I am seeing more domain investors selling domains at low $xxx. How are they making money when they're selling it at below the cost?
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I am seeing more domain investors selling domains at low $xxx. How are they making money when they're selling it at below the cost?
I have hundreds of domains scheduled to drop this year, I have started advertising them at $250 and will reduce by $50 every so often until the final sale price of $50.
At one point we have to cull excess domains and recouping even some of the cost is better than none. So you don't know when domainers do that, it could be at any time they take a number of domains and blow them out and all we see is the end sale price not knowing it was priced aggressively on purpose.
Not sure if it applies in this case but it can explain some of the lower prices we are seeing.
In this case, seller has more domains priced in this range.
Ai domains have 2 year renewal so these are not domains that are about to expire.
Ai domains have 2 year renewal so these are not domains that are about to expire.
Would you publish your list here?
Merci!
Wayne
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I think it depends on the cost of the domain. If they were hand registered then they are making money.
I don't typically buy domains for resale for more than $1000; most I get for less than that or are hand-registered.
DomainRecap
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Nope, and not even close.
I think a hand-register .COM at $10 needs over $1000 to break even at a generous 2% STR, and these are .AI with a lot higher price tag - $60-$100 depending on the registrar.
Wayne
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I must have misunderstood.
If I register a domain name for $20 and sell it for $40 I'm making $20.
Unless you are including cost of your time or multiple renewal fees, then I'm not quite sure what you mean.
DomainRecap
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Not really, as there is a lot of math behind your numbers that doesn't make sense.
Our esteemed colleague Bob Hawkes wrote a very comprehensive article over at NP, although due the jocular nature of our host here, you may have to change Namepoos in the link to the proper URL:
strategy - The Minimum Domain Price for Profitability
Nope, I changed that, all links work.
I know they do that over there to our URL's but I wanted to be the bigger man.
All previous links have self corrected and are functioning with no modifications necessary.
DomainRecap
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Thanks and I really think that everyone should read that article by Bob, as it clearly outlines the relationship between acquisition price and the price you must sell at to even make a slight profit.
In domains, you make money on the buy, not the sell, so everyone should set their purchase budget based on a realistic, expected resale price, not on "how much you like the domain".
Too many people get all caught up in TBR auctions and end up overpaying, sometimes vastly so, which is a quick trip to a cardboard box.
In domains, you make money on the buy, not the sell, so everyone should set their purchase budget based on a realistic, expected resale price, not on "how much you like the domain".
Too many people get all caught up in TBR auctions and end up overpaying, sometimes vastly so, which is a quick trip to a cardboard box.
.ai costs $150-$200 dollars for 2 years. Seller that i mentioned above has 50 more domains priced at same range. No profitability.
DomainRecap
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Yeah, this guys seems like a real financial genius.
Even apart from him not understanding "domain economics", he fails to grasp even rudimentary math - if you pay $200 for something and list it for sale at $150 (and you repeat that 50+ more times), then something is clearly not right upstairs.
Wayne
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I see.
You are including registration fees over time, commissions, interest etc.
I was talking more of a simple flip directly from buyer to seller without commissions and without annual renewals.
Wayne
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DomainRecap
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No you don't see. Go read it again.
A 15% commission on $40 is $6, 4% interest on $20 is $0.80, and there is no renewal fee the first year, so by your logic, I would only need to sell it for $46.80 to make a profit.
In reality, even before commission and interest, you would need to sell that $40 domain for about $2,000 to break even. How can that be?
DomainRecap
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I'll spell it out.
No one sells 100% of their domains purchased in a year, no one. Even the most aggressive flippers might hit 5-8% (Bob uses 5% in his outbound chart) so even if you're "just flipping", spending $20 and getting $40 is a quick trip to the poorhouse.
That's why so many of these "domain flippers" disappear after a year or so - there is no sustainable market for this type of business model. I've seen it on NP all the time, some guy offering up $50 domains he bought and maybe 2-3 of the 50-100 domains offered ever sells.
Whoa! Pure profit, right?
That's the way the domain market works and if you can even get up to a 5% sell-through rate using low prices, you're doing great, but you'll be bankrupt buying $20 domains and trying to flip them for $40. Just basic math on 100 domains at $20 = $2000 and a 5% STR = $200 in revenue. Even at 10% STR you still only made $400 and now you need to renew 90 domains - cha-ching!
Domain math will absolutely bury you, so it behooves you to understand it.
No one sells 100% of their domains purchased in a year, no one. Even the most aggressive flippers might hit 5-8% (Bob uses 5% in his outbound chart) so even if you're "just flipping", spending $20 and getting $40 is a quick trip to the poorhouse.
That's why so many of these "domain flippers" disappear after a year or so - there is no sustainable market for this type of business model. I've seen it on NP all the time, some guy offering up $50 domains he bought and maybe 2-3 of the 50-100 domains offered ever sells.
Whoa! Pure profit, right?
That's the way the domain market works and if you can even get up to a 5% sell-through rate using low prices, you're doing great, but you'll be bankrupt buying $20 domains and trying to flip them for $40. Just basic math on 100 domains at $20 = $2000 and a 5% STR = $200 in revenue. Even at 10% STR you still only made $400 and now you need to renew 90 domains - cha-ching!
Domain math will absolutely bury you, so it behooves you to understand it.
Wayne
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And therein lies the confusion.
I was referring to profit from a single sale on a single domain. You are referring to overall profit on an entire portfolio over time.
If I only have one domain name, that I paid $20 for, and flip it myself (no middleman) for $40, then I make $20 profit.
Obviously if I have a portfolio of 100 domain names, and sell 5% of my domain names a year for $40 each, i'm losing money.
BTW thanks for the link to the domain math.
DomainRecap
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If you own more than one domain, there is no such thing as a "profit on single domain sale". It's right up there with the Easter Rabbit and it's the first thing you need to learn when you start investing in domains.
Everything is about the portfolio and single sales are absolutely meaningless outside of the overall performance of your portfolio.
P.S. Even if you only have 1 domain total, then you might be waiting 10 years or more to sell it, so even that outlier outcome is far more detailed than your example.
"Someone buys one domain and immediately sells that domain for a profit then never buys another domain in his or her lifetime" is a fairy tale at best.
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