Late last Summer, I placed a $18 Discount Club backorder on a domain name at DropCatch.com. Once it became eligible to transfer, I spent under $10 to transfer it to my account at GoDaddy. I listed it for sale on Afternic for $4,999, and it sold within the last several weeks at the BIN price without any negotiation. After the 20% commission and acquisition + transfer costs, the total profit is somewhere north of $3,950.
Since the domain name sold, I have been periodically checking the domain name to see who bought it and why. Recently, I noticed a new website on the domain name, and it turns out a stealth startup with around $150 million in funding was the company that acquired the domain name. It’s the perfect brand match .com domain name for their business, and it suits them well.
Prior to the acquisition, the company did not have any presence. There would have been no way for me to know this brand existed to price it accordingly. There’s a very good chance I left money on the table, but of course, there is no way to know for sure. The company may have had 5 branding options, and the brand was selected because my domain name was the most affordable. It’s also possible the company could have hand registered a lengthened domain name had my price been higher. Who knows.
This isn’t a post lamenting the fact that I left money on the table. I think it’s a story of a great ROI. Those funds, like the funds from other sales, are used towards subsequent purchases. They also help pay my salary, taxes, and other expenses. A profit of $3,950 means I can buy more than 200 additional domain names at that price. If I have a 1% annual sell through rate on these types of pending delete purchases (overall sell through rate was 3.6% YTD a couple of sales ago), it’s a pretty strong business.
Obviously, it doesn’t work as simple as that. Some of those funds are used to pay bills like taxes, salary, and hosting. I have never calculated my sell through rate on pending delete purchases, and I don’t think I will ever spend the time doing that since the number of sales would not produce a statistically significant number for me to learn from.
Beyond the profit margin, the nice thing about a sale like this is the validation that my time spent searching for and bidding on pending delete domain names is worthwhile. I enjoy the time I spend hunting for these generally hidden gems, and closing a sale like this makes me feel good. It’s relatively easy to sell the obviously great domain names, but it’s more of a challenge to find, buy, price, and sell hidden gems.
Maybe I left some money on the table here, but this kind of deal feels almost as good as a big sale.