$18 Purchase to $4,999 Sale to $150 Million Startup

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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.

About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.

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16 COMMENTS

  1. there is often money left on the table but any time I can turn a 20 dollar domain purchase into 5000, I will typically take it and not have any regrets no matter who bought it.

  2. Great post Elliot; always exhilarating when making a sale. I’ve learned that whenever a name sells at a price that was listed for, regardless of who acquired it….I am always satisfied and happy and never look back and feel I left money on the table. Congratulations.

      • I hand reg all my domains at 99cent or at $6.99—and all of them were Purchased to $888-999million $ Sale to $150-999 Million Startup

        Been there done that…
        For example-
        I just hand reg tiebreakten.com at 6.99$ and already got offers!!

      • No one is asking for what you are buying. But your post has so much cloak and dagger and there is no NDA for this sale. It all just rings very strange.

        • Sorry, I don’t share information about my sales unless the buyer specifically wants it shared. Why should I give other people information they can use to select domain names to bid on, potentially costing me money in a competitive auction? There is nothing for me to gain in doing that.

          In addition to this, just because I can reveal a sale, it does not mean I should reveal it without permission from the buyer.

  3. Elliot, I always look forward instead of backward. However, I did enjoy reading about your $18 to $5000 success story. I hope that you can close out 2021 with an even better ROI and look forward to hearing about it!

  4. “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.”

    So the domain had a value of $5k. But if that company had existed and you’d known about it then you could have “priced it accordingly” yeah? Much higher obviously.

    So then please explain to me why it’s called domain “investing” and not domain “squatting” or “extorting”? Because the above quote basically confesses that you’d effectively extort the maximum you could from that company under the guise that the domain is worth so much more now that a big company might want it.

    I’m a domain investor too, but I think in a lot of cases it has gone way beyond investing and becomes extortion. Let’s not paint ourselves with gold when we know there is often shit under it. This is a truth that is often unpalatable to the domain industry.

    • There’s nothing wrong with what Elliot said. You could argue the same analogy with real estate and, to me, domains are cyber real estate. When Disney was buying up land around Orlando to create Disneyworld, he did it through shell companies so the local landowners wouldn’t know it was him. Walt Disney had every right to conceal his identity and the landowners had every right to jack up their prices if they’d found out it was him.

  5. Thanks for sharing Elliot! Appreciate hearing about your rational and thought process to make the deal happen. A couple of sales at this level every month certainly helps any small business move forward with its ventures.

  6. Hello Elliot,
    Remember it is your prerogative to deem information as Proprietary or not. People need to understand that if you run your business Casually you often become a casualty. JAS &/6/2021

    Gratefully and Respectfully, Jeff Schneider
    (Contact Group) METAL TIGER
    Former: (Rockefeller I.B.E.C. Strategic Marketing Analyst/Strategist)
    (Licensed C.B.O.E. Hedge Strategist)
    Domain Master: (UseBiz.com) / (USeBiz.com)

  7. Hello Elliot,
    When you say R.O.I. Do you mean an annualized R.O.I ? If so you bested most all Wall Street Hot Shots, that’s a hell of a turn around. Just be grateful you had the saviness to even be a part of the power equation . JAS

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