A domain portfolio sell through rate (STR) may be a vanity number that holds little importance to most people. The STR is the percentage of domain names that are sold, and it is usually calculated on an annual basis.
Someone who doesn’t rely on domain name sales for their income might have a very small STR, but someone who sells their domain name for a living might have a high STR. Depending the business needs, a good target STR can vary from person to person.
If a domain investor owns 1,000 domain names and she sells 50 of them in a year, her sell through rate is 5%. That’s a pretty easy calculation to make. However, calculating STR can be challenging for someone who is in acquisition mode. If someone starts the year with 2,000 domain names, sells 150 domain names in the year, and ends the year with 2,500 domain names, the STR is more difficult to calculate. Last week, I asked how people would go about calculating their STR based on this scenario:
If you start the year with 2,000 domain names, sell 150 domain names, and end the year with 2,500 domain names, how do you calculate your annual sell through rate?
— Elliot Silver (@DInvesting) September 30, 2022
There were a number of helpful responses to my question. One I want to highlight today is from Squadhelp founder Darpan Munjal. Darpan gave the two step calculation for figuring out an annualized STR:
First calculate the average holding time of 500 new domains acquired during the year. Let’s say it is 200 days.
In that case your average portfolio age for the year = (365*2000+200*500)/2500 = 332 days
Then Annualized STR = (150/2500)*(365/332) = 6.6% pic.twitter.com/zzrHlVqpvL
— Darpan (@darpanmunjal) September 30, 2022