One Thing I Learned During the Recession

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I want to share something I learned during the last recession that might seem like common sense, but it’s something I think about often as the economy seems to be teetering on the brink of a second recession.

My largest source of income is flipping domain names. I don’t always have huge profit margins, but I make up for that in value. For instance, I would rather make 30% profit margin on a $25,000 sale than 300% profit on a $5,000 sale.  This is common sense, but it means I need to invest in higher value domain names for the cashflow to continue growing my business.

During the recession, I got scared. I had no idea how long the recession would last, and my primary focus was maintaining liquidity and growing alternative revenue streams via my developed websites. I became far more cautious with my investments and was basically running scared. As a result, my income took a hit, which then made me even more nervous and cautious. It was something of a downward spiral.

Eventually, I made a couple of higher value acquisitions that I flipped, and I was able to turn the tide.

From this experience, I learned a valuable lesson. I always need to be investing in great domain names at good prices. Instead of buying mediocre names for under $1,000, I need to continue buying great domain names. Mediocre names are significantly more difficult to flip than great names. If I buy 10 mediocre names for $1,000/each, it’s far more challenging to sell those than it is to sell one $10,000 domain name.  Similarly, it’s more difficult to make enough money to thrive with hand registrations than it is on higher value domain names.

Instead of spending money conservatively on hand registered domain names, save up and buy one great name when it’s available. Put your money aside and wait until the right name is offered for the right price. There seem to be a whole lot more people with 500 crappy domain names than there are people with one solid domain name. Every year, that means it’s $5,000 for renewals.

The next time you are hand registering speculative domain names, think about what I’ve written. This advice should especially be heeded by people who continue to register names but have never sold any before. Perhaps it’s the names you are picking? Stop making the domain registrars rich, and start building value for your own portfolio.

Don’t get me wrong – there are times when it’s smart to hand register domain names, but if you want to take your business to the next level, you’ll likely need to buy high value domain names at great prices.

* I am away right now, so comments may take a bit longer than usual to be approved.

17 COMMENTS

  1. Good advice, ES.

    I think the majority of people reading this should follow your advice. It all really depends on how and where you acquire domains.

    For me, personally, the sweet spot seems to be acquiring domains in the regfee-$2,500 range. I rarely have to spend over that for a particular domain even if it’s worth up to $50,000 or more. About half my domains are regfees. They are not creative, off the cuff registrations but dropcatches fresh from the registry of keyword rich dotcoms. I usually sell the regfees for $400-1,500 range and the pricier ones for $1,500-30,000.

    One example of a domain I bought for around $1K that I think is easily worth $50K would be AssetAllocation.com. I don’t think I would sell that even for that but just an example.

  2. What recession?

    A pessimist sees the difficulty in every opportunity; an optimist
    sees the opportunity in every difficulty.”

    I got squarely dot com for just <1K$

  3. Very good lesson! but on the other side for a small investor $ 10,000 in a single good domain means maybe 2 years without purchasing any domains, it is a very long time…

  4. how many investors have the same thought?and can we win great name ,defeat some great men? ..I am not sure..
    last but not least, will the great name to day be high value tomorrow or future ..skimart is a example

  5. I like it when people register “dross” because it means that the end users have even less of a chance of hand registering a new domain name and instead may come to me and buy mine. Please therefore keep registering all the crap names,lol.

  6. Elliot, this has been my strategy too and for a while now. If you do the statistic you’ll find a high correlation between domain value and buyer desirability. Mediocre domains are indeed more difficult to flip and hence take longer to sell based on your standard selling strategy utilized for all domains in one’s portfolio. Ironically you could calculate your time margin to achieving a desired profit threshold based on this metric too, food for thought! ;)~

  7. Not enough quality control for that auction.
    A quick scan shows only around 4 or 5 good domains out of 150.

    3dadvertising.com
    3dapps.com
    3dvideos.com
    cellphoneapps.com
    solarbusiness.com

    Too many long names. Too many impractical or meaningless concepts.. 3descort.. 3dfloral.. ??

  8. Nice post and very good lesson(s)….thanks for sharing Elliot. I too have had better success in buying low $X,XXX domains and selling for high $X,XXX or low $XX,XXX then the ROI I get from hand reg domains….

    Keep up the great work and SAFE travels….

    @AndrewHazen

  9. As a relatively new domainer, it’s posts like these (& the impending doom of renewing a bunch of crap domains) that are helping me to evolve. Appreciated.

    I am starting to see the light, but it’s still a big step (financially & mentally) to go from $X.XX to $XXX or $X,XXX. That being said, Elliott and @AndrewHazen (& rest of readers), do you have any tips to help identify & ultimately flip that first higher value domain? I know it’s highly individualized, but anything helps. Especially for a new domainer that doesn’t have a name or a database of contacts.

  10. @Tony

    You say good advice to Elliot and yet you’ve nearly done what he thinks domainers should avoid doing 🙂

    …. and the irony is that you’ve been successful at it and all 🙂 🙂

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