What’s the Biggest Mistake a Domain Investor Can Make?

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Domain industry veteran Dan Cera posted his thoughts on the two biggest mistakes he believes a domain investor can make. One is related to buying domain names and the other is related to selling domain names. I like and respect Dan, but I think there is an even bigger mistake that investors can make.

Here’s what Dan wrote on Twitter yesterday:

Although I am almost exclusively a .com domain investor with very few exceptions, I recognize that many non-.com domain names sell every day. In fact, it was quite a few non .com domain name sales that propelled a few successful recent entrants in to the business of domain investing. I have seen people find success selling .IO domain names, .CO domain names, .XYZ domain names, .AI domain names, .VC domain names, and quite a few others.

Non .com domain names might not sell for as much as .coms, but it seems that some people have found success selling non .coms. In addition, the entry price for .com domain names that have value is quite high as well. I would have a difficult time calling non .com investments a mistake, let alone a big mistake.

The other mistake Dan listed is pricing domain names. This is something marketplaces like Sedo and GoDaddy have advocated for to help sell domain names more easily. Not pricing domain names can lead to higher value sales because the registrant can price each domain name based on current market conditions and who is inquiring at the time of inquiry.

For me and many others, listing domain names for sale with prices on platforms like GoDaddy and DAN help move inventory. Perhaps I have undersold inventory, but I would rather move replaceable inventory at nice margins than wait for a golden unicorn with a bottomless wallet that might never come. I think inventory quality domain names should be priced to help with cash-flow.

Even some of my highest value domain names are priced (high) to give prospective buyers an idea of what it will take to acquire. Luminous.com, for example, is priced just shy of $500k. Maybe I could get more if I didn’t price it, but I would say that is unlikely. On the other hand, prospective buyers know my expectations and can send an inquiry with that amount in mind if they do not wish to buy it at the list price. This combined with a minimum offer requirement at DAN has virtually eliminated all time wasters.

Obviously pricing domain names is more of an art, and pricing strategy (or not-pricing) depends on each person’s business model and needs.

I replied to Dan’s tweet stating that I believe the biggest mistake is buying obvious trademark domain names. People think they might be able to sell these types of domain names to the trademark owner, harkening back to the early days of domain name sales. It’s an uneducated point of view that is not only a waste of money, but it can also be a serious liability depending on the trademark owner and how aggressive they are.

Just like there are many ways to be successful in the business of domain investing, there are many pitfalls as well. I am curious to know what you think the biggest mistake a domain investor can make is.

23 COMMENTS

  1. The biggest mistake a domain investor can make is blindly following the advice of another domain investor. Especially one who is in a totally different situation. It is very easy for someone who has been successful in the business and has ample capital to wait and wait for their perceived highest and best sales price of a domain name. That strategy spells disaster for most domainers though, who should rather be buying and selling regularly, using their particular knowledge and skill set. Not pricing domains guarantees less domain sales.

  2. “…I believe the biggest mistake is buying obvious trademark domain names.”

    Completely agree, Elliot.

    The second biggest ‘mistake’ is to lack a very long term perspective.

    I realize that there are domainers whose livelihood depends on cash-flow from domaining – so for them, I can appreciate their situation of needing to focus on (some) turnover.

    But for domainers (like myself), for whom domaining has always been a part-time endeavor, they really need to have a multi-decade time horizon if their circumstances permit. Because, so long as you have even a few names that you know are (or will soon be, in the case of emerging technologies) worth a fortune, you shouldn’t be in any rush to sell them.

    Frankly, entering into a partnership – versus an outright sale – with a deep-pocketed entity will likely, in the long run, be an annuity that your kids and grandkids will enjoy the benefits of.

    • “they really need to have a multi-decade time horizon if their circumstances permit. Because, so long as you have even a few names that you know are (or will soon be, in the case of emerging technologies) worth a fortune, you shouldn’t be in any rush to sell them.” VERY true. I’ve been sitting on “Boatels” for 20 years and the concept is going crazy now. Also, I wish my old friend Thurmon Gates would get off his butt so we can develop “GatesSoftware”, 22 years.

  3. I agree with Mike, all points. Also “Impulse”, “shooting from the hip” buying related to what’s trending, (Like pandemic names) can waste smart money. And ditto Elliot’s concern about stepping on trademark toes. You can’t research that too much before you reg it. Ultimately tho, DotCom is still King.

  4. I agree with Mike. Every investor’s situation is different and each investors path to success will be different depending upon their point of entry, and their goals. While I concede that buying non coms may not be the biggest mistake a domain investor can make, ignoring the com market complete is! That’s where the mass is!

  5. The biggest mistake IMHO is “falling in love” with one or more of your domains – it leads to unrealistic expectations, paying renewal fees for years-on-end on junk names and blindly chasing sales which will never happen.

  6. @Mike-The biggest mistake a domain investor can make is blindly following the advice of another domain
    investor.com– you are so damn right and anybody can call themselves domain Pro/Investor/whatever-you heard about this guy that thinks he can make big money on dot ws and always bragging about making money on his blog?

    I bought these 4L domains years ago for $15 each from this so-called a domain expert /pro and now who is laughing all the way to the bank?
    gxnx.com
    kvlp.com
    llyu.com
    vhvk.com
    wzwi.com
    zmmr.com
    http://www.squarely.com

    Follow your instinct and check their facts…

    I hand reg all my domains at 99cent and resell for big bucks…easy peasy…

  7. I agree with Mike. We all make mistakes, one that I made is that of not having listened to what was repetitive for me, then I realized that I must have listened more to the repetitive Domain Investor who knew much more.

    Mistake buy domains by hand on impulse then they are Pigeon Shits.

    With reference to registering brand domains, unconsciously registering TennisJordan.co and our colleague @Konstantinos Zournas warned me that he could have TM problems, it was true.

    Coincidentally days later I receive news of the sale of multiple domains (Com) a single word $ 500K, some still making mistakes, they sell with Live TM.

  8. I don’t agree that pricing your domain is a mistake. If you are confident of your pricing then your should sell it for what you want. It doesn’t matter what others think of your price except for the one that buys it.

    • Yup. As I have written recently, pricing has done well for me in recent times. And if anyone has seen my comments, I value domains usually much more highly than others. And at the same time, I agree that the recent advice from the great one himself about not pricing is also good. Like I said recently as well, “rules” don’t have to be hard and fast. Each situation with each individual domain is unique. You may want to almost never price, for instance, but may still want to for some.

    • PS, Michael: You guys may not like me, or at least not like my anonymous commenting ways, but you and your brother David are “great ones” and domain “kings” too and two of my favs regardless of how you feel about me. You two especially appear to be noticeably more in touch with what is really going on in our country and the world in general than most, compared to how so many are so oblivious, deluded and deceived, and that is something I particularly like including when it occasionally comes out in some of both your comments.

      So like me or hate me, cheers. 😉

  9. Hello Elliot,
    The biggest mistake , in our opinion, is selling your platform to a speculator and not a Bonafide End User. JAS 6/10/2021

  10. There are two biggest domain mistakes:

    1. Getting into domains in the first place.

    2. Getting out of domains once in.

  11. Oh the irony. I know someone who is part of a “Luminous” company that would be such a great candidate for Luminous.com. Now that is definitely one of your great domains… I do not intend to contact the person or even try to earn a finder/broker fee, but as the great one himself has recently expressed, it may be worth it to try some outbound marketing for that one…

    There are so many mistakes, and I’ve made them myself, haven’t most of us…

    The one most on my mind now is one I’ve already addressed in the blog comments for a long time now, and it pertains to domain valuation.

    I’ve now come to refer to it as “mindless domainer think.”

    Psychologically speaking, on a related note it includes critical elements of thought and mind like these:

    1. Being influenced and controlled by group think and peer pressure. That includes even when industry luminaries who have certainly experienced success in the past and have a reputation because of it descend into mistaken and misguided thinking or advocacy themselves nonetheless. And of course one has to often consider the possible self-interest involved.

    2. Be devoid of what I refer to as “empathy.” But I use that word in the sense of lacking and not cultivating real world end user perspective, not the way that word is more commonly used. Thinking only as a “domainer” or “domain investor” in formulaic ways that have nothing to do with the real world end user value of a domain vs. mere goals and concerns about flipping and selling. This has harmed us all.

  12. “Not pricing domain names can lead to higher value sales because the registrant can price each domain name based on current market conditions and who is inquiring at the time of inquiry.”

    IMHO “who is inquiring” as a basis for pricing is what gives the industry the creep factor. It shouldn’t matter.
    Haven’t ever heard or seen any top seller list who is inquiring as a value metric.

    Upfront pricing = integrity and transparency.

    Make offer is always an option no matter what the product or service or price is for those open to negotiate.

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