When it Comes to Domain Name Sales, Inconsistency is an Issue

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One of the biggest issues that high value domain name sellers and domain investors face is the inconsistency in selling domain names. I might be able to sell five $50,000 domain names in a month to five different end user buyers, but I might not be able to sell a $5,000 domain name for two months after that. There is very little consistency with domain sales.

Different prospects in different fields value domain names differently. As a result, one doesn’t know if he will generate $100,000 in net income a month from domain sales or $10,000 in a month. The inconsistency makes things more challenging, and it is one reason there aren’t a whole lot of people doing it for their primary source of income right now.

If you want to be a domain seller/flipper, you need to realize there will be little consistency with your sales. One month you might net six figures and another month you might only gross 5 figures (maybe less, although you probably couldn’t do it for a full time living if you’re not earning 5 figures a month).  After a while, you can get an idea of how much money you’re going to earn, but there’s always the possibility you’ll be way off with your projections.

The inconsistency with domain sales is one reason I’ve developed and maintained a few websites (like DogWalker.com and my blog) so that there is a specified amount of consistant revenue each month, but at the end of the day, selling domain names is inconsistent by nature.

You can certainly make a great living from selling domain names, but it’s not as easy as it sounds and it’s tough to predict.

32 COMMENTS

  1. Yep, domain sales are so unpredictable and it’s very hard to make projections except for maybe yearly or longer time periods. Too long a time period and you risk seismic shifts in the industry changing your sales.

    I would say it’s also a numbers game. If you own 1,000 quality domains or less, you can’t bank on sales too much for consistent income. On the other end of the spectrum, if you own 10,000 or more, you might be able to use domain sales as your primary income. IMO, 10,000 is the threshold. The quality of the domains I’m referring to is the average you’d find in Frank Schilling’s portfolio not made up phrases etc. Of course, if you own category killers, then the quantity doesn’t matter.

    • Good point about larger portfolios, although I would think that’s valid if the portfolios contain great names that receive frequent offers.

      If I went out and hand registered 10k names today, I doubt I would see as many offers as a legacy portfolio.

      • Agree, 10,000 typical hand regs won’t do it. But I don’t think it takes a legacy portfolio either. There are still reg fee drops even now that are of the quality I’m referring to. One example is StairBanister.com which I picked up for reg fee within this past week.

        • Why would you need to own 10,000 or even 1,000 domains for consistent income? If you are good at flipping domain names, then you will be selling most of what you buy.

          • Adam – I believe that I have some good domains such as DropboxStorage.com, OnlyZip.com, PatentMaking.com, RoboCod.com, CircleBag.com, Peplums.com, etc but I still like to know or obtain best advice on how to be good at flipping domain names at a profit.

  2. It’s definitely a numbers game.You rarely see drops from some one that has 10k + domains.

    I do agree with you Tony on this,it’s best if you are in a position like Frank because he has a lot and good,that’s why he can afford to renew 3,4 years ahead.
    Unfortunately not many people are like that.

    But there are still decent drops out there to make it.

    Personally i would only invest in drops,$8-$100.

    Going back to the subject ,yes it’s been slow.

    • “Going back to the subject ,yes it’s been slow.”

      One thing that makes this business interesting is that tomorrow I could get a $xx,xxx offer on a name I bought for a couple thousand and all of a sudden things are great 🙂

  3. This is sooo very true. I don’t have a huge portfolio, nor do I list my entire list of names at any certain place at the same time. Last month for example I had offers for 5 different domains on Sedo in the same week. That in itself is a rare, at-least for me it is. Most of my sales are via email contact from end users though.

  4. Tony@

    I think 10,000 will do it but you need to be selective and acquire this portfolio in 3 or 4 year’s time 12 hrs a day.

  5. You’d be surprised how many business models out there are on some sort of 80/20 or 90/10 rule for revenues and income.

  6. – It’s the problem with $5K names, they compete with hundred thousands of $5K names. And most you go down in value and more the competition is huge because inventory is larger.

    – Inconsistency or the domain lottery. I also recommend find job/biz to make a living and have domain sales has the cherry.

  7. I think you summed that up pretty good, it is a reality for many domainers. And often the bigger sales come from domains where you least expected it. You have to be able to float your portfolio for stretches where sales are lean – whether it’s website income, ad clicks, affiliate programs, etc

  8. Elliot,

    I believe I’ve punished you enough by staying away from your blog.

    Now, on this post, you are on the right track, but not only did you not go far enough, you are trying to dial back a little.

    The domain name industry is subject to market conditions, plus there are a lot of paternalistic levers, even underhandedness, applied by industry giants. When you see people with hundreds of thousands of names making sales regularly, I even suspect that the Registrars, or Auction houses purchase names from them to keep them alive, and to keep re-registering names. I say that because some of the sales they make are obviously suspicious. Our industry is not on the up and up.

    A few days ago, Shane Cultra published a good article “Take What I Can Get, Turn Some Profit, Hold Out For Solid Price”, and response to him a made the following observation, that I think is in line with your post:

    The bottom line is that our industry is versatile, and fluid. No one strategy could cover the gamut, but the psychology implied in your post, to me, reflects, and accounts for the vicissitude of the market.

    Despite the façade regularly put up by a few domain veterans, it is fool-hearty to routinize the spirit of the domain market. Demand and supply ut dictum.

    While Rick Schwartz’s strategy satisfies the intrinsic desire for maximum profit, it is the instrumental value of his philosophy that ultimately matters for the quotidian realities and longer-term interests, that matters to most of us who flock to his postings. We are able to discount the excesses in his wisdom. He is still the domain king.

    I believe new, and regular domainers should be very, very careful in this industry.

  9. Agreed. That’s why someone who starts out today, should never leave his day job. IMO in today’s domain market, buying and selling names is undoubtedly a nice second source of income, but one can’t afford to lose the consistency of a monthly salary.

    • The guy who makes more money than Frank on a pure domaining play will probably enter this market next year, when a few 100k ‘great brands’ will become available in the primary market.

      • @ Samit

        I am not worried about gTLDs at this point. Maybe I should be concerned, but my portfolio is almost entirely .com and I don’t see the valuation of .com deteriorating much, if at all. I think some gTLDs will be successful, but I think most people will look at them as .com alternates. Also, with the way things have gone, I wouldn’t be totally shocked if the new TLDs weren’t introduced until 2014.

  10. Good post. While business has doubled for me this year, the dry spells kill me and 4 weeks of losing momentum. But its about diversification and been focusing in other areas right now besides sales. Trimming down the junk and carrying costs. Building up direct navigation names.

    Yes sales are a huge part of my business.

    The great thing about domaining, always challenges and what route to take. Kinda in this position right now.

    • The other great thing is that you can have 30 bad days without a sale, and have a buyer approach you on day 31 and you’ve made your month or maybe even your year. If you invest in some excellent names you will be rewarded.

  11. Tony@
    3yrs,%66 to go

    Today’s catch,all .com

    AfricaTravelers
    CarsShipper
    NyPropertyRentals
    PropertyInNyc.com
    StPetersburgDuiAttorneys

  12. C’MON GUYS! What sales job offers a guaranteed amount of money every week. Don’t count your money each day/week/month if you are in this business look at the bigger picture 12 months. Want to know how much you make each week? Tally up your sales from Jan 1, 2011 through Dec 31, 2011 and divide by 52 week. That’s how much you made on average for the year. Minus your renewal costs of course. If you aren’t happy not knowing if you are going to make $5,000 or $50,000 in a given month consider yourself lucky since many people today are struggling to survive on low 5 figures annually. Stop complaining and start selling 🙂

  13. My wife has come to deal with my emotions during good and slow times. As stated you make huge money one month then several can go by with barely making anything, just the way it is.

    She also has told me I am nervous when things are slow and nervous when things are for sale. My only happy time is the day it closes, so essentially I am nervous 300+ days a year LOL

    I wouldnt want any other job though 🙂

    • You totally hit the nail on the head. I get excited when I make big deals, but more times than not, I reinvest much of that money into other stellar names, so the excitement can be fleeting.

      • I feel relief when I get a sale. I feel ECSTATIC when I buy a great name at what I think is a great price. That’s the reason I love domaining come to think of it.

  14. This is typical of any sales oriented Entrepreneur, you’ll find we become somewhat obsessed with chasing the sale and forget to work on expanding the company (much like Elliot does by developing) , as a result time is pulled away from strategizing. Sedo does 4,000 sales a month, the deals are out there you just need to attract them and that means getting aggressive. Average salary in the US is $44,000 a year – if you’re good you can easily do better..

  15. Well, Now this is what i call a good domain blog, We are all talking about what matters us the most ;),
    The sales have been slow this month, It may be due to London 2012 or the whole world is on vacation.. If you check sedo auction, The total numbers of domain for auction barely hits 80. Now, Thats really sad 🙁 .. Now, shall i panic if the sales has dropped? Shall i drop my 2nd category names? Or, shall i hang on to all the name that i once thought that will make smart ROI?
    The best advice i got for myself is : Do what you love and do it so good that people are willing to pay, for what you do… 😉

  16. I asked Mike Mann on fb whether Domain Market is cash positive considering his renewals and he said they just went cash positive after all these years.

    His play seems to be to find a bulk buyer for the entire company and portfolio eventually, just like he did with BuyDomains.

    The beauty of this business is that there are 1000s of revenue streams possible aside from buying for resale, we do development, others do other stuff.

    • The beauty of this business is that there are 1000s of revenue streams possible aside from buying for resale, we do development, others do other stuff.

      That is a great point. Being able to monetize my blog and a few other websites has allowed me to be more aggressive with my investments and hold out longer for better offers.

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