Yesterday I spent a bit of time in the forums and had a friendly exchange welcoming a newcomer who already had some experience in monetisation and marketing. Ended up sharing a few thoughts that I figured could be helpful if I shared .. here are extracts of some of my essential points:
– Buying for $10 and selling for $50 might seem like good money .. but in domaining, unless you’re volume flipping at wholesale, that model is going to lose you money because of renewals and the fact that the average portfolio only sells about 1-3% of their domains a year. Almost always less for newcomers because almost everyone overvalues their domains when they start. I personally aim for about 100x … which ends up being vastly less due to renewals and the costs of all the domains “not yet sold”.
– Most people who attempt domaining do lose money. The problem with holding “decent” domains, is that even decent domains don’t sell fast enough or at high enough multiples to actually make someone a profitable overall portfolio … the domains you buy need to be far above average in quality .. and just as importantly .. you need to buy them at good value .. because while it’s very easy to buy very good domains .. if you don’t buy them cheap enough, then you’ll never find yourself making enough money. That being said .. be careful with hand registrations when you start .. they are the pitfall of most new domainers (because there’s so much more room to make bigger errors on a blank canvas).
– At the end of the day what makes a good domain “good” can stem from a multitude of elements. Domaining is one part science and one part art. The science part is based on metrics, domain data and more importantly industry/niche knowledge. The art is phonetics, plays on words, finding names that are memorable for any number of reasons. If there was a simple answer then everybody would be making tons of money domaining rather than most people losing money.
– A background in affiliate marketing can be a serious bonus and a serious detriment. Bonus in that you know what niches have money and demand flowing through them .. but it can hurt as well because while you could have the talent to make affiliate money from below average quality names, most END USERS will likely need and want stronger brands. Effectively meaning that you might find a domain to be above average because YOU have the skills to make money with it .. but the reality is .. that most people would not.
– At the end of the day .. the only real rules that matter is that the domains you buy actually have an end user demand .. and that you buy them at a very good price that allows you to mark up your sales price at a significantly high enough multiple that allows you to make profits when you include ALL your costs including acquisitions, renewals and domains you don’t sell.
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