Domaing is a tough business for most of us and a giant numbers game for big success

[David G]

It's extremely difficult to make money in domains compared to the past. There are some exceptions for those who spend vast amounts of time buying and flipping low cost domains but if you are trying to make significant money living off domains and do not want to spend 80-hrs or so a week online for low pay hourly income this business is quite unlikely to be a good one for you.

Exceptions who do very well are people like Michael Mann but the reason for their success is because he and others like him have 100s of 1000s of domains (ranging all the way up to nearly a million domains) so they make tons of money because its a big numbers game which is not necessarily based on domain or portfolio value. Let's assume 1% of the domains sell per year (which I think is possible but possibly even high based on mostly passive sales). If you own say 500,000 names that means you get 5,000 sales a year. Let's also assume the average sale price is say $2,000. That results in an income of $10,000,000 less renewal fees & costs of say $10 a name, adding up to roughly $5,000,000-year expenses, which equals $5,000,000 net profit a year (if my math is right), plus extra income from parking (but with poor PPC payouts that may not be much extra).

However, most members here own a few 100 up to maybe 2,000 names. Using 2,000 as an example but the same percentages and numbers result in just 20 sales adding up to $40,000 sales minus expenses of about $20,000 or profits of $20,000., plus ppc revenue too (but unlikely to be a lot extra). With just 200 domains you would only make about 4k using the same ratios. The only good way to sell more than say 1% a year would be to lower your asking price a lot but the problem then becomes you would need to spend much more time in the business working hard trying to harvest more names and replacing the flipped names with new inventory. Since I have never done any flipping I have also rarely sold names to subsidize income. My names are always price based on intrinsic value and not flipped prices which is why my sales are not often.

All of the above makes it a real tough business and is a reason I am reducing my inventory by about 1,000 names.

 

[Onward]

If you buy names people want to develop, your % of names sold and average price will be a good bit higher than those numbers.

 

[David G]

If you buy names people want to develop, your % of names sold and average price will be a good bit higher than those numbers.

Assuming you are not into low-priced flipping and rely on intrinsic value passive sales (as I do), what percentage of your portfolio sold in the past 12-months? I ask that question of other members too. My research indicates 1% is actually considered to be a good percentage and even above normal.

 

[Mark Talbot]

David, you have been around and I like alot of your posts.

I think you are correct in your description.

Most ALL of the 'sellable' names are owned by the domain magnates. (you know who you are )

Reg names rarely get anything but a flip to another domainer looking to expand their catalog.

Some lucky small-catalog domainers may have one or two names that may strike a chord with an end user.


But so be the market of domainers. Following the magnates' sales examples while chasing a dream.


It IS a tough biz.

 

[DN BROKER]

97.96% of Domainers own and trade reg fee domains names! The rest of the 2% are the big players!

 

[hugegrowth]

Making money isn't easy, otherwise everyone would be rich.

It isn't coincidence that you keep seeing the same names in the DNjournal sales report every week, making the big sales.

The internet is still growing, so if you're in domaining you're in a sector of the economy that is expanding. There are a lot of choices to make in domaining and developing domain names, if you make enough good moves you will be more successful than others. There are lots of examples out there about what kind of domains sell more often. Paring down a portfolio to higher quality domains and spending time developing them into quality information sites will likely increase revenues/profits while you wait for sales.

I don't think it is purely a numbers game, there is a talent to knowing the right extensions and keywords to register. And sometimes it is just luck.

One good thing about domaining is you can do it in your spare time at home, on your own schedule, and the potential is there to earn good money. Many of us discovered domaining after already being in a totally different career, and can't go full time because we wouldn't be able to replace our regular job income quickly enough.

I've earned more each year than I've spent with domains/internet, but last year was one of my lowest profit years, and this year isn't looking much better so far. Still, I'm paring down my portfolio (cutting costs) and focusing more on my earning domains. You never know when a good sale or two will come, but I'd really prefer to develop a high traffic, quality site so it doesn't matter if I make a domain sale or not. If you truly believe you have quality names in your portfolio you have to go with your gut and hang in there, believing the sales will come.

 

[Vincent]

It's extremely difficult to make money in domains compared to the past. There are some exceptions for those who spend vast amounts of time buying and flipping low cost domains but if you are trying to make significant money living off domains and do not want to spend 80-hrs or so a week online for low pay hourly income this business is quite unlikely to be a good one for you.

Exceptions who do very well are people like Michael Mann but the reason for their success is because he and others like him have 100s of 1000s of domains (ranging all the way up to nearly a million domains) so they make tons of money because its a big numbers game which is not necessarily based on domain or portfolio value. Let's assume 1% of the domains sell per year (which I think is possible but possibly even high based on mostly passive sales). If you own say 500,000 names that means you get 5,000 sales a year. Let's also assume the average sale price is say $2,000. That results in an income of $10,000,000 less renewal fees & costs of say $10 a name, adding up to roughly $5,000,000-year expenses, which equals $5,000,000 net profit a year (if my math is right), plus extra income from parking (but with poor PPC payouts that may not be much extra).

However, most members here own a few 100 up to maybe 2,000 names. Using 2,000 as an example but the same percentages and numbers result in just 20 sales adding up to $40,000 sales minus expenses of about $20,000 or profits of $20,000., plus ppc revenue too (but unlikely to be a lot extra). With just 200 domains you would only make about 4k using the same ratios. The only good way to sell more than say 1% a year would be to lower your asking price a lot but the problem then becomes you would need to spend much more time in the business working hard trying to harvest more names and replacing the flipped names with new inventory. Since I have never done any flipping I have also rarely sold names to subsidize income. My names are always price based on intrinsic value and not flipped prices which is why my sales are not often.

All of the above makes it a real tough business and is a reason I have reduced my inventory by about 1,000 names with 100's more taken off auto renewal. In fact, I have even let drop dozens of poor stats old names reg'd in the 1990s and rarely if ever buy or reg names anymore. The domain business outlook is now negative to the point I may never reach post 6,000 at DNF.

David,
Thanks for the post. Your post give domainers the real perspective of reality. I started a thread once, maybe it was in the wrong forum. I asked how many domains domainers sell last month. How many they bought. I had not a single response. I wanted to find out how many of us make money and how many lost.

From your post, we expect to see more people losing money. The thing is a lot of posts and news articles are about big sales and big profit. When I read dnjournal, I like many other domainers, dream of selling one of those names. After a long while, I come to realize the hypes that don't represent the reality of domaining. I still think it's good still. It is those sales motivates people to hope and work. Sure, those who are not motivate and or do not stay motivated will get disappointed and quit domaining (the majority). The few that continue work extra hard will go on to their way to success. Those who dropped out of the race will always be replaced by the new comers. The newcomers are the most gullible one. I was one of them when I first started. I still I'm today.

Except I'm a little wiser now. Hopefully my learned wisdom will sustain my domaining path. Drop more. Buy less. Quality over Quantity. Buy from domainers. Never sell to domaners. Be patient. Thanks Adam for that lesson.

Why do blogs brag how lucrative domaining is? Books tell you how rich you can get? I only admire the blogs that really speak the truth. The truth is it's possible to make money in domaining, but it is a lot harder and now its tough for starter. Almost impossible, but still possible. Will you do the undoable? I own undoable.com.

How about this? Turn $9 into $1 million, or even $9 million. Yes, you can do it! Get rich quick domaining. LOL

 

[brian1234]

The domain business outlook is now negative to the point I may never reach post 6,000 at DNF.

I'm sorry, but you're just whining...

I have seen many of your posts, and they seem to follow
a similar path of negativity.

 

[Biggie]

i would put it in different way than brian1234, but when you start off using MM as a reference, then you're bound to feel dismal in comparison.


start comparing yourself to those who don't have what you have, then the picture becomes brighter....and thus the future

 

[Jeroen]

I appreciate David for publishing a critical post on domaining. Whether or not it's applicable to most domainers, I don't know but I too would like to know the real facts and numbers. I agree though, it's tough!

If you're interested in numbers, these are mine just serving as a reference.

I registered with DNF in 2006 when I bought my first domain name. However, I would say that domaining became a serious activity since last year when my amount of freelance jobs started to decline so i could spend more time online.

-At any time i owned not more than roughly 200 names. Pre-DNF college (mid 2011), never more than 30 names.
-I initiated more effort to contact endusers by 4th quarter of 2011. Since beginning of this year until today sold 8 domain names to endusers for an average net sale price (-commission) of $716. That's roughly 4% of my portfolio.
-Those 8 domains comprise 3 handregged names (one waiting for payment), 3 aftermarket domains costing less than $100 and 2 domains bought in the aftermarket in the $xxx range.
-I'm virtually full time online though not always as efficient as I would like to.

I realize this is not sufficient to sustain a living but I guess i'll have to start somewhere.
I think many domainers do a lot better than I do and perhaps some do worse. I'm not planning to give up though, past 2 months where the best ever both in 'volume' (....ok really just a handful) and revenue.

 

[katherine]

Personally I'm bullish on domain names. For one simple reason: I'm doing better every year.
The Internet is far from saturated, there is still room for growth... lots of growth.
Domain names are strategic assets, strong domain names are always in demand and becoming more valuable. Increasing the number of extensions (that nobody asked for) is not going to change that.

Domaining is a true arbitrage game where you have to adapt constantly, you have to keep the portfolio slim, streamline your methods and find new ways around the competition...

A decade ago you could do well with hand regged domains but not any more.
There are still good prerelease domains slipping through the cracks. Also, you have to be proactive and reach out holders of domain names. Tedious but from time to time there is a good deal to be had.

Disclaimer: I'm not currently making a living on domains.
Domain sales are unpredictable unless you run a well-oiled operation like MM or FS then it becomes a numbers game. You can still approach end users proactively but you are in a begging position and losing the advantage except for the stellar domains where you can drive end users into a bidding war.

Correct me if I'm wrong, but most domainers are hobbyists, they are simply not dedicated and funded like real business ventures with business plans etc. Obviously there is no comparison with MM.
You need money to make money and while the barriers to entry are low, regfee domains are not going to make you rich. Now you must be an investor, being a gold digger used to be viable back but that was then...

Be strong David

 

[Mark Talbot]

I agree with almost everyone here.

You might liken the industry to software.
Everybody see's Bill Gates.
In the analogy, domainers can buy or reg their own unique 'software package' for resale.
But it isnt likely you will sell to the level of Microsoft, or MM (out of analogy).

Yes I myself am bullish too, but only long term, and I still maintain that the names I own for the most part have purpose for me and not just resale.
For this reason I can wait years past the flurry of $200 offers or 'what do want for' domainer offers that come and go from time to time.

But the 'promise' is no different than mining for gold in dirt.
The payoff may happen, maybe not, but you have to dig, and hafta be patient.
And it may get old and tiring.

Which is why I would recommend ditching the scrub land and keeping the good land for the long term.

Someone may want to build on it eventually.

 

[hugegrowth]

I think it's the same for any industry, pay attention to what the people at the top and the successful people are doing, and try to emulate them with the resources you have. Find a mentor in your industry who is more successful than you, and copy what they do. I've never personally met any top domainers like Frank Schilling but I read everything I can on him. The past is the past and we can't go back 10-15 years and take advantage of the time period some of them did. But you can still focus on quality keyword domains, you can focus on the best extensions, you can find deals if you hunt around. But it takes more than a few weeks or months, and you have to be willing to wait out slow periods. There are some domainers who started 'late' and through flipping or developping have taken their initial stake and multiplied it many times, without putting more money in. At the end of the day you have to enjoy doing this and be making some profit on an annual basis. If you've been in domaining many years and are only losing money, then it's time for a serious re-evaluation.

 

[Blue Wren]

I appreciate David for publishing a critical post on domaining. Whether or not it's applicable to most domainers, I don't know but I too would like to know the real facts and numbers. I agree though, it's tough!

If you're interested in numbers, these are mine just serving as a reference.

I registered with DNF in 2006 when I bought my first domain name. However, I would say that domaining became a serious activity since last year when my amount of freelance jobs started to decline so i could spend more time online.

-At any time i owned not more than roughly 200 names. Pre-DNF college (mid 2011), never more than 30 names.
-I initiated more effort to contact endusers by 4th quarter of 2011. Since beginning of this year until today sold 8 domain names to endusers for an average net sale price (-commission) of $716. That's roughly 4% of my portfolio.
-Those 8 domains comprise 3 handregged names (one waiting for payment), 3 aftermarket domains costing less than $100 and 2 domains bought in the aftermarket in the $xxx range.
-I'm virtually full time online though not always as efficient as I would like to.

I realize this is not sufficient to sustain a living but I guess i'll have to start somewhere.
I think many domainers do a lot better than I do and perhaps some do worse. I'm not planning to give up though, past 2 months where the best ever both in 'volume' (....ok really just a handful) and revenue.

Hi Jeroen

Thank you for your honesty in what is currently your domaining status. It does help myself (and I'm sure others). Sort of like a benchmark to measure ourselves against.
Brave I think, so thank you.

 

[DomainMagnate]

Is Mike Mann actually profitable? He keeps posting about new sales on FB, but with the amount of domains he buys I don't even know if it's enough to pay for all the renewals.

Domaining is definitely not what it used to be. I guess I sortof quit domaining a few years ago, now all my income comes from sites and very little from domain sales. I reduced my portfolio drastically and about half the domains I own now are developed (to some degree) sites that bring some revenue. It makes a decent living though, so I'm not complaining, but domain sales have become quite rare, even though I have many high quality names (no hand regs, all generic .com's).

The internet business is changing quickly, gotta be able to adapt and recognize new opportunities. Old ways become obsolete and profit margins shrink quickly. There is still good money to be made in domaining, even for new comers, but it really requires a lot of work, expertise and risk and my guess is it's only going to get tougher as the industry consolidates.

Frankly I don't see many people in domaining who are successful these days (that is making a good full time income from it), sure there are a few, but they work real hard and are really good at what they do.

 

[Onward]

Assuming you are not into low-priced flipping and rely on intrinsic value passive sales (as I do), what percentage of your portfolio sold in the past 12-months?

Many names in my portfolio I will not sell as they are related to my niche...most of my other non niche domains are names I pick up for a reason with a future dev or partnership plan...but will consider selling some of those. Of the latter names my percentage is much higher than 1% and more like 7%. Would be a lot higher than that if I accepted more >2k offers (I get a lot of inquiries in the names I select). Most of the names in this category (Non niche names for dev) I buy for $9-$99.

 

[Jeroen]

@Blue Wren, thanks. Very few share numbers which is a pity (but understandable) because a lot can be learned.