domains Are Your Brandables Profitable?

The .com is 4,488 at domainSales......

I dont even know my domains.. haha
it is EZrecord.net (no "s")

bonin said:

Our conversation made me think and I found Favoryo .com

Аccording to "Оxford dictionaries" yo is used as a greeting....

For those who seek similar domains with the root ( favor ) be happy.... you can find available domains

Thanks to Keith DeBoer and hookbox

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Not a good name in my opinion. Favoryo does not flow very well at all. Sometimes you can take a full root word and add a suffix and it sounds good but that doesn't mean you should. Some will sell some won't. YO may mean greeting in the Oxford dictionary but it's more meaningful as slang for Hello or if you get really technical it's a little bit ghetto. Yo What's Up! Yo is probably way at the bottom of the list of suffixes you should add to any name.

Thanks again hookbox :D It is better when there is someone to guide us

And how do you measure profitability?

hookbox said:

Not a good name in my opinion. Favoryo does not flow very well at all. Sometimes you can take a full root word and add a suffix and it sounds good but that doesn't mean you should. Some will sell some won't. YO may mean greeting in the Oxford dictionary but it's more meaningful as slang for Hello or if you get really technical it's a little bit ghetto. Yo What's Up! Yo is probably way at the bottom of the list of suffixes you should add to any name.

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I agree with Hookbox's astute comments. Startups want to sound fresh and with the times but in my experience won't use slang or fad-like terms in the brands.

Recons.Com said:

And how do you measure profitability?

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Not sure what you mean.

You've titled the article "Are Your Brandables Profitable?".

Hence the question, how do you measure the profitability? For example, if somebody bought a piece of land for $1M and haven't sold it for 10 years does that make it unprofitable investment?

Recons.Com said:

You've titled the article "Are Your Brandables Profitable?".

Hence the question, how do you measure the profitability? For example, if somebody bought a piece of land for $1M and haven't sold it for 10 years does that make it unprofitable investment?

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Profit means income minus expenses. If you haven't sold the item then the equation cannot be completed. The profitability of the purchase remains in question. It all depends on the sale price. That's where the rubber meets the road.

Thank you for your detailed response.

The problem here is that you still have to look at it as a portfolio and its profitability of a subgroup of the portfolio.

So, if you bought brandables for cheap, let's say 100 of them at $50 each, for total of $5,000. And in 2 years you sold 5 of them at $500 average for total of $2,500. In two years you spent around 100 domains x $10 x 2 years = $2,000 for renewals. Now, you still have 96 domains that you have spent $4,800 for and $500 income after renewals.

What do you assume at this point? That you'll sell all 96 at $500 plus appreciation over years average and that $500 is your profit or that the four you sold were the attractive ones and now you hold trash and you made a loss of $4,300 actually?

can't edit for some reason. last parts should read:

" Now, you still have 95 domains that you have spent $4,750 for and $500 income after renewals.

What do you assume at this point? That you'll sell all 95 at $500 plus appreciation over years average and that $500 is your profit or that the five you sold were the attractive ones and now you hold trash and you made a loss of $4,250 actually?"

The profitability of a financial operation is best measured by the IRR (internal rate of return) indicator. It represents a fictitious interest rate that a bank would serve you if you gave them your negative cash flow and you would receive the positive cash flow from them.

In order to calculate an IRR, you must make assumptions on your future cash flow until the end if the financial investment. You then need to calculate the IRR and for that MSExcel is the easiest tool.

For the sake of example, let's assume you will sell 5 extra domains at 500$ in year 3 and 5 more in year 4. 50% of the residue might be sold at 50$ and the rest would be sold at a distressed price price of 10$.


Your positive cash flow is:

year1: 0
year2:2500
year3:2500
year4:2500 +(100-15)/2x50 + (100-15)/2x10

Your negative cash flows are:

year1: 100x50 = 5000
year2: -95x10$ renewal
year3: -90x10$ renewals
year4: -85x10 renewals


Your net cash flow is
year1= -5000
year2: +1550
year3: +1600
year4: +5475

With these numbers, you get an IRR of 26%/year

When doing profitability calculations, the most interesting is to make sensitivity calculations. All your business decisions can be simulated with these calculations to maximize the IRR. The method is called: 'Business plan as a decision making tool'

Example: you decide to keep your domains for an extra year with about the same sales expectations


The numbers become

year1: 0 -5000 = -5000
year2:2500 -95x10 = 1550
year3:2500 - 90x10 =1600
year4:2500 - 80x10 = 1700
year5:2500 +(100-20)/2x50 + (100-25)/2x10 = 4875

IRR: 26%

With these new values, we are somehow wasting our time...Better get rid of the residue right away (unless you have good reasons to believe you have a big winner in your portfolio).

Aramyus,

you are making lots of assumptions there, including that you'll be able to sell the remaining domains in year 4 at cost. And that if you sold 5 in year one, you'll sell 5 in next years as well. Domain names are not normally a commodity, especially so called "brandables", differing from some other categories that have "floors".

Yes, with this happy thinking one can show 20+% annual return on investment. But what if the first 5-10 were actually the only "worthy" ones and you won't get probably offers for rest and nobody will want them at cost as well?

Recons.Com said:

Aramyus,

you are making lots of assumptions there, including that you'll be able to sell the remaining domains in year 4 at cost. And that if you sold 5 in year one, you'll sell 5 in next years as well. Domain names are not normally a commodity, especially so called "brandables", differing from some other categories that have "floors".

Yes, with this happy thinking one can show 20+% annual return on investment. But what if the first 5-10 were actually the only "worthy" ones and you won't get probably offers for rest and nobody will want them at cost as well?

Click to expand...

So now I see your question. You are not asking about individual profitability but about portfolio profitability. I can't answer your question but here's a few things you should know about domaining:

1. It's a very speculative industry.
2. It's unregulated and with a few exceptions domains have no standardized valuations or pricing.
   
3. 95% of domainers have day jobs.
   
4. All domainers start out buying junk. Many renew their junk for years. More than a few give up, let their domains expire and leave the industry with a loss.
   
5. Portfolio and money management are key to turning a profit. Only a small portion of your portfolio is going to sell to an end user in your life time. If you are not careful renewals will eat up all your profits.
   
6. Everyone has their own business plan and methodology, based on trial and error or advice from industry veterans.
   
7. The idea that there is easy money in domaining is a huge myth. Like any industry there is a big learning curve and being profitable requires hard work, good money management and business savvy.

Thank you. Of course, I do know most of that and have gone through some of the motions, including wasting money on .mobi. Which was a good thing, because now I know not to waste on all new tlds.
My point was that your title question is a bit unanswerable, because a) yes, the ones you actually sold will look profitable; b) no, if you look at it as portfolio of brandables, you will not know if it was a profitable investment until either you sell a lot of them well above your costs or the market has gone up so much and there are now more "floors" in place adding to liquidity and predictability/ease of assessment.

I don't now how others evaluate their portfolio but I keep it simple and stupid.

I take my total income and subtract my total expenses, including renewals, commissions, listing fees, website etc , and that is my profit or loss YTD. If it's a loss I make adjustments ie I sell some at wholesale or let some domains expire or redouble my efforts to find end users, adjust my buying habits and on and on. The only value I assign my remaining portfolio is what I paid for it. I don't assume any value above my cost until I have made a sale. To do otherwise is foolish in my opinion. But others may disagree.

So if you bought LLL.com 5 years ago for $5,000, you still assign that value to it? And otherwise, it would be "foolish"?

My prior comments were in the context of my blog which is about brandables. You might try starting a thread about 4Ls and portfolio management. I'm sure there are lots of experienced domainers here that would be happy to discuss the topic with you. Good luck!

In general, a helpful post, Keith. Thank you!

However, when you say:

Keith DeBoer said:

You make your money on the buy, not on the sale.

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you seems to be ignoring the fact that particularly in brandables, we make money on the sale - as they are mostly handregs.

Recons.Com said:

you are making lots of assumptions there

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You are quite right, and this applies to ALL possible investments, even when buying a home or opening a saving account. The beauty of financial calculations is the possibility to run a lot of 'what if' situations and decide what is realistic or not.

The logical conclusion from Keith's guidelines is to invest an amount of money you can afford to loose (say: 500$ for instance) and manage your portfolio to have a positive cash flow every year.

80-20 said:

In general, a helpful post, Keith. Thank you!

However, when you say:

you seems to be ignoring the fact that particularly in brandables, we make money on the sale - as they are mostly handregs.

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I understand your point. But what I was saying is your brandable has little or no chance of selling if you don't buy wisely. Cheers!

Each person who has liked this article has received a brandable domain name idea that is available for hand registration. I gave each person 12 hours to register the domain before I published them here. Here are the names I sent to individual readers yesterday.

One man's trash is another man's (or woman's) treasure. Take a look and see if there is anything that looks good to you and if so, hand reg it. Good luck!

All are dot coms:
ForUpgrade
LifestyleHut
LightRole
MailPivot
MessageSquad
PasStyle
PivotPush
SpecScreen
SpringBeyond
StyleNotch
TapBloom
TheraFox
TinyFocus
TinyHatch
TurboLotus
VioLend

Keith DeBoer said:

Each person who has liked this article has received a brandable domain name idea that is available for hand registration. I gave each person 12 hours to register the domain before I published them here. Here are the names I sent to individual readers yesterday.

One man's trash is another man's (or woman's) treasure. Take a look and see if there is anything that looks good to you and if so, hand reg it. Good luck!

All are dot coms:
ForUpgrade
LifestyleHut
LightRole
MailPivot
MessageSquad
PasStyle
PivotPush
SpecScreen
SpringBeyond
StyleNotch
TapBloom
TheraFox
TinyFocus
TinyHatch
TurboLotus
VioLend

Click to expand...

Correction:
PaxStyle (not PasStyle)

Sorry, one last question. How do you come up with those?
I usually don't go for that kind of brandables. I do more like a good word plus a made up suffix, like limoly.com, marketcy.com, diplomaly.com etc.

Recons.Com said:

Sorry, one last question. How do you come up with those?
I usually don't go for that kind of brandables. I do more like a good word plus a made up suffix, like limoly.com, marketcy.com, diplomaly.com etc.

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You might get some ideas from this list of the 'brandable' domains that sold yesterday according to NameBio:
AceCam.com $760
BabyDo.com $275
BeautySources.com $450
BidSauce.com $119
Borea.com $1650
BotScore.com $2000
BrainCode.com $305
Entellect.com $395
ExportWise.com $104
FashionChoice.com $800
FashionUs.com $207
FirstGift.com $495
Formon.com $308
Gelex.com $210
MagneticHealth.com $406
PenPan.com $154
RednBlue.com $184
RedYarn.com $251
ReverseAlert.com $121
SharedHost.com $1500
SnapBasic.com $108
SnapCustom.com $108
SnapNote.com $2275
SnapPlus.com $117
SprintExpress.com $410
StoneHouse.com $3988
Tarlow.com $3291
TinyRecords.com $101
TouTou.com $1319
VastSolutions.com $2700
Vrsale.com $260