Dan.com
NameSilo
Many skills can help you make better decisions as a domain name investor. One of them is quantitative decision making. While probability can never firmly tell you what to do, it can help make better decisions in some cases.

Applied probability can be used to help answer questions such as how many domains will I probably sell this year, should this domain name be renewed, and whether it is better to renew names in advance of a forthcoming price increase.

Basic Ideas

A probability is a numerical estimate of the chance of something happening. For example, if you roll a normal dice, unless it is rigged in some way, the probability of any particular number being rolled 1 chance in 6.

Normally we express probability on a scale from 0 to 1, with 0 meaning no chance that result will happen, and 1 meaning it is sure to happen. In the dice example, the probability of each number would be about 0.167.

Sometimes probabilities are expressed as percentages, from 0 to 100%, rather than from 0 to 1.

If we go back to the dice example, if we roll it twice, the odds of getting 2 followed by another 2 will be about (1/6)*(1/6), or one chance in 36. That is because the events, for a fair dice, are independent.

It is important to realize that probabilities are not always independent though. For example, the probability of a domain name in a certain sector selling, and the probability of a high sales price, are probably related. If demand for a niche or sector goes up, the chance of a name selling and its price, both increase.

A probability value may change with time. For example, the probability of a metaverse domain name selling 10 years ago was probably less than this year. Some sectors that were hot a few years ago are much less active in domain name sales now.

If you want to read more about probability, the Wikipedia entry on probability is well written.

The Sell-Through Rate, STR

The sell-through rate (STR). STR is simply the number of sales during a 12 month period divided by the average number of names in your portfolio during that year.
IMAGE-STR.png

If you have a substantial portfolio, and have been investing in domain names for a number of years, you can calculate your annual sell-through rate (STR) each year.

Many include only sales above some price point in calculating their STR.

EXAMPLE – STR Calculation:
Let’s say someone sets $600 as minimum price for their STR calculation. If they sold 5 domain names above that price during the 12 month period, from a portfolio that ranged from 400 to 600 domain names during the year, averaging 500 names, then the annual STR = 5/500 or 0.01 which is 1%.​

The STR is not a probability, but the probability of selling a domain name during a year is expected to be similar to your annual STR, unless something has changed in your domain investing approach.

As a new investor, you will not have an established personal STR from records from previous years. One approach is to use the domain name selling universe, making the rough assumption that your performance might be equal to the average of all names listed for sale. That is relatively easy to calculate as shown below.

EXAMPLE – Industry-Wide STR:
Let’s look just at .com domain names and the last 5 years to be representative of current conditions. I am going to set the minimum price at $1000 and the maximum at $25,000. See below for a justification on using a maximum.​
With the NameBio interface you can readily find the number of sales over the 60-month period, 75,400, and the average price, $3061. But not all sales are in NameBio, since sales at several popular venues are not generally included. If we assume that 25% of the sales of $1000 plus are in NameBio, we can apply an adjustment factor of 4x, making an estimate of 67,860 sales per year.​
Using Dofo Advanced search, setting to only .com and BIN prices of $1000 to $25,000, there were 11,936,067 domain names listed for sale. But not every domain for sale gets in Dofo listings, and also there are some for sale at make offer, or higher prices, that will end up selling within our price range. On the other hand, there are some old listings still on marketplaces that are not truly for sale. Considering all these factors, I applied a net 1.3x correction factor, obtaining 15,516,887 domain names for sale.​
Now we can calculate the industry-wide annual .com STR for sales of $1000 to $25,000 = 67,860 / 15,516,887 = 0.0044 = 0.44%. The average sales price was $3061.

This does not mean that will be your STR. Perhaps you have acquired very strong names, or use effective promotion of your names, and achieve a higher STR. On the other hand, many starting out in domain investing probably have a lower STR than the average. Your personal STR may be higher or lower than the industry average.

Why did I introduce the upper cutoff of $25,000? It has almost no impact at all on the STR, but the cutoff upper price does impact the average price significantly. Those 6-figure and up sales have a huge impact on the average price. But most domain investors, particularly those just starting out, may never have a sale in 6-figures. In fact, many will not even have domain names priced above $25,000, so I thought it best to introduce an upper cutoff price to obtain a more reasonable average sales price.

How Many Domains Will I Probably Sell This Year?

Some promote domain name investing as easy and fast. This leads to unreasonable expectations that names will sell for good return on investment quickly. The reality, for almost all domain name investors, is far different.

Let’s look at it numerically. If you have, say 50 domain names, how many sales can you expect in your first year? It is a pretty easy calculation, simply the probability that any one name sells during a 12 year period times the size of your portfolio.
IMAGE-AnnualSales.png

Since you don’t have an established personal STR yet, I will assume that you are ‘average’ and the probability of one of your names selling is equal to the industry-wide STR calculated above, 0.44%.

EXAMPLE How Many Sales From 50 Name Portfolio?
Number of sales in 12 months = probability of sale for one name x number of domain names in portfolio.​
Number of annual sales = 0.0044 x 50 = 0.21​
This means an investor with a 50 name ‘average’ .com portfolio will have a bit more than 1 chance in 5 of selling a name at the end of one full year, or will, on average, sell one name in a 5 year period.​

Let me stress again this is the industry-wide average number. If there is an important message, it is that you must strive to be better than average to find success in domain name investing. Also, unless you are very lucky, a lot of patience will be needed. It is hard waiting those many months before your first sale.

It should be stressed that while it is interesting to see how your STR compares with the industry average, the true measure of success if whether you are profitable. Some have a personal STR well below the average, but sell at great prices and are profitable. Others will sell at a higher rate than the industry average STR, but at prices, or with acquisition costs, that make them overall unprofitable.

Should I Renew This Domain Name?

We all face the issue of which domain names to renew. If we think about the question in a quantitative fashion, the product of the annual probability of sale for the domain name times the expected net return from a sale of that domain name should be higher than the annual costs to hold the domain name in order for it to make sense to renew.
IMAGEHoldName.png

EXAMPLE – Should I Renew This Name?
Let’s say the probability of sale of a particular domain name at 0.25%, a bit less than the industry average. If we estimate the net return from a sale, if it happens, based on pricing, expected commission, acquisition cost, etc., would be $1500.​
0.0025 x $1500 = $3.75​
Therefore it would not make sense to renew this particular domain name, assuming that the renewal fee was $9.00.​

Note that the net return is your gross sales price minus commissions and other costs, and minus your acquisition cost.

I have not included parking revenue in the calculation. If your domain name earns enough parking revenue to cover renewal costs it of course justifies keeping.

If you have a large portfolio, and have been successful in domaining for some years, you can estimate the values for a domain name with more confidence than if you are just starting out.

I covered some factors to consider when deciding to renew a domain name in How To Decide What Domain Names To Renew.

Renew In Advance?

Verisign is raising the wholesale price on .com by another 7% at the end of this month. Some investors are renewing domain names in advance of the price increase. Others argue that if the name sells that is essentially lost money, and only renew near expiration.

Let’s quantitatively look at the situation using the annual probability of sale of the name, p. If the name does not sell before the period when the renewal kicks in, you have saved the difference between the current and increased renewal rate. On average, the saving is p times the cost savings. However, there is a chance that the name will sell quickly, and you have wasted the amount spent. In this case, we multiply the current renewal times (1-p) where p has been expressed on the usual 0 to 1 scale. I summarize the two calculations below.
Image-RenewEarly.png

EXAMPLE – Renew In Advance Of Price Increase
You hold a .com name that you have decided you will want to keep for more than one year if it does not sell. To get a representative cost, I took the 5th best current .com renewal rate at TLD-list, which turned out to be $9.13. With a 7% increase, we expect the new retail renewal to be about $9.77.​
Let’s say it is a good name, and you think the probability of sale in any one year is 10%, much better than the industry average. So there is 1 chance in 10 the name sells during the next year before you need that renewal you did in advance. If we multiply $9.13 x 0.10 = $0.91 that would be the probabilistic loss.​
Now let’s look at what probability suggests we save by renewing early. There is a probability of 0.90 that we will need to renew the domain name because it did not sell. We save $0.64 by renewing in advance, so that would suggest a $0.64 x 0.90 = $0.58.​
Since the saving, for these numbers, is less than the $0.91 calculated earlier, for this high probability of sale domain name it does not make sense to renew in advance.​
However, if instead we look at a more typical annual probability of sale, say 1%, the results are different. In this case $9.13 x 0.01 = $0.09 is the average loss by renewing names like this in advance. The expected average saving is now $0.64 x 0.99 = $0.64. Renewing in advance is a no-brainer in this case, if we have the funds and we are sure we want to keep it long term.​

Note this line of thinking does not apply to domain names that you do not feel confident are high enough quality to hold long-term.

Also, even when the calculation shows we save money, on average, by renewing in advance of price increase, only you can say if you have the cashflow to act on it. Even if you do have the funds, you need to ask if this is the best use of money you have. The funds you put into advance renewals will not be available for increasing your portfolio size through acquisitions, which might yield a better return.

Final Thoughts

There are lots of other examples of ways to apply probability ideas to domain name investing decisions.

For example, does it make sense to hold domain names with high premium renewal rates?

What about transferring a name to save on renewal cost, which may make the name not open to fast transfer networks for a period of time, depending on registrar. Do the savings justify the period when your sales chance will be decreased?

An interesting case is for .co and some new extensions where you can get the first year at a discounted rate compared to the regular renewal. The probability argument for this case may suggest the name is worthwhile to hold for one year, but not long term at the higher annual cost.

Perhaps the most important case is using probability estimates to decide whether to accept an offer, or hold out for a higher price, but with some chance the name will never sell.

What about a name you have decided to drop? Does probability suggest it is better to keep the domain name listed at retail price right to the end, or to liquidate for some return?

I may take up some of these other applications in a future article.

I hope you will share interesting ways you use quantitative thinking in your domain name decisions.
 
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inforg

Top Contributor
Impact
1,042
@redemo
You realize you are on a domaining forum right? There are plenty of webmaster forums for folks that want to develop names.

I have done development off and on over the years and doing some right now, so I'm certainly a proponent of it, but it comes with it's own pitfalls as well.

Domain parking is rough and super competitive to get names that will pay you back maybe in the next 12-24 months.

10 minutes a day is over 60 hours a year - to make $100? I'd rather lose a hundred and keep my time.

Buy and hold domaining takes almost no time and I have literally gone years where I just pay renewals and collect sales money.

It doesn't really matter which you prefer, most of the folks coming in here think they found a get rich quick scheme. Neither domaining nor development is going to work for these folks.

It is very difficult to keep up with more than a handful of developed websites and while development has gotten easier since the HTML days, there is still a pretty steep learning curve.
 
Impact
38,377
Sorry but that's simply untrue mate.
LOL. Of course it is true.

Every website has a different budget.

When you don't know what budget someone is putting towards development, it is impossible to calculate the odds of making a profit.

If someone is spending $20K to develop PowerCleaners.info with more information about Power Cleaners, it is probably safe to say they are not turning a profit.

Unless you have the budget, niche, content, and many other factors it is impossible to calculate if a profit via development is likely or not.

Brad
 
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Impact
38,377
A properly developed 10 dollar domain name that doesn't earn 100 each year? It's 25 cents per day. Come on it's not rocket science. Set up takes what two hours. Ten or twenty minutes updating each day if that. I'm convince domainers are just addicted to the rush of a sell, the gambler's mindset. It's not really about creating a sustainable business model which can be repeated.

Well if that is so easy, surely you are making many millions of dollars a year with mini-sites.
You could easily have hundreds (or thousands) of people working for you cranking out these sites if it is so easy to scale.

I know if I had a surefire way to turn $10 and (2) hours of labor into $100 on a massive scale, I would surely do it.

Nothing is that linear. Sorry.

Brad
 
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topdom

Top Contributor
Impact
1,512
We need to think in a more complicated way. I mean, is the buyer a middleman, a registrar. Which marketplace will try to prevent a sale, wait until domain expires if there is lead, try to get more than our buy now price from the buyer and won't give us any part of the difference; will they insert themselves as buyer and do arbitrage (worse than shillbidding). what can we do to block their ugly games, are their games systematic or depend on the domain and the buyer...
All my domains have potential to sell for 4 figures, but they won't because all marketplaces are suckers, dishonest before payment, honest after payment but this much honesty is not enough. Epik's idea: you are scammed anyway so, why are you angry if we are that s..r, you could have sold this domain for higher, so we want the difference etc and you don't deserve it because your asking price is low already, and if it doesn't sell because of us it is your loss. All marketplaces are unethical obviously and intentionally and noone complains about them. They need class action lawsuits, because it is not easy to prove something using a single sale, buyers are ignorant.
conclusion: cheating can be allowed if rules are fair.
 
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redemo

Mug RuithTop Contributor
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Well if that is so easy, surely you are making many millions of dollars a year with mini-sites.
You could easily have hundreds (or thousands) of people working for you cranking out these sites if it is so easy to scale.
You're a super cool dude but I can't let this slide. Jumping from making a profit ti making millions of dollars a year is not a logical argument. I make a PROFIT on every domain name that I fully develop. I never said anything about having staff or having hundreds of sites. These are your mushroom-induced elaborations, my good man. What I'm saying is for an average domainer to turn a profit on an average domain, then the best way is by far to domain name development. It's not even really an argument, but you do throw some good points into the mix so I shall entertain it.
I know if I had a surefire way to turn $10 and (2) hours of labor into $100 on a massive scale, I would surely do it.
You can turn 10 dollars into 100 dollars with every single registration, through domain name development. As I said, it's like what 30 cents per day ad revenue. If this is your side hustle and not your fulltime job then your time can be worth whatever much you want.
Nothing is that linear. Sorry.
Yes it is, don't be sorry, be happy (and be profitable).
 

redemo

Mug RuithTop Contributor
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LOL. Of course it is true.
Nah mate, cool story though. You get a domain name, right. Step one. Next you build a website on your domain name which ok then let's say takes you best part of a day. Fine. You write some original copy, ten quick-fire articles maybe you even pay for them, pre-schedule to get posted out every three days. One month later your website is all looking good, you poke out some banners here, some links there, sit back and chill-chill like a ragamuffin. You're getting 30 cents every day or more. You're all good to make PROFIT from your domain name purchase. It's slightly more complicated than that, but in essence it's actually very simple.
Every website has a different budget.
True. So does every sale.
When you don't know what budget someone is putting towards development, it is impossible to calculate the odds of making a profit.
So you earmark a budget. Next...
If someone is spending $20K to develop PowerCleaners.info with more information about Power Cleaners, it is probably safe to say they are not turning a profit.
Not necessarily true, but I wouldn't spend 20000 to develop a website.
Unless you have the budget, niche, content, and many other factors it is impossible to calculate if a profit via development is likely or not.
You don't need any skills to make a calculation except English and mathematics.
 

redemo

Mug RuithTop Contributor
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You realize you are on a domaining forum right? There are plenty of webmaster forums for folks that want to develop names.
Domaining includes development, or are you disagreeing with the industry definition of domaining? Webmaster forums are for development not for making money. This is a domain name forum which covers all facets of turning a profit from domaining. But I get that most people are selling domain names and they don't make any money from domainers who develop their domain names. I get that. It's taken a ridiculously long time period to figure it out, but I understand why the hostility now.
I have done development off and on over the years and doing some right now, so I'm certainly a proponent of it, but it comes with it's own pitfalls as well.
As does driving a car on a public highway, or swimming in the sea.
Domain parking is rough and super competitive to get names that will pay you back maybe in the next 12-24 months
I disagree. The main problem is the laziness of domainers not to do proper research. There are many ways to profit from domain name parking. Again, I'm not saying making millions just turning a profit on the original financial investment. However we must mitigate the value of one's time which is unique to each domainer.
10 minutes a day is over 60 hours a year - to make $100? I'd rather lose a hundred and keep my time.
I would rather make a profit, even it takes a while.
Buy and hold domaining takes almost no time and I have literally gone years where I just pay renewals and collect sales money.
You are clearly smarter than the chasing pack. Most domainers are not.
It doesn't really matter which you prefer, most of the folks coming in here think they found a get rich quick scheme. Neither domaining nor development is going to work for these folks.
Domain name development is part of domaining, they aren't mutually exclusive components.
It is very difficult to keep up with more than a handful of developed websites and while development has gotten easier since the HTML days, there is still a pretty steep learning curve.
Yes it is but you get faster with practise and time. Nobody should be losing money on domain name registrations. Nobody. It's the fact that sales are pushed so much which does the greatest harm to the industry's newbies.
 
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Nah mate, cool story though. You get a domain name, right. Step one. Next you build a website on your domain name which ok then let's say takes you best part of a day. Fine. You write some original copy, ten quick-fire articles maybe you even pay for them, pre-schedule to get posted out every three days. One month later your website is all looking good, you poke out some banners here, some links there, sit back and chill-chill like a ragamuffin. You're getting 30 cents every day or more. You're all good to make PROFIT from your domain name purchase. It's slightly more complicated than that, but in essence it's actually very simple.

I passively sold a domain on Afternic today for $7500. $6125 after fees.

That covers an awful of mini-sites.

I saved a lot of time and energy by just selling a domain for a nice profit instead of developing it.

Brad
 
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inforg

Top Contributor
Impact
1,042
@redemo
You should just share this money-making plan in detail with everyone if it is so great, easy, and guaranteed. Along with some proof that it works.

I'd be interested as well - I've spent 20+ years trying to crack the minisite code on how to make $100 per site each year with little time or money invested. I could scale that to 1000 sites and make some real money.

I am old. I used to build web pages on my AOL space, then Geocities, used to hand code my HTML and FTP to my hosting space. I did Joomla, scripts, Xsite, WordPress and so much other stuff I can't even remember 😁

Affiliate programs, paid to surf, directories, adsense, bing, auctions, job sites, hosting, reselling and e-commerce. In my heyday I earned about $2500 a month and spent hundreds of hours doing it. I was better off with a real job and just stuck with selling domains on the side since it was passive.

If you have revolutionized monetization of domain names, please enlighten us.
 

redemo

Mug RuithTop Contributor
Impact
2,422
I passively sold a domain on Afternic today for $7500. $6125 after fees.

That covers an awful of mini-sites.

I saved a lot of time and energy by just selling a domain for a nice profit instead of developing it.

Brad
And hey well done, I'm genuinely happy for you. But you obviously have developed a domain selling skill set which most domainers will never have. My message is for John Doe average domainer. They will NEVER sell a domain for anywhere near your 7500. Not a cat's chance in hell. Their best bet is to park or develop and MAYBE sell down the line. You are a pro at this and that puts you in the top tier 1%. Hats off!
 

redemo

Mug RuithTop Contributor
Impact
2,422
@redemo
You should just share this money-making plan in detail with everyone if it is so great, easy, and guaranteed. Along with some proof that it works.
It's not get-rich-quick, it's not become a millionaire in one year. It's just a smart way to make a profit from your domain names. Do internal N.P. search or Google search how to develop domain names for profit I think the Namepros thread comes in the top 10 Google results somewhere. It's easy IF you follow the instructions. So anybody going half way don't even bother. Nothing in life is guaranteed except death. But you are 99.999999% sure to make money from your banners and links with enough high grade traffic. It's the law of averages in marketing. There's thousands of examples. Name your area of interest?
I'd be interested as well - I've spent 20+ years trying to crack the minisite code on how to make $100 per site each year with little time or money invested. I could scale that to 1000 sites and make some real money.
I'm no expere but my notes are here
I am old. I used to build web pages on my AOL space, then Geocities, used to hand code my HTML and FTP to my hosting space. I did Joomla, scripts, Xsite, WordPress and so much other stuff I can't even remember 😁

Affiliate programs, paid to surf, directories, adsense, bing, auctions, job sites, hosting, reselling and e-commerce. In my heyday I earned about $2500 a month and spent hundreds of hours doing it. I was better off with a real job and just stuck with selling domains on the side since it was passive.
Have your real job and develop domain names on the site. All I'm saying is you need to be serious about it. Like brushing your teeth, like going to the gym, like arranging a holiday. If you are going to do it it needs to be constant and well organised. If you let it slip then your profits will slip. You can't then turn around and say it doesn't work. It works.
If you have revolutionized monetization of domain names, please enlighten us.
I haven't revolutionised anything. In fact nearly everything I have learnt has come from somebody else. Be it a seminar, a how-to guide, a vid, whatever. I learn so much on this forum too. Developing a domain name is 90% understanding the markets and the human psyche. Connecting the dots. Maintaining a harmonious rhythm in your design and content. Making people happy.
 

redemo

Mug RuithTop Contributor
Impact
2,422
There's a logical funnel to dev'd domain names. Less so parking, even less so selling.
 

redemo

Mug RuithTop Contributor
Impact
2,422
I know if I had a surefire way to turn $10 and (2) hours of labor into $100 on a massive scale, I would surely do it.
Dude you gotta choose your own path in life because if you follow the masses you'll end up with what the masses have. You need to go off the beaten track and start thinking for yourself. Developing domain names for profit really does work, it's such a simple and logical process I can't even believe more people aren't doing it. Domaining isn't just selling, and I'll say it until the day I die.
 

Recons.Com

Top Contributor
Impact
17,210
And hey well done, I'm genuinely happy for you. But you obviously have developed a domain selling skill set which most domainers will never have. My message is for John Doe average domainer. They will NEVER sell a domain for anywhere near your 7500. Not a cat's chance in hell. Their best bet is to park or develop and MAYBE sell down the line. You are a pro at this and that puts you in the top tier 1%. Hats off!

Yeah, as if domain development doesn't require skills.

I don't buy that you've made business of developing sites. And that you can make $100 per name by putting simple blog and 5 articles on it.

You also assume that is free, which is not true.

1. you need hosting. That is cost per site

2. You need money for themes, plugins.

3. You need to pay someone to set it up or you have to develop those skills yourself, which is way more complex than skill of listing it on Afternic and pointing nameservers to landers

4. It is total BS that once you've set the site up, you are done. Websites need regular maintenance. Themes need updating, plugins need updating. If you don't, you'll be hacked and be source of malware, while your domains will be blacklisted.

5. So you need around $100-200 per site to set it up (either pay or factor in your time cost). And you need another $50-100 in maintenance per year per site.

6. Articles are not free. If it is $5-10 articles, they won't rank much and won't drive much traffic. Good articles with 1000+ words and well researched start at $50, $100 average. 5 articles x 100 = $500. Let's generously assume you don't need to add any new content (google doesn't like sites with no new content appearing).

7. How are you monetizing it? Google ads or anything similar aren't paying much. Depending on the quality of traffic, you'd be making 20 cents to 1 dollar per 1000 views. To make 100$ in a year, you need to get 500 000 to 100 000 views for your articles. It is safe to assume that no mini site is getting 300-1500 clicks from search with 5 article non-renewing content. Yes, you could be getting even $2-3/1000, but that requires US/West Europe traffic in highly competitive niches like finance, insurance. It is safe to assume you are not making it into top pages for those kind of keywords.


So here we go, I did math for you. You'll spend hundreds upfront. You'll need to spend $50-100 a year on hosting/maintenance etc. That is your certain part. What is uncertain your profit. You'll probably end up making $10-30 per site, if you are lucky, in a year.

Now here is domain math:

Buy for 10$ to $50 per .com
Point to landers
End up making $15 to $30 per name from sales average (assuming you hold hundreds of names) minus $10 renewal, i.e. net $5 to $20 per name.
Your IRR per name: 10% to 200%.
This is assuming you know what kind of names to buy and price them right. And, of course, DYOR. It is not an investment advice. It just works for me that way month in and month out.
 

redemo

Mug RuithTop Contributor
Impact
2,422
This is what I was hoping for. I disagree with many of your points @Recons.Com. But I really appreciate your time taken to give such a detailed reply, and it's this debate all domainers can benefit from. Because there are fairly accurate predictive calculations for all forms of domain name monetisation, just takes research and testing. I'm not being argumentative for the sake of it, hopefully we can all benefit. It's directly related to @Bob Hawkes o.p. because there is a logical formula with odds of being successful.
Yeah, as if domain development doesn't require skills.
12-year-old kid with no qualifications or work experience could develop a domain name in a day, so why can't you? Don't believe me? Offer a 12-year-old kid $100 to develop a domain name in a day. Bingo!
I don't buy that you've made business of developing sites. And that you can make $100 per name by putting simple blog and 5 articles on it.
Well I'm not selling it so you don't need to buy it. 28 cents per day in banner and link clicks average over a year. That's easy. You might think I am not doing it, and by the fact I haven't provided any website links as evidence there's no point arguing that with you. You're wrong, and you can't prove you're right. Aside from that are you saying hundreds of thousands of people aren't getting banner and link clicks worth 28 cents every day? That would be a lot easier to prove if you want?
You also assume that is free, which is not true.
Yes it is 100% free. It is true. You're wrong.
1. you need hosting. That is cost per site
That's not true. The cost is zero. Many companies offer free hosting when you register a domain name.
2. You need money for themes, plugins.
That's not true. The cost is zero. All templates or extra software you need is free unless you decided go premium.
3. You need to pay someone to set it up or you have to develop those skills yourself, which is way more complex than skill of listing it on Afternic and pointing nameservers to landers
Again, this isn't true. You can find simple website set-up instructions on Google. If you can maintain a domain name portfolio you can develop your domain names. I don't buy that b.s. about lack of skills. This is 2022. You got a smartphone right? You know how to use e-mail? You can develop a domain name. It's just either your don't want to or you're being lazy. Both of which are fine. But they're also true.
4. It is total BS that once you've set the site up, you are done. Websites need regular maintenance. Themes need updating, plugins need updating. If you don't, you'll be hacked and be source of malware, while your domains will be blacklisted.
I didn't say you are done, but you're correct that such a statement would be b.s. Normal technical updates take seconds and minutes not hours. Adding a new blog takes 10-15 minutes.
5. So you need around $100-200 per site to set it up (either pay or factor in your time cost). And you need another $50-100 in maintenance per year per site.
No you just need to allow time. You only need to pay for the domain name, nothing else. Fact.
6. Articles are not free. If it is $5-10 articles, they won't rank much and won't drive much traffic. Good articles with 1000+ words and well researched start at $50, $100 average. 5 articles x 100 = $500. Let's generously assume you don't need to add any new content (google doesn't like sites with no new content appearing).
Again, not true. Articles are free. You posted in this thread and you have a good level of English. Why can't you speak a blog post into your phone and let Google type it out then upload?
7. How are you monetizing it? Google ads or anything similar aren't paying much. Depending on the quality of traffic, you'd be making 20 cents to 1 dollar per 1000 views. To make 100$ in a year, you need to get 500 000 to 100 000 views for your articles. It is safe to assume that no mini site is getting 300-1500 clicks from search with 5 article non-renewing content. Yes, you could be getting even $2-3/1000, but that requires US/West Europe traffic in highly competitive niches like finance, insurance. It is safe to assume you are not making it into top pages for those kind of keywords.
Any banners or links which are related to your traffic. If you don't know how this works just Google it. Thousands of people are doing it, why should you be any different? Smart fox like you this should be a breeze.
So here we go, I did math for you. You'll spend hundreds upfront. You'll need to spend $50-100 a year on hosting/maintenance etc. That is your certain part. What is uncertain your profit. You'll probably end up making $10-30 per site, if you are lucky, in a year.
Nope. You'll easily earn $100 on every $10 registration. 10 registrations = $1000 profit, because all you've supplied so far are excuses upon excuses. I know you're smarter than you're letting on as one of the most high profile members on Namepros. I just don't believe you wouldn't be able to figure it out.
Now here is domain math:

Buy for 10$ to $50 per .com
Point to landers
End up making $15 to $30 per name from sales average (assuming you hold hundreds of names) minus $10 renewal, i.e. net $5 to $20 per name.
Your IRR per name: 10% to 200%.
This is assuming you know what kind of names to buy and price them right. And, of course, DYOR. It is not an investment advice. It just works for me that way month in and month out.
Hey if it works for you all power to you. Well done.
 
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This is what I was hoping for. I disagree with many of your points @Recons.Com. But I really appreciate your time taken to give such a detailed reply, and it's this debate all domainers can benefit from. Because there are fairly accurate predictive calculations for all forms of domain name monetisation, just takes research and testing. I'm not being argumentative for the sake of it, hopefully we can all benefit. It's directly related to @Bob Hawkes o.p. because there is a logical formula with odds of being successful.

12-year-old kid with no qualifications or work experience could develop a domain name in a day, so why can't you? Don't believe me? Offer a 12-year-old kid $100 to develop a domain name in a day. Bingo!

Well I'm not selling it so you don't need to buy it. 28 cents per day in banner and link clicks average over a year. That's easy. You might think I am not doing it, and by the fact I haven't provided any website links as evidence there's no point arguing that with you. You're wrong, and you can't prove you're right. Aside from that are you saying hundreds of thousands of people aren't getting banner and link clicks worth 28 cents every day? That would be a lot easier to prove if you want?

Yes it is 100% free. It is true. You're wrong.

That's not true. The cost is zero. Many companies offer free hosting when you register a domain name.

That's not true. The cost is zero. All templates or extra software you need is free unless you decided go premium.

Again, this isn't true. You can find simple website set-up instructions on Google. If you can maintain a domain name portfolio you can develop your domain names. I don't buy that b.s. about lack of skills. This is 2022. You got a smartphone right? You know how to use e-mail? You can develop a domain name. It's just either your don't want to or you're being lazy. Both of which are fine. But they're also true.

I didn't say you are done, but you're correct that such a statement would be b.s. Normal technical updates take seconds and minutes not hours. Adding a new blog takes 10-15 minutes.

No you just need to allow time. You only need to pay for the domain name, nothing else. Fact.

Again, not true. Articles are free. You posted in this thread and you have a good level of English. Why can't you speak a blog post into your phone and let Google type it out then upload?

Any banners or links which are related to your traffic. If you don't know how this works just Google it. Thousands of people are doing it, why should you be any different? Smart fox like you this should be a breeze.

Nope. You'll easily earn $100 on every $10 registration. 10 registrations = $1000 profit, because all you've supplied so far are excuses upon excuses. I know you're smarter than you're letting on as one of the most high profile members on Namepros. I just don't believe you wouldn't be able to figure it out.

Hey if it works for you all power to you. Well done.

As I said earlier in the thread, if this is so easy it could scale infinitely.

You could hire hundreds or thousands of people to crank these out.

Are you doing that? If not, why not?

Your responses are pretty scant on actual specifics.

It would probably help to give at least one actual real world example, instead of being so broad.

Without that, it sounds more like some Adam Dicker sales pitch. :)

Brad
 
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redemo

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Important debate, even if we disagree on most points, and highly relevant to applied probability of profit from domain name investing.
As I said earlier in the thread, if this is so easy it could scale infinitely.
Is buying and selling cars so easy? No. Do car traders make profits? Yes. Is mowing lawns so easy? No. Do gardeners make a profit? Yes. Is collecting cans all day so easy? No. Do can collectors make profits? Yes. I could go on. You're jumping from making a $90 profit over 365 days to being able to afford a Porsche 911 and it just doesn't sit well with the theme of this discussion. I'm not an expert, or a millionaire, just saying it works. You're saying it doesn't work. I'm simply disagreeing with you, but trying to stay on point.
You could hire hundreds or thousands of people to crank these out.
You could eat an apple through a letterbox, what's your point?
Are you doing that? If not, why not?
Yes, I'm doing that. No, I'm not sharing domain names. I've had at least 5 messages from established members saying sharing domain names is a bad idea. I took their advice. You believe what you want. Again, you're saying it doesn't work and I'm saying it works.
Your responses are pretty scant on actual specifics.
I've answered every one of your points individually, out of courtesy and respect for the debate. That's called being very specific.
It would probably help to give at least one actual real world example, instead of being so broad.
Well that's not going to happen so you may as well stop asking. I could give you examples from any industry, but you haven't asked for an example yet?
Without that, it sounds more like some Adam Dicker sales pitch. :)
Well now you're jumping again. Share one single message public or private where I have pitched anything from which I stand to make personal gain. A single post. One sentence. You can't just make things up and expect to not be challenged.

End of the day, all I'm doing is trying to get a conversation going about how average John Doe or Mary Jane domainer can end the misery and make some profit. This actually benefits you because a domainer might buy a domain name off your and develop it. Have you considered that?
 
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I'm not an expert, or a millionaire, just saying it works. You're saying it doesn't work. I'm simply disagreeing with you, but trying to stay on point.
Nope, I am not saying that. I am simply skeptical of how easy you make it sound with zero actual specifics.

Well that's not going to happen so you may as well stop asking. I could give you examples from any industry, but you haven't asked for an example yet?

Cool, then the debate is pointless. You are making broad proclamations with no actual examples.

Well now you're jumping again. Share one single message public or private where I have pitched anything from which I stand to make personal gain. A single post. One sentence. You can't just make things up and expect to not be challenged.
I am referring to his pitch of making money with mini-sites. He is not the first one to fail at it.

I am not saying you are pitching anything. I am simply pointing out it might not be quite as easy as you make it sound.

Until I actually know what you mean by "development", I am going to assume we are talking about mini-sites with poorly written articles via some type of article spinner. Please clarify if you mean something else by development.

Brad
 

redemo

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https://www.namepros.com/threads/how-to-develop-domain-names-for-profit.1242996/
Just read it guys. It's all there. But I understand the hostility as it's easy to do it with first registrations so it earns the domain name marketplaces money, not you. I really get that now.
Thanks for the link.

That seems like quite a bit of stuff to learn and try, and a process that would be quite time consuming.

It is really no different than the trial and error when it comes to domain sales.
I don't need to develop mini-sites because I sell domains, and mini-sites hurt in that goal.

Regardless, if it works for you then great.

I am just gonna leave it there, because at this point the thread has been kind of hijacked from the original topic.

Brad
 
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redemo

Mug RuithTop Contributor
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I am just gonna leave it there, because at this point the thread has been kind of hijacked from the original topic.
How's that? The o.p. was about applied probability within the sphere of domain name investing. You are clearly hostile to developing domain names, and you only want to discuss domain name sales. So it's not hijacking a threat when you're on-topic and sharing relevant useful information. That's a criticism I get a lot because it's about making profit off newbies who will end up losing money, and you know it. @Bob Hawkes post i.m.o. is about applying logical mathematics to domain name investing decisions. One of the smartest domain investing decisions is obviously to develop, since most domain sellers lose money. And I don't really care if I'm in the minority, because the important things is to be correct and spread factual information.
 

poweredbyme

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Domain sales are independent events in terms of statistics, similar to rolling dice/tossing coins. You can't apply probability calculations to independent events. It means probability of rolling 2 for 2 times in dice is not equal to 1/36. Because the second outcome (rolling 2 for the second time) does not depend on the first. That's also called gambler fallacy.

You may ask why domains are independent statistical events. Because each domain is unique and each sale is unique, doesn't depend on previous sales.

So I disagree with the original post. Those probability calculations/forecasts are wrong.
 
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Domain sales are independent events in terms of statistics, similar to rolling dice/tossing coins. You can't apply probability calculations to independent events. It means probability of rolling 2 for 2 times in dice is not equal to 1/36. Because the second outcome (rolling 2 for the second time) does not depend on the first. That's also called gambler fallacy.

You may ask why domains are independent statistical events. Because each domain is unique and each sale is unique, doesn't depend on previous sales.

So I disagree with the original post. Those probability calculations/forecasts are wrong.

In theory that is correct, in practice I disagree at least on a large portfolio scale.

On an individual domain basis, sure. When you own thousands of domains it makes the odds of a sale much higher.

Take a 100 sided dice, what are the odds of it landing on a 3? 1 in 100.

Now throw that 100 sided dice 5000 times. You are going to get many 3's, though the exact number is unknown.

I have maintained a 1%-2% STR for well over a decade.

If you have enough decent to great quality domains, priced in a reasonable range, you are going to make some sales.

Brad
 
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each domain is unique and each sale is unique, doesn't depend on previous sales.
Thank you for your comments, @poweredbyme.

I agree that each domain name is unique. That is also true of all sorts of things that we apply probability to. Each sports event is unique to varying degrees, but probability is applied in establishing betting odds. All sorts of specialized things are unique, but insurers use statistics from somewhat similar events to, on average, estimate odds of various outcomes. Same when a doctor tells a patient under informed consent the chances of different outcomes from a procedure. Each person and operation is unique. But the doctor can tell me, based on people with somewhat similar physical characteristics and over many operations by different surgeons, what my odds are.

Let's look at startups. Each is unique, has a different idea, different people, different competitive landscape. One can look at a collection of many startups to see typical failure rates. That could be used to estimate the fraction of investments in startups that will pay off. Probability will not let you predict with certainty which startups will succeed, but if done carefully will give an approximate number that will fail if you invest in 100 different startups.

Probability never tells you the precise outcome for any one event. It will never tell you voice.com will sell for $30 million, or if any one particular name will sell this week, this year, this decade or never.

As @bmugford replied above, the key idea is having a sufficiently large portfolio to apply probabilistic ideas to. The degree to which the portfolio is similar to the one on which the probability is calculated will determine how much, or little, confidence we have in the result.

For example, if only 3 single-letter .com were grandfathered, and you owned all 3, probability based on other domain sales probably would not be very helpful. And even in the best of times, it will not tell you the result for individual domain names. Simply because as you say, each name, and each seller and buyer, is unique.
t means probability of rolling 2 for 2 times in dice is not equal to 1/36. Because the second outcome (rolling 2 for the second time) does not depend on the first. That's also called gambler fallacy.
Assuming that the dice is 'fair' it is indeed 1/36 and it is because the second event does not depend on the first. The chance of rolling that first 2 is 1/6. The chance when we roll again does not depend on the first roll result, so it too has a chance of 1/6 of being a 2. Independent probabilities are multiplied to establish an overall probability.

Wikipedia explain Gambler's Fallacy like this, "the incorrect belief that, if a particular event occurs more frequently than normal during the past, it is less likely to happen in the future (or vice versa)". So someone with gambler's fallacy would say, well the last time I did not roll a 2, so there is a better chance of rolling a 2 this time. That is not true. Each time the chance is the same, 1/6, and by the multiplication rule for probabilities the chance that we roll a 2 the first time and a 2 the second time is (1/6)*(1/6).

Khan Academy have a good explanation of the multiplication rule for independent probabilities.
https://www.khanacademy.org/math/ap...iplication-rule/a/general-multiplication-rule

Bob
 
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