Building a domain portfolio based on certain metrics

Lot of smart people on here who have proven success with building and selling domains, the below is for you.

Initially I was going to be fully focused on my website this year but when I crunched the numbers on this experiment it got me thinking.........

For the last (just over) a year I have been dabbling with getting domains that meet certain requirements

Sample size of 40 domains and 3 have sold that meet certain metrics which equates to a 7.5% sell through rate for this mini test portfolio

All domains where bought for less than $20 each and sold for mid xxx - low x,xxx so the test has been profitable

Now I am wondering if I scale up to 400 domains that follow the same metrics is it worth doing? By my reckoning that could equate to 30 domains sold - I do understand there is no guarantee the sell through rate will be the same and wonder if my sample purchase size is to small to make this kind of decision and whether I should keep it simple and test out another 40 over the next 12 months to see what happens?

Out of the remaining 37 domains - I have had offers and price requests on a further 5 which I plan to or have renewed, plus a few others that are getting type in traffic.....

All in all this not a huge experiment, just testing the waters with it and in the grand scheme of things amounts to not a lot but I am curious if this the way you can scale a portfolio to give it a better chance of success....

Any opinions, advice on the above or how to scale a portfolio in a sensible manner etc etc would be appreciated......

 

Are you absolutely sure that the domains sold based on the reasons you think they sold?

It has happened to me time and time again to buy a domain expecting to earn because reason A but when I looked closely it really earned because of reason Z which I had not anticipated.

Small samples (ie. your 3 domains sold) are the trickiest and more prone to pitfalls imo.

STILL,
this job is all about trying new things and get burned a bit in the process.
If it were me*, I would try to increase the sample size to see what happens.

*edit: is it 'if I was me' or 'if it were' me?

 

That's exactly it....tricky 🙂 and why I have kept it small, when I started had a lot of fingers burned 😄

If it was based on one metric then I would be much more skeptical, but those 3 where bought based on 4 requirements being met, not a coincidence.....I think/hope not......it's the hope that kills things

It's a question of scaling up rapidly based on a small data set or gradually increasing the sample size

Risk a bigger potential reward or loss or play the slow game and minimise both....

 

Hi @NickB

I like the way you're trying to analys/ze this. It definitely seems you're not an impluse buyer

How confident are you about the 37 domains that are still in your portfolio?

 

If you believe there is no-one to compete with what you do then maybe it's wise to increase the sample in small steps. I mean, what's the rush?

If, however, there are chances others notice the sudden surge of specific type of domains being bought then speed is of importance.

Don't forget though, every .com being bought is being noticed, especially if it follows a certain pattern

 

Learnt the hard way to not be impulsive, though occasionally I do slip up 🙂

For this test sample another 5 have had interest and I will be keeping a few more depending on certain things.....

 

Hi

the unmentioned metric is the "sales model"
as in whether you are outspamming for str
or
getting unsolicited incoming offers and BIN sales, that reflect str

imo....

 

No spamming here

incoming........

 

The problem really is the sample size is too small. You could grow your portfolio by 10x and make 10x as many sales, or grow it by 10x and make 2x the sales.

Buy quality domains. Sell domains. Reinvest in similar or better quality domains.

That is what works for me and many others in the field. You can basically just scale organically, over time, if you are making good decisions.

I would assume with the amount of inquires and sales that you are doing something right.

Brad

 

Yeah the sample size is very small

I think you and @Hypersot have given solid advice - build up slowly and keep it simple, no need to complicate things.......

The problem with the last couple of sales is that I have put it towards the website

I need to make sure to reinvest the money from the next sale into renewals and better quality otherwise it could end up becoming a bottomless pit......

 

I am a firm believer of quality + quantity model. It took me years though to grow my portfolio to where it is now.

Buy. Sell. Re-invest.

If you have only super high quality domains you can hit a dead end capital wise.
If you have only bad domains, you will never make sales.

Finding the right balance between quality and quantity is the key.

You have the Ferrari dealers, people like Rick Schwartz. They are the guys who have multi-million dollar domains and are in a position to maximize profits.

I am more like the Toyota dealer. Many of my sales are in a $2K - $5K range with higher sales mixed in. That business model is a lot easier to replicate today.

Brad

 

Toyota dealer? Give over......I have you down as jag dealer - nothing like a little self deprecation

Good point - the sweet spot for me atm is mid xxx - very low x,xxx due to the domain quality (or (lack of) negotiating skills) - this is where reinvestment becomes critical....I have a much better understanding of what a good domain is now compared to when I first started so it is just a matter of putting those future sales to good/better use.....and trimming down the fat (junk) ones - which is another topic all together.....

But I do like registering new tech domains for a longer term hold as well - easier to get better quality keywords but then you have to weigh up the risks if that tech term will take of, just got to keep the balance right........

 

Hi Brad

if you're a Toyota dealer,
then in comparison,
i'm a used car sales person working at Joe's Automotive, down the street



imo...

 

Go for it! If you can buy 400 names for a total of $8000, and your average sales price is, let's say, $800 (half way between low $1,xxx and mid $xxx), then you'll need a 2.5% STR to break even. If you don't try, there's a 100% chance you fail.

 

I burned 15k on a test like that in the past.

The good part was not the money (loss) but the lessons learned. Edit: the information I got was still worth the money

Oh and yes I've burned 20 k it seems this year too on a different test, but overall I'm fine = profitable. It was an accepted risk.

 

I'd be extremely careful to rely only on certain measurements, no matter which ones and how many of them. As @Hypersot mentioned, selling 3 out of 40, you in reality have no idea whether or not the outcome is the result of a specific system you use to buy domains with.

Another factor that I don't really like blindly following certain metrics, is that your instincts, your gut feeling being left aside in this case. I personally like to ''like'' domains I buy, to feel them, fully understand them.
I use certain metrics too, but I need to know that I want it - this specific domain.

You can try to scale up using only ''your'' system, however I think soon you'll change your approach.

Best of luck!

 

I'm in a similar situation and trying to decide which direction to take. Like you, I think that it makes sense at the outset to focus on sell-through rate and ROI, even if the amounts seem small to established investors.

Did you sales all come through a single market/platform? Which one?

Cheers

 

Interesting test Nick, it will be interesting to see with a bigger portfolio what will happen. Best of luck.

 

Thanks - still mulling it over, got distracted with the site launch so not much happening on the domain buying side of things atm.....the best advice seems to be don't rush so I'm not going to......

It's something I am going to test out - will update as and when anything relevant happens without giving away the secret (potentially sour) sauce......

 

Ones that sold - Afternic & Godaddy Auction site - both make offer listings
Price Requests/Offers - Afternic