question-answered How can domain investing be profitable when the sell-through rate is under 5%?

[Said2025]

Is it true that the sell-through rate in this field (without active marketing) is really under 5%? If so, what does that mean for domain pricing? Does it mean domains should be priced above $500 to make a profit? And does selling domains under $500 always lead to guaranteed losses? I'd appreciate some clarification on this point.

 

[bhartzer]

The markup is oftentimes 1000% or more. Register a domain for $10/year, hold it for 10 years, you paid about $100 (in round numbers).

I don't know of many other industries where you can purchase a product (even at wholesale prices) and sell it with a 1000% markup. Or even a 100 or 200% markup.

 

[Jannes]

@Bob Hawkes to the rescue:

https://www.namepros.com/blog/the-minimum-domain-price-for-profitability.1313195/

 

[Eric Lyon]

Is it true that the sell-through rate in this field (without active marketing) is really under 5%? If so, what does that mean for domain pricing? Does it mean domains should be priced above $500 to make a profit? And does selling domains under $500 always lead to guaranteed losses? I'd appreciate some clarification on this point.

When you talk "Sell-Thru-Rates", you are mainly referring to large portfolio holders that play the bulk sit and wait game. They may or may not list a bunch on various marketplaces and then wait for someone to inquire about one (Leveraging the marketplaces marketing to get eyeballs visiting the listings).

Occasionally, they may do a little outbound, but not as often when it's a larger portfolio, since outbound can be very time intensive.

In short, if you are only focusing on large portfolio holders playing the sit and wait game, then yes, under 5% is normal.

That % goes up with the more time you put into it, proactively (E.g. outbound, social shares, paid advertising, free advertising, brokers, coops, partnerships, etc..)

Even then if you're not targeting the right potential buyers, not pricing competitively, fail at negotiating, pitching low-quality domains, etc... the extra time could simply be wasted effort, but still a learning experience.

Everyone does it differently.

 

[biggie]

Is it true that the sell-through rate in this field (without active marketing) is really under 5%? If so, what does that mean for domain pricing? Does it mean domains should be priced above $500 to make a profit? And does selling domains under $500 always lead to guaranteed losses? I'd appreciate some clarification on this point.

Hi

others may have said it, but profit is made on the buy side.

str only relates to how many names sold from the portfolio on average within a year
it has nothing to do with how much $ each domain sold for.

imo…

 

[Said2025]

The markup is oftentimes 1000% or more. Register a domain for $10/year, hold it for 10 years, you paid about $100 (in round numbers).

I don't know of many other industries where you can purchase a product (even at wholesale prices) and sell it with a 1000% markup. Or even a 100 or 200% markup.

You're right. Choosing a very strong domain, setting a high price, and waiting for the right buyer over the years can indeed be profitable. On the other hand, average or weak names with high prices may never attract a buyer. In other words, domain investing only works with strong names — most of which have already been taken, if not all.

 

[Said2025]

Hi

others may have said it, but profit is made on the buy side.

str only relates to how many names sold from the portfolio on average within a year
it has nothing to do with how much $ each domain sold for.

imo…

Maybe. But let's suppose someone is targeting budget-conscious buyers who don’t spend much, and they price their domains between $50 and $200. Do you think they can actually make a profit if their sell-through rate is only 5%?

 

[Said2025]

When you talk "Sell-Thru-Rates", you are mainly referring to large portfolio holders that play the bulk sit and wait game. They may or may not list a bunch on various marketplaces and then wait for someone to inquire about one (Leveraging the marketplaces marketing to get eyeballs visiting the listings).

Occasionally, they may do a little outbound, but not as often when it's a larger portfolio, since outbound can be very time intensive.

In short, if you are only focusing on large portfolio holders playing the sit and wait game, then yes, under 5% is normal.

That % goes up with the more time you put into it, proactively (E.g. outbound, social shares, paid advertising, free advertising, brokers, coops, partnerships, etc..)

Even then if you're not targeting the right potential buyers, not pricing competitively, fail at negotiating, pitching low-quality domains, etc... the extra time could simply be wasted effort, but still a learning experience.

Everyone does it differently.

You explained it well — a 5% sell-through rate is indeed reasonable for someone who simply lists their domains on marketplaces and waits.
This clearly shows that things can be completely different with active marketing.
So, we can say:
Passive investment strategy = High prices + Premium-quality domains + Patience
Active strategy = Reasonable prices + Decent or brandable domains + Targeting the right buyers.
So, the sell-through rate of under 5% is mostly related to passive investing — those who just list domains and wait. In contrast, for those who actively market their domains instead of waiting, the sell-through rate can be completely different. It really depends on each person's marketing strategy

 

[bmugford]

Maybe. But let's suppose someone is targeting budget-conscious buyers who don’t spend much, and they price their domains between $50 and $200. Do you think they can actually make a profit if their sell-through rate is only 5%?

Not really. The math doesn't work.

However, it's not that rare to buy a decent domain on closeouts or auction for mid $XX to low $XXX then sell it later for say $2,500 - $5,000 to an end user.

The subjective value of domains and low liquidity is where the opportunity comes from.

Brad

 

[bmugford]

It really just boils down to math.

Let's say I buy 1000 .COM domains for $100 each. That is $100,000 in year 1.
Year 2 - $11K in renewals.
Year 3 - $11K in renewals.

and so on.

If you have a 1% STR that is 10 sales a year.
If you have a 2% STR that is 20 sales a year.

If the average sales price is $2,500 that is $25K - $50K a year.

You would lose money year 1, but start making money year 2 and thereafter.

The higher the STR and higher the price, the more profit.

Brad

 

[bmugford]

Something else to point out is that quality domains tend to go up in demand and value over time.

I try to sell my average inventory.

Those average sales cover renewals and turn a profit, allowing me to keep my better domains and ask much higher prices.

Brad

 

[Future Sensors]

It really just boils down to math.

Let's say I buy 1000 .COM domains for $100 each. That is $100,000 in year 1.
Year 2 - $11K in renewals.
Year 3 - $11K in renewals.

and so on.

If you have a 1% STR that is 10 sales a year.
If you have a 2% STR that is 20 sales a year.

If the average sales price is $2,500 that is $25K - $50K a year.

You would lose money year 1, but start making money year 2 and thereafter.

The higher the STR and higher the price, the more profit.

Brad

Good math. Mind if I toss in one more variable to the mix?

(The graph simplifies things a bit, because certain years are contractually exempt from price increases. Still, the takeaway is clear.)

 

[bmugford]

Good math. Mind if I toss in one more variable to the mix?

(The graph simplifies things a bit, because certain years are contractually exempt from price increases. Still, the takeaway is clear.)

Show attachment 280633

Yeah, you need to factor in rising renewal fees.

One way I mitigate that is to renew my best domains well into the future.

Brad

 

[cooljub]

These bots are getting harder to spot.

 

[biggie]

Maybe. But let's suppose someone is targeting budget-conscious buyers who don’t spend much, and they price their domains between $50 and $200. Do you think they can actually make a profit if their sell-through rate is only 5%?

Hi

I advise not to dwell on str,
in the scheme of things it’s not worth pondering.

put the focus on making profitable sales and what it takes to accomplish that.

imo…

 

[Mkt Sales Leads]

These bots are getting harder to spot.

Maybe. But then I reckon about 5% on here are Transformers (bots in disguise)

 

[Said2025]

Something else to point out is that quality domains tend to go up in demand and value over time.

I try to sell my average inventory.

Those average sales cover renewals and turn a profit, allowing me to keep my better domains and ask much higher prices.

Brad

I pointed out two important points:
The first is taking advantage of a stagnant market by buying suitable domains at a low price.
The second seems like a good strategy—dividing the domain portfolio into two types: average domains that are sold periodically, possibly with marketing, and premium domains that are held until they sell at their appropriate price.
This way, you balance between the two approaches

 

[johnn]

Buy 100 at $1 each and sell back at $1,000 each