Ideal Return on Investments...

[tomcarl]

I read a couple of blog articles and watched a couple of videos where the advice given was "If you are buying domains for $100 or $200 to flip for $400, or $500, you're setting yourself up for failure in this business." And this was said by a couple of pros in the industry, and I've heard that a couple of times in different words.

In a perfect world we can buy domains for $10 or $20 dollars and flip them for $500 - $1500 all day, or buy a name for $xxx and flip for 4 or 5 figures, it happens, but in my opinion profit is profit and the time it takes to return that profit is a big factor with my model. I've acquired domains at times for $100 or $200 only to double that because I knew it would be an easy/fast flip for me.

I was thinking maybe that advice given would probably make sense for a domainer who doesn't do any pro-active marketing and plans to keep it parked until a buyer comes along. In that case I'd have to agree that paying $200 for a name to let it sit parked at $400 isn't a smart move, keeping $xxx funds tied hoping for $xxx profit = failure.

I was wondering what the majority of investors/domainers expect on their returns? Do you have certain limits/ratios? In other words, if you think a name could sell for mid $xxx, do you think paying low $xxx is too much?

We all have our own models and what works for one person may not work for the next but I was curious about others feedback on this after hearing those opinions in the blogs/videos I watched.

 

[Nattydomain]

Good question. I hardly ever go over 30 bucks for a domain and that in itself is rare. I am about at $1-3 for new reg to $13-20 for expired auctions. So I expect really to go for the $x,xxx amount but that also depends on how well the name can sell alone and time held. If after 2 years I get no offers or low offers then I lower my price and may even take the first low $xxx that comes IF I never had a offer or super low before.

Really it just depends but If I do $3 for first year, $9 for second year, and I sell for $300 well hell $12 for $300 is ok in my book.

 

[garptrader]

While uneducated buyers often believe they are doing you a favor by paying $50 for a domain which they think only cost you $10, the reality is one must consider portfolio cash flow not just the margin on one domain sale. Portfolio turnover can be accelerated by lowering prices and doing outbound marketing. However, outbound marketing comes at a significant cost (one's limited time has a value). The most successful domain investors tend to favor fewer high-dollar sales over more low-dollar flips. However, there are different approaches and most domainer portfolios don't allow one to wait for unsolicited five-figure offers.

 

[biggie]

if you don't read the articles or watch the video's, then whatever profit you make....you'll be happy with

but when trying to keep up with the Jones', it will fiz-zuck with your conscience.

do what you do, get good at it, and don't worry about other folks margins.



imo....

 

[discobull]

My ideal ROI is a billion to 1.

Seriously though the math is really simple. To break even, your average ROI needs to be the inverse of your closing ratio. From there you can figure out how much it needs to be increased in order to reach your financial goals.

 

[SpareDomains]

Almost every domain I own was a $8 expired .com pick up. Since my initial investment was only $8 I have patience and don't mind hitting the renew button a few years. Most that I sell land in the 1-10k range. A couple below that range and a couple above that range.

Profit is profit but ya wanna be careful not to sell the gems too cheap as it's not 1998 anymore. So over time if you continue to deplete quality from your portfolio at cheap prices you'll be left with garbage and won't have the income to replace those gems as way more competition today.

 

[tonyk2000]

Some industry-reviewing blogs reported (analysing various sources including but not limited to zone files and public/private sales data) that an average domainer (including both "big boys" like buydomains AND smaller "players") sells about 1% of their portfolio each year. Now, applying this percentage to a "normal" domainselling business (and excluding specific cases of domainers who happened to be in the right place in the right time - early 1990s or maybe even year 1987/88 and regged some top domains which may be now sold for top-high $$$): Indeed, one should never sell their domains for 2x or 4x. In other words, there would be negative balance in a long run with 1% yearly sales @4x, and even if we increase sales rate to 10% of the portfolio - the result is the same.
As such, one should think twice before over-bidding some big spenders like a few particular godaddy auctions customers for example, who are willing to pay lets say $100-$105 for an expired domain that would worth max. $14.99 dynadot backorder fee (if not a handreg fee) should it be dropped in a normal way. Simply because a realistic end-user price for such a domain is almost exclusively in 3-figures range, so such a domain would frequently remain unsold (if the price is too high) OR will be sold for 5x-7x for example, which should never happen. Again, this is about routine day-to-day enduser sales business, which is supposed to be profitable in any statistically significant period (like 6-12 months), without potential parking income (which is decreasing anyway) and without taking in account possible "jackpots" like selling after-drop handreg for 5 figures a week later (yes, this also happens...)

 

[NameOmnia]

This is a very interesting thread. Thank you for starting it.

I think the aspects of such a topic are many : how much money you can invest and keep " locked ", how impatient you are, how many years you are willing to renew that domain, how many domains you have, if domaining is your main source of income or not etc etc.

There are tens of aspect to take in consideration.

There are domainers who work " with quantity " : they register for 2-3-5$ and they are happy to sell it on ebay for 10 or less. They do it hundreds of times per month.

There are domainers who buy " gems " ( well..they hope and think they do :P ) and hold on to them for years until the right offers come in. How many times per month or year they can do it all depends on how much money they can invest.

In my learning curve I created a strategy that is suitable for me and my needs or dreams and I think everyone has his own. I can't really think about comparing myself to those who have xxx.xxx to spend in domains every week or month simply because it's not my case. I also can't compare myself with those who registered THE gems in the 90s and they are now millionaires who can hold on to names for the rest of eternity.

We also have to keep in mind that those we consider successful and influential domainers now began their career as such but they are not " pure " domainers anymore and they haven't been for a long time.

Accepting " gurus "' opinions is sometimes smart but most of those gurus' opinions were valuable years ago not anymore. They live in the past.
Looking at future trends is living a hope and most of them revealed themselves as huge money wasters. Investing in those is investing into something that doesn't exist yet and maybe never will.

As a person and business woman I chose to live in the present and upon that decision I based my business model.