Risk/Benefit with buying or selling traffic domains

[accuname]

I'm brainstorming to try and weight risk/benefit with the traffic name sales where the seller provides a screenshot of traffic. (let's say traffic is legit for the screenshot). Anyone have any thoughts or inputs ?

Buyer: Gets name earning $50 per month. Pays 24x = 1200
1) Risk: Earnings can drop plus looses interest $1200 could have earned.
2) $50 per month earnings are consistent - break even
3) Benefit: traffic can rise. All revenue after beak even is profit.

Seller: Sells $50 per month earner.
1) Risk: Earnings could go up on name sold. Looses revenue.
2) $50 per month earnings are consistent - lose future earnings past 24x
3) Benefit: Earnings fall to never recoup (good sale then). Immediate cash which can earn interest.

 

[netzilla]

I think it depends on the type of traffic like whether its direct type-in, inbound links, or from search engine results.

If its a domain with PR and has a fair amount of pages indexed the traffic will be steady for a bit but then once the site is reindexed the PR will eventually trickle down to nothing after awhile along with the traffic most likely. This has been my experience at least.

 

[mhdoc]

I don't think interest earnings are really a factor. Presumably both buyer and seller are "players" in the domain game. If the seller needs money to acquire a better domain the "opportunity" cost of not selling would have a much larger impact.

Buying an income stream for 24 times net monthly earnings is a 50% annual return on your investment. That means keeping your money invested is important.

 

[yandig]

Also important is the value of the domain name itself. Many domains have some inherent value, even if it's only a dollar or two.

 

[TheBulldog]

Entirely depends on what you plan to do with it.

If it is just for parking, it better be a decent name that will continue to get traffic. If it is some weird thing, then chances are that over time it will lose both interest and traffic so I wouldn't see the point.

 

[Keynes]

you also have to incorporate legal risks into the equation...

 

[netfleet]

There is a risk that traffic has been artificially inflated for the preiod in which the purchase price is calculated. And I don't mean just by buying traffic, bots, click monkeys and that sort of thing but other offline things.

Eg domain owner puts a small ad in the paper for a few weeks which drives direct type-in traffic to site. He provides the genuine stats & rev figures. they do a deal, he cancels the ad. The buyer would never know why the traffic declines...

 

[accuname]

Eg domain owner puts a small ad in the paper for a few weeks which drives direct type-in traffic to site. He provides the genuine stats & rev figures. they do a deal, he cancels the ad. The buyer would never know why the traffic declines...

I would be really interested to know how often such shenanigans occur! Often I see attempts to sell traffic domains with earnings after only 1 month of revenue stats. Not that big of a deal until you run into a selling willing to part with a name at 10 months revenue when the domain is making a dollar a day or more. Hmm. I sure as heck won't part with a traffic name for 10 months revenue if it makes 30+ a month.