March 1st, 2010 Posted in General Domain News | 8 Comments »
(This blog article is entirely inspired by my friend Elliot Silver’s blog article)
Elliot Silver, who I respect in the highest regard, stated on one of his recent blog articles:
“I would much rather own one good name that I bought for $2,500 than 300 newly registered names. If you don’t end up selling them, you’re just going to double your carrying costs the next year.”
I had a different viewpoint that was too long to voice in a comment on El’s site, so I wrote this blog article answering his comment. Let me present these two different scenarios of what would happen if an experienced domain investor bought 300 OOTB (Out Of The Basket – meaning “new registrations”) domains compared to spending the same amount ($2500) on one premium domain.
If you have the stomach for details, read below:
1) I am already guessing that you’re an experienced domainer. If you buy 300 OOTB’s, I assume you’ve done your homework and these domains are already giving you the hand-jive, or you wouldn’t have registered them. (New domain investors and their domain buying obsessions don’t apply to the following)
2) Now you have 300 OOTB’s, which your experience has told you, “I won’t buy a domain like a noobie, these aren’t all .biz domains, they’re all .coms or one word high trend noun ccTLD’s”. You know that at least some of these 300 domains have some value at a profitable resell level, (or you realize you bought them on a drunken domain raid and all bets are off.)
3) You want to test out your new purchases, and set up 50 of them to sell cheap quick. You sell 25 domains quickly for only $100 and get your investment back. That leaves you with 275 other domains to play with. You find that you have a great eye for domains, and you’ve done your research like a bio-physics student at Stanford. If you scored with a domain that was just waiting to mature or hit the consumer trend index, that would become apparent within a year or so. Now you have a domain in your remaining list that is worth maybe $2500. You sell that domain name and you’ve doubled your investment now, leaving you with 274 domains to play with.
4) The following year, you do a followup on SE analysis for search and page results from quoted queries on each domain as they come up for renewal. You consider if they need to mature, or whether you were not thinking when you registered it. Let it drop, big deal. Let’s say you let 20% of your domains to drop, leaving you with about 220 domains.
5) You invest another $1700 to renew those domains.
6) The next year, you discover that another one of your domains is hot, and someone gives you $1600 for the domain. You’ve just covered your renewal fees for 224 domains. Now you’re looking at your list of 220 domains a lot closer, because you’re seeing why YOU BOUGHT THEM OOTB IN THE FIRST PLACE!
7) You watch the progress of the domains while parked at a PPC or at WhyPark to check OST or TI traffic… and you discover that either one or both are making some rev for you, and you’re getting a few purchase enquiries a week. You sell a few for $250 each on average.
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