Blogs about how you can best sell your domains or stories about how you may have sold or bought a domain in the past.

Part 2 – Why Domain Portfolio Optimisation Works – Development

Part 2 – Why Domain Portfolio Optimisation Works – Development

In this article I will be further expanding on how to develop a domain into a business. This is the first business model that can be applied to domains, the other three are monetising traffic, treating domains as stock-items and the last selling domains at high values.

The first issue for me with any developmental project is working out how the domain is going to make money. This seems like an obvious question but many people approach developing a domain from an aesthetic perspective (ie. pretty website) rather than being focused on the business outcomes.

Escrow.com

Generally speaking, all business models hinge on getting not just new traffic to your website but repeat visitors. A repeat visitor is gold as they perceived a value in your site enough that they returned for a second look. It shows that there is something about your business offering that they want.

So here are some reasons why people will return to your website.

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Part 1 – Why Domain Portfolio Optimisation Works

Part 1 – Why Domain Portfolio Optimisation Works

I recently had the privilege of conducting a session at Domaining Europe on the topic of monetisation. Many domain investors have fallen into the trap that monetisation is dead and let me share with you that nothing is further from the truth. Domain monetisation is alive, well and thriving.

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What has happened, is like any industry there has been an evolution in technology. Those that have kept up with the technological curve remain successful while those that don’t struggle to remain in business.

This is not dissimilar to the days of the buggy whip manufacturer. During the days of horse drawn carts they made an absolute killing. Then a strange contraption initially known as a mechanical horse came onto the market. This technological innovation was really expensive so the buggy whip makers all laughed at the early version of the motor car and continued to make their whips. The rest is history and other than the handful of craftsman buggy whip makers are no more.

It’s the same thing in the domain industry. On one of my recent trips around the world I was talking to a domain owner that had been in the industry for years and he was decrying that monetisation was dead. I asked him one question, “What are you doing now that you weren’t doing five years ago?”

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Using Analytics to Price Domains - Part 4

Using Analytics to Price Domains - Part 4

In the last article in this series I began to unpack the importance of the demand curve for accurately pricing domain names. My experience with domain sellers is that most of them price their domains more by gut then attempting to apply a process. In this article I want to move my line of thinking forward to help sellers more accurately price their domains and buyers know if their getting a fair deal.

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I should say out the outset that I’m going to keep everything as simple as possible by minimising the number of input data points and mathematics…..but hold onto your shirt as it can still get a little tricky! Remember the goal is to see if we can create a demand curve for a market vertical and then attribute pricing to this curve. So where to start?

We can use the google keyword tool (remember there are a LOT more other data points) to provide us with both quantity and price for an individual keyword. It just so happens that the price is more often than not a reflection of the demand for that keyword due to the Google auction system amongst advertisers. Google also provides a competitive index which is really interesting and bears a lot more thought…..I won’t be applying the index for this analysis.

So I entered a whole lot of “gaming” keywords into the keyword tool and out popped the data that I was after. After a bit of manipulation, I was able to produce the following chart (price is the vertical axis and quantity the horizontal). I really haven’t added a huge number of data points but it provides a reasonable picture of demand for the gaming market vertical.

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Demand Based Domain Pricing Strategy - Part 3

Demand Based Domain Pricing Strategy - Part 3

In the previous articles in the series I discussed how much a domain is really worth and some of the potential traps that some domain investors fall into in selling stock-item domains (ie. multiple keyword domains). In this article I plan on tackling both the pricing and portfolio models from the perspective of supply and demand.

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What we do know about the supply/demand curve is that once a domain is acquired the cost of supply is constant for .com domains. Each year there is the same renewal fees (assuming no increase) and the renewal fees are identical to each domain whether it’s google.com or fredspizzashop.com. This line is represented in the blue colour in the below chart.

Standard Supply and Demand Chart

The shape of the demand curve is much more difficult to plot but for now let’s assume that it’s linear and represented by the red line. The industry essentially works under the assumption that optimum price for stock-item domains is around $1,000. What this suggests is that the total volume of dollars sold, Area 1 (yellow), is at a maximum at this price point. In other words, the quantity of domains sold multiplied by $1,000 is the best amount the industry can possibly do for these types of domains. I don't believe this is correct.

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The Challenges of Selling Domains - Part 2

The Challenges of Selling Domains - Part 2

In a previous article I discussed the topic of what a domain is actually worth and suggested that the great majority are actually worthless. So the questions that needs to be asked is why and how can we price domains effectively to maximise their sale potential.

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So let’s open up the stock item sales model of domains. This is where you have a lot of keyword related domains and are wanting to sell 1% of them each year for some average amount. This business model was first pioneered by Fabulous (remember them?) and Buy domains (now owned by Godaddy).

We’re going to use a really simple case study to help us understand how to price domains using this model. Let’s imagine I have a 1,000 domains that cost me $10/year to register. My cost is going to be $10,000 per year (ignoring my time for now).

If I want to make 100% return on my investment, then I will need to do $20,000 in revenue for the year. If I think I can sell 1% of the domains each year (ie. 10 domains) then what is my domain sale price? Pretty simple, it’s $20,000 divided by 10 domains which is $2,000 per domain.

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How Much Are Your Domains Really Worth? Part 1

How Much Are Your Domains Really Worth? Part 1

Over the last few years there has been a rush of capital into the domain industry from two major sources, Chinese investors and speculators. I have written quite a lot on the Chinese investors but have largely ignored the speculators.

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Speculators have hoped to win the lottery by having a domain that a cashed up major company wants to desperately buy. They hear about the successes of “old-time” domainers and dream about find the pot-of-gold at the end of one of their domain rainbows. I don’t mean to rain on your parade but this is unlikely to happen and here’s why.

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Selling Domains Part 3 - Moving the Stock

Selling Domains Part 3 - Moving the Stock

I was asked in a forum what I mean by stock-turn domains. These domains are typically multi-keyword names that have a price tag of around $1,000. Like a supermarket selling low-margin goods, the aim the domain investor is to increase the number of domains they sell each year. So what are some things you can do to increase the number of sales of stock-turn domains?

Escrow.com

There are some really basic things you can do. For a start, make sure that you have correct whois information with your contact details. Lots of buyers use this information to contact sellers and you can end up having a lot of very frustrated buyers out there if your details are incorrect or out of date (ignoring the fact that ICANN requires correct information).

There are two main markets where you can sell your domains. The first is the wholesale market where you are selling to other domain investors. You’re not going to get the best prices in the world here as they need to make a margin when they onsell the domain to an end user. The advantage of the wholesale market is you typically don’t have to educate it on the value and importance of a domain name.

The retail or end-user market is a little different and I would suggest that you have a selection of stock-item domains in a number of discreet market verticals. This will then allow you to target prospective buyers and potentially upsell them into higher value domains.

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Selling Domains Part 2 - What to do with ChiPs

Selling Domains Part 2 - What to do with ChiPs

With the incursion of the Chinese domain buyer ChiP (Chinese Premium) domains have become all the rage and are typically hot items. ChiP domains are domains typically 4 letter domains without vowels or the letter v. The definition of ChiP domains has broadened to include 4 number domains without a 0 or 4. The one thing that both the letter and number variations have in common is they are all .coms.

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In my recent trip around the world attending the Dubai Domainers Meeting etc. I began to dig into what was fuelling the interest in ChiPs. I spoke with one prominent domain owner and he indicated that a lot of the money being invested in ChiPs actual come from margin loans underpinned by stocks on the Shanghai stock market.

What Chinese investors are doing is taking RMB (Renminbi – Chinese currency) and buying ChiPs on websites like 4.cn. They are then either flipping the domains to other Chinese investors or planning on selling them for $US at a later date. In many cases, as ChiP domains are quite liquid they have become an effective medium for converting RMB to $US.

It just so happens that there are some well cashed up Chinese investors (ie. not margin loan backed) that are buying the domains in $US because they can resell them for more in the Chinese market or believe that their value will increase over time.

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Making Money From Selling Domains - Part 1

Making Money From Selling Domains - Part 1

So you’ve been looking despondently at your domain portfolio and wondering how to make any money from it. To date, you’ve done a few sales but generally speaking there’s nothing really exciting in the pipeline. So let’s take a look at a few things you can do to get some activity happening.

Escrow.com

Let’s imagine you have around 1,000 domains. You’ll probably find that around 5% of them make their registration costs from traffic revenue. By being a little smarter you can probably push this to 20%.

What do I meant by being smarter? Stop trying to work out who is going to pay the most for your traffic by yourself and send the domains to professionals that do that all day long. Not only will you get paid more but trying to do this yourself is a complete waste of your time. Optimising traffic and squeezing the most out of it is a professional skill that takes massive servers and expertise…..unless you have that then give it to someone else to do.

I’ll make a generalisation here but out of the 1,000 domains there are probably 50 that can be priced above $10,000. Set these domains aside a projects in themselves. I’ll come back to them in a future article.

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Stop Pricing Burger Domains at High End Prices

Stop Pricing Burger Domains at High End Prices

Many domainers need to appreciate that we live in a world where the is massive oversupply of domain names and a steady demand. Sadly, the domains in your portfolio are not immune to this state of affairs.

Escrow.com

While on my recent trip around the world I met a domain investor that has several thousand domains and hasn’t sold any in the last few years. It was clear that they were getting a little desperate as the renewal fees kept on coming in each year. My advice was to drop the majority of their domains and take a look at the price of the ones they just can’t part with.

Just think about it for a second. What business model was the domain investor I spoke with applying to his domains? Was it the stock-turn or high value model? He was actually unclear and the result was no sales.

Many domain owners should actually be in the stock turn game where they are trying to sell 1-2% of their portfolio each year at an average price per domain of around $1,000. The problem is they have big prices on their domains and no sales result. They aren’t actually realistic about the pricing of their domains as they fall in love with much of the hype promoted by the “big sales”.

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