One of the easist mistakes many domain investors make is paying too much attention to their average daily revenue and not really understanding what it really means. The average daily revenue is made up from all of the individual earnings of each domain in a portfolio…..which makes sense but underneath that statement is a lot of hidden meaning.
A couple of years ago I met with the CEO of a large domain portfolio and they were amazed when I began to unpack the data that made up their average figures. So let’s look at a number of the misconceptions that many people hold to around their average numbers.
The Law of Averages
It's best to look at an example to illustrate what I'm talking about. Let's imagine that you have two domains in a portfolio, A.com and B.com. The average earnings per day for A.com is $1 and B.com is $0.10. Obviously, the average daily earnings for the portfolio is $1 + 0.10 = $1.10 per day.
If you are able to increase the earnings of B.com by 50% (which is a lot) then the earnings become $1.15 per day....which is barely a blip on the radar for most portfolio owners. Now here's the interesting part. Most people have 10 times more type B domains compared to type A domains. This means the average daily earnings is actually $1 + 10 x $0.10 = $2 per day....