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 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.

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?”

He replied, “I’m doing the same thing.”

I then said, “So you are expecting a different result by doing the same thing? You do know that’s the definition of insanity, don’t you?”

Of course, he wasn’t insane but how many domain investors behave in exactly the same manner? Five years ago they placed all of their domains with a single company, watch their revenue line fall and then claim that it has nothing to do with their own behaviour but the industry. The problem with these domainers is that they are still trying to make buggy whips rather than innovate.

So in this series of articles I’m going to share with you what I do with my own domain portfolio and more importantly why I do it. Since I’m a numbers guy, as much as possible I’m going to track everything back to facts rather than fiction and gut reaction.

When I think about optimising my domain portfolio I place each asset into one of four main buckets.

1.      Development
2.      Traffic
3.      Stock-items
4.      High value

In terms of development, I have and after a hiatus of about five years I’m in the process of rebuilding my aviation website Why these two domains? I’m passionate about both sites and I really enjoy engaging with readers. For example, those of you that have left comments here at whizzbangsblog quickly discover that I really enjoy replying to questions and helping other domain investors out in any way I can.

Developing a website that you’re passionate about is really important as it will spur you on to write or work on the site into the years ahead. I was speaking to a domain investor about developing a website into a business and I shared that it was actually really easy to do. In my case, all I had to do was write an average of three articles a week for nine years. Voila! Success :-)

I’m actually really proud of the articles here on whizzbangsblog and I often find myself trawling back through the archives to review how my thinking on a topic has developed over the years. I also find that I do much of my thinking about the domain industry and all of the opportunities within it while writing articles. It may sound strange but it’s my way of relaxing.

Every domain investor should have a couple of projects that they are developing into real businesses. In the case of whizzbangsblog I have the privilege of and Epik sponsoring my blog and this helps fund my time for writing.

I'm really careful about the number of sponsors and who sponsors my blog as I'm tying my own reputation to the services being offered by the sponsors. If their services aren't any good then it reflects badly on me.

With the relaunch of downwind I will be seeking aviation industry advertising as the traffic grows.

What’s really important is that when you develop a domain, develop it into a business. Don’t try and make something pretty because you like pretty websites. Focus on the end goal of how you will make money from the site so that what you develop is sustainable over time.

For the record, it doesn’t take much to get a good website up and running. There’s many different platforms available for managing the content. I personally use Joomla but wordpress is just as good.

If you spend over $1,000 getting an initial launch of a website put together then you’re probably spending too much. Make sure you get your first dollar of revenue in as fast as possible and whatever happens, learn from customer feedback!

In the next articles I’m going to dive really deep into my thinking around the four business models and how they help me optimise my domain portfolio for greater profitability. In the process I also plan on revisiting the series on pricing domains.

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Recent Comments
Hi Michael-great post so thank you. We own the name and have thought it would be a great name for a worldclass econ... Read More
27 June 2016
John, I'm glad I could be of assistance. Feel free to reach out to me if you want to chat about your domain.
28 June 2016
It's easy to say yes to money and then realise that you've made a BIG mistake.
28 June 2016
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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.

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.

Games demand curve


The next thing I add is a power series trend line (blue dashed line) which I can then use to approximate the demand curve for gaming traffic. It just so happens that Excel has a great feature that allows you to display the formula of the trend line on the page. In this case it’s 40.053X^-0.0537. For those of you that have forgotten your maths, this is 40.053 times by an X-value raised to the power -0.537. Basically it’s the formula for a nice curve.

Trend line to games demand curve


After some more complicated mathematics using some integral calculus I was able to determine the area under the blue line. Why is this important? What we do know is the average domain name sells for $1,000, therefore the mid-demand point should reflect this valuation. It just so happens that the mid-point is at (1510,0.786). I’ve highlighted this on the graph below.

Plotting of the mid-point


So what do we now know? Right up the top of the demand curve are the generic category killer domains and rightly, this is where the curve asymptotes into the stratosphere for pricing. For instance, is worth a LOT of money and this is where this domain would reside on our chart.

At the far right hand end of the blue curve we have a rapid drop off in demand. Any keyword domains that find themselves out this end of the spectrum should be dropped. This is where domains such as belong…..just drop these ones or at the very least put them up for sale at just above registration fee.

By using the Google keyword tool I can now type in any of my domain names to get the suggested price for that keyword. I can then plot the price on the demand curve and determine whether the domain is above or below the $1,000 point.

Now here’s where it gets tricky. What we don’t know is whether the pricing scale on the right is linear, logarithmic or some other scale all together. My intuition suggests that this scale must relate somehow to the size of the market and the overall demand for the individual domain we are trying to price. I need to think about this a little more.

So what can we now do? We can generate a demand curve for any market vertical, plot the mid-point to work out whether our domain should be priced above or below $1,000. We should also be able to view those domains that are category killers and those that should be dropped. It’s a start in the analytical process…..and hopefully I can refine this further.

Total demand picture

As I said in my previous article, I really value feedback (good and bad) that provokes additional ideas….so feel free to pitch in with questions and suggestions.

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Recent Comments
Hi Jeff, Many thanks for your thoughts. I think what I was attempting to do with by using the Google data was to get a picture of ... Read More
21 June 2016
Hi Adam, yes,,,,maths can be a pain at times. The methodology of pricing domains can be used for both buying and selling.
22 June 2016
Hi Jeff, Couldn't agree with you more....and that is why we founded ParkLogic for traffic monetisation. It basically back fills wi... Read More
22 June 2016
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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.

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 or 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.

What happens if the demand graph looks like the one below? As the price rapidly decreases more domains are sold while the profit is reduced as we slide down the demand curve to the point of zero profit where the supply and demand curves cross.

Supply and Demand Curve 2

Conversely, what if the demand curve is a step function and the minute we try and charge more than $1,000 for a domain then no domains are sold. This shaped graph means the $1,000 price tag better be really accurate or we are either maximising our returns or never getting a sale.

Supply and Demand Curve 3

What these examples illustrate is the shape and scale of the demand curve can have a huge impact on our potential sale opportunities and also return on investment.

At a micro-level one of the problems with domains is that each of them is unique so predicting the demand curve for a specific domain becomes problematic as the quantity is always one. Basic economic theory says that we are selling large quantities of identical items. Nevertheless, although we can’t predict the demand curve for an individual domain we should be able to do so for a market vertical which has many thousands of domains which may be appropriate to it.

 For example, let’s imagine I have decided to corner the market on 3D printer domains by purchasing as many 3D-printer related domains as possible. I’ve finally accumulated several thousand of the domains… how should I price them and what should I do with them?

The first thing we need to look at is the size of the 3D printer market. Right now it’s sitting at around $12 billion dollars and is expected to rapidly grown to $27 billion dollars by 2019. Although this looks like a massive number, it’s actually a really small market compared to other market verticals. I could also add the total number of 3D-printing companies into this mix.

I should see the predicted market size growth reflected in the traffic for my 3D printing domains. So after plotting the various graphs (eg. market size, number of companies and my domain traffic) over time I find there is a correlation of 0.9. This confirms that the market is rapidly expanding so all is good!

Obviously the more data points that I can put into the mix the better the result. For example, what is the demand for Google adwords for 3D printer related keywords? If I put the domain names into the keyword search tool, then out pops a cost to buy that keyword. Since this is a dynamically changing auction it provides a real snapshot of the demand curve for customers. Once I match this up with the other data I’ve collected I should know which domains are actually my diamonds and which are my straw.

So what’s my strategy? For illustration purposes let’s imagine I now work out that my demand line is linear and looks like the one below. My goal is to maximise the revenue under the entire curve. If I set the price of all of my domains with a buy-it-now of $1,000 then I ONLY have the potential to get the revenue represented by the yellow area.

3D printer supply and demand curve

My goal should be to pick up ALL of the white area under the demand curve that is ABOVE the blue supply line.

Since it is a rapidly expanding market, I’m going to build out my highest demand domain into a fully functional website. An advertisement on the site will be about buying 3D printing domains and some of the articles may even be about the importance of a domain name for start-up businesses in a rapidly growing market etc.

My super-premium domains that are in demand I’ll put a “call for price” on them. The vast majority of the domains I then price accordingly down my demand curve. The goal is to have price points that maximises the total area under the demand curve. This means that some of the domains I may sell for far less than $1,000. The patchwork quilt in the below image illustrates what I’m talking about.

Patchwork supply and demand curve

Since we work in a changing marketplace then over time we need to re-evaluate our pricing strategy based upon any new data that we’ve collected. If you want to maximise your returns from selling domains then you can not afford to approach it with a fire and forget mentaility….it takes work!

Here’s the challenge, this strategy seems logical if you have a lot of domains in an individual market vertical but what happens if you only hold a handful? More on this in a future article.

If you've found this article useful and it has provoked your thinking to approach selling domains differently then please leave a comment. As a long-time blogger I sometimes wonder whether I'm actually helping people out or now. It's through our engagement and sharing of ideas that we can improve our businesses. Besides, leaving comments spurs me on to write more :-)

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Recent Comments
Michael, this series of posts has been invaluable - thank you. Richard Canberra.
17 June 2016
Richard, not a problem. I'm still doing a lot of thinking about pricing and how domain investors can earn more from their sales...... Read More
17 June 2016
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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.

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.

Since stock item domains typically sell for $1,000 each then it looks like my price of $2,000 is a little aggressive. It just so happens that in order to satisfy the price point of $1,000 I will then need to do a 2% stock turn or sell 20 domains per year.

My guess is that the great majority of people don’t sell anything like 2% of their domains each year so this is going to be a challenge. Two other costs needed to be added into the equation. The first is stock replenishment and the second is the value of your time. If you decided to spend an average of 1 hour per night working on your domain business (ie. your part-time) and charge out your time at $100 per hour then you will need to add in a cost of $36,500.

The reality is I don’t know any part-time domain investor that actually incorporates their charge-out rate into their business. This means they are really running a hobby more than a business…..which is fine as long as they realise this.

In terms of replenishing stock….let’s imagine that there are enough domains to hand register so they only cost you $10 each. Fingers crossed on this one J

If you take into account all of these costs, then selling 2% of your portfolio per year will mean that you need to sell 20 domains at an average price of $4,670 per domain. To get the price per domain around the $1,000 mark you need to sell 10% of your portfolio per year and around 8-9 domains per month. Good luck with that!

Here’s the mistake that many domain investors do. They sell one domain for $1,000, attribute a cost of $10 to the domain and then cheer because they made 10,000% on their money. For that domain they did but across their portfolio their more than likely losing a bundle.

So what is it that we all believe will happen to get across the economic irrationality of our situation. The first is that our time is free and the second is that we will sell a domain for not $1,000 but for $1,000,000. The domains become like buying lottery tickets and if only just one of them comes off we can be financially free!

So when an offer of $1,000 is received some investors convince themselves that maybe, just maybe this is the potential buyer that is going to save our bacon. So they respond to the offer with something ludicrous. Remember these are stock-item domains not premium domains. The goal here is to increase the speed of sales, NOT to sell for a crazy price. Nine times out of ten the sale is lost due to the outrageous response.

So far everything sounds a little depressing…..but don’t worry, there is light at the end of the tunnel. This article and the preceding one laid out the situation for the majority of domain investors. The next article in this series is going to throw out just about everything I’ve said in the last two as it unpacks what is happening at a domain economic level. It will cover additional thoughts on pricing, supply and more importantly demand.

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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.

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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