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.

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.

Now let’s take a look at the vast majority of the portfolio. The bottom 50% should be dropped so if you get anything for these domains then it’s a bonus. I know you have lots of reasons to keep them but let’s approach this from an economically rational perspective. These domains haven’t sold and are costing you money, so out the door they go in a fire sale.

Put buy-it-now prices for these domains at around $99 in all of the market places. If an offer comes in, then just accept it and move on. Even at $99 you’re making around 1000% of your investment…..so why complain!

In your portfolio there are around 350 stock item domains that should be priced at around $1,000 each. Seeing that your sales to date have been dismal, your goal should be to move to at least a 2% stock turn per year. This means that you’re looking at selling around seven domains per year or just under one per month.

At these type of numbers your gross revenue line will be around $7,000 and the renewal costs around $3,500 which means you’re make 50% on your money. Since your cost base is fixed, if you can do anything to increase the revenue line then your return on investment increases dramatically. Likewise, if you don’t sell the seven domains then you’ll go backwards.

So what’s the business process here. If you have any enquiries for the $99 domains, then try and upsell them into a $1,000 domain and likewise if you can upsell a $1,000 buyer into a $10,000 domain. This isn’t always going to work and you have to be careful about scaring a potential buyer off but at least there is the beginnings of a strategy.

The next step is to build a web page with all of your domains listed for sale and ideally have them categorised. Any inbound enquiries need to end up at this page (we can put custom links on parked pages at ParkLogic to point to your sales page). The links for the domains on this sales listing page can point back to the marketplaces.

This is where your traffic domains are gold…..each piece of traffic is a potential domain buyer. This works particularly well if you’ve purchased domains in distinct market verticals. A potential buyer will have a large selection of domains to choose from. If you have ALL of your traffic go directly to a marketplace (ie. from the parked page), then the odds of any potential buyer finding your other domains for sale is next to zero.

Traffic domains are incredibly valuable to BOTH the monetisation and the domain sales business models as traffic is potential clicks and sales. If you sell all of your traffic domains, then expect your domain sales to suffer as well.....so hang onto the traffic domains!

In the next article I will be discussing why stock domains are priced at $1,000 and more in particular who buys them.

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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.

Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.