Selling bad domains can double your costs...

[Edwin]

I was idly musing about this the other day and thought it was worth a post.

DomainLore works very well as a site (I'm certainly happy with the service, and I know many others are too) but it has a sting in the tail for those genuinely unable to distinguish "worthless" domains from domains that have the potential to sell for £50+.

There have been plenty of cases where I've seen domains get appraised as "worthless" (or a slightly kinder paraphrase) by experienced domain investors, only to wind up on DomainLore the very next day and (naturally) go unsold at the end of the auction period.

So what happens then?

Well, you've got a situation where somebody has spent...
- £5 (roughly) for a worthless domain
- £5 on a listing (because DL have a fantastic system whereby all successful sales are free, thus incentivising the listing of domains that will sell at realistic prices)

So suddenly that £5 gamble has turned into a £10 gamble.

So the seller now has to sell twice as many names to cover their costs, even before they can start to think about any sort of "profit".

Of course, the above is ludicrously trivial if we're talking about ONE domain - I assume anyone can carry a £10 rather than £5 loss. But scale it up to dozens/hundreds of domains or more, and it's another clear pointer that those who are newly entering the market have to be REALLY careful about what they register.

The beauty of Domainlore is that it gives names a real, fair chance at a sale because there are few listings at any one time (unlike Sedo/Afternic for example) and because the opportunity to buy is always time-limited. There are plenty of people watching the site, such that even names in the "hidden" section will sell if there's a flicker of interest. And of course a quick free thread in the Auction forum on Acorn will ensure the folks here see it.

But once Domainlore has been exhausted, the other avenues start to look like a lot of work or a big gamble:
- List on Sedo - have to catch a buyer's eye out of millions and millions of listings plus the sale price has to be over a minimum floor price to cover their minimum commission
- Afternic - ditto
- Point at a "for sale" page - need typein traffic as 0 visitors = 0 chances of making a sale
- Proactive marketing effort - research likely buyers, contact them and follow up (but if a domain is REALLY worth this kind of effort it would have already sold on DL for £50 at least)

 

[Murray]

You could apply this to public catchers which is scaled up.

If you're paying £50 for a name at a time because you think it's worth something and it's not, losses mount very quickly.

 

[Retired_Member42]

I think most domainers would agree that it's about averages. Some sell, some don't. Some you think will go for peanuts will go for a decent price and vice versa. I run my drop catching and flipping sideline with a total profit / loss figure and ignore individual sales. From day one my profit has always been above my costs. It's not going to make you rich but the time it takes to load the catcher and sell them for the profit it returns is more than worth it.

I think the biggest challenge is picking a domain which will sell. That takes time and experience in flipping domains. I made the mistake of catching domains which I'd usually buy to develop etc and thinking people were of the same mindset. They're not. It's only a certain type of domain which can be flipped easily so I now gear my catching/sales to reflect that.

For anyone looking to do it as a core business or sideline I'd say the biggest lesson is to look for what domains are selling and concentrate your sales efforts on those. Don't waste time catching (or buying) domains to flip just because it's a cool word, it's short, you think it's brandable, it has good search metrics and so on. You'll be stuck with it. If you want to make money on domain lore, invest in what sells, not what you simply think is a good domain.

 

[Edwin]

You could apply this to public catchers which is scaled up.

If you're paying £50 for a name at a time because you think it's worth something and it's not, losses mount very quickly.

Yes, very true! Another factor that skews the averages needed to make a go of it.

 

[sdsinc]

You are completely right, unfortunately this is not the end of the story. The subsequent renewals amplify the losses.
I have seen some real sad chaps clinging on to their worthless domains for years, as if they were some sort of retirement fund...

The good names sell for themselves, and don't need 'promotion' which means paid listings or spamming.