If you were to talk to a business person in any other industry and tell them your business model what would they say? This isn’t verbatim, but essentially a question and answer session I had with a new investor. He didn’t know to what extent I was involved in the industry and I pretended like I wanted to know more. Looking back on the conversation I realized that unfortunately the hope and pray method is the business model of choice for many domainers. Would your discussion go like this?
Q: How do you make money with a domain?
A: Well, I buy a domain and then I wait for someone to come along and make me an offer on it.
Q: How do buyers know you have it for sale?
A: I put “this name is for sale” or I’ll put it on a site that will list it for sale for me
Q: What if nobody contacts you?
A: Then I wait. Sometimes I’ll send out some emails and let people know that I have something they need
Q: If they need it won’t they contact you on their own?
A: Sometimes they don’t know they need it
Q: So instead of waiting, do you have any other places to sell the domain?
A: I can sell it on the forums to other domain investors or have a friend put up a fake bid and sell it on Sedo. I could use a public auction platform like Bido or Boxcar
Q. Any luck with Bido or Boxcar?
A. Not really
Q: So the only way you can get it up to an auction is to have a friend put up a fake bid? Why don’t you just have some of your names put into some larger auctions?
A: None of the auctions will take any of my names
Q: Then doesn’t that mean you don’t have quality names?
A: No, they are just not the type of names they like. They are still very valuable
Q: If nobody wants them and the auction houses won’t put them in an auction what gives them value?
A: They are unique. There are no other names like them in the world. They also have good value according to the estimators like estibot and valuate
Q: Do people buy based on those estimates?
A: No, i guess they are only guides.
Q: Is there anything you can do to make money on these domains that just sit there?
A: I can park them and put ads on them when people visit or I can develop them out
Q: How much do you make parking?
A: Not as much as I used to. Actually it’s pretty much down to nothing.
Q: Well then, how about developing? How many have you developed and how are they doing?
A: I actually haven’t developed any but I plan to
Q: What’s your time frame for developing them?
A: I’ve been pretty busy and really haven’t had much time. It takes me an hour or two to look for new names so not much time left for developing
Q: What percentage of the names do you sell?
A: Oh usually 1 to 2 percent a month if I’m lucky
Q: Does that cover costs?
A: Sometimes, but did I tell you I sold a domain for $6K that I only paid $500 for?
Q: That’s great, but did it pay for the cost and renewals of all the names you didn’t sell?
A: I made $5500 on that sale alone, I’m pretty sure it did
Q: Pretty sure it did or KNOW it did?
A: Actually I’m not quite sure, I haven’t checked the numbers yet?
Q: What did your taxes say?
A: Taxes? I didn’t make enough to file taxes last year
Q: If you sold any domains you had to file some taxes right?
A: I’d have to talk to my accountant
Q: You have an domain accountant?
A: No. I guess I better check into that huh?