HOW MUCH MONEY ARE WE TALKING ABOUT?
Now, comes the bottom line. How much money are we talking about? It all depends on the volume of your domain name business. The higher the volume, the more likelihood you will make a bigger profit. That's because each individual domain name that you park or buy is not going to be profit leader. You will have some losers and some big winners. In addition, you will have a lower volume to work with if you are developing the sites instead of just flipping them. That's because it takes more time, but the profit can be more too. It all depends on what model you are using.
The simplest way to make money off a domain name is to flip it. So, say you buy a domain name for $6.50/year. This pricing is set for volume buyers of domain names. If you are not a volume buyer, you may end up paying a lot more. But, for someone who owns their own domain name business, you can get pricing for $10 or less per year for each domain name your register. These are the domain names being registered under the .com, .org, or the .net extensions.
You buy the domain name and then you want to sell it. What's a reasonable profit for flipping it? There's no way to tell, actually. The sale price is usually determined by the value buyers perceive the domain name to have. That's why most sales are done in an auction format with multiple bidders. The price of a domain name is completely arbitrary, and some do not sell at all.
The average resale value of domains is less than $200 for those that sell. If you have multiple no-sells then that eats into that profit. So, you are working a volume business with some domains selling and others not. You can get rid of any domains that aren't selling and try new ones, but you do have to spend to either taste the domain or register it. For the most part, if you sell your $6.50 for $13.00, you've made 100% profit. And, that's the way you have to look at your numbers.
You can buy other domains that are worth more like $200 and flip those, but there's not guarantee those sell either. However, those that do sell, are sure to make a very large return on your investment when you look at the percentage of monies made in comparison to what you spent. There is no other place right now where you can put down money and get such a large rate of return. So, obviously, the risk is that it doesn't sell at all. With a large enough portfolio, those dead domains don't really affect your overall earnings. Instead, you might want to try a different strategy other than flipping for those to see if they can sell later, or recycle them back into cyberspace after the year is out.
For instance, say you buy 10 domain names for $10 and only half sell. Your expense was $100 for the entire year. The half that sold made a profit of 200% on average or $300. So, now you have pocketed $200. With the other four you decide to park and make advertising revenue through campaigns and affiliate programs. They generate maybe $10 per month each. So that's $40 per month or $480 per year of additional income. So, now your $100 investment has netted an annual return of $680.
But, wait, there's still one domain name left over. It didn't flip, you decided to park it, and the traffic skyrocketed. You decide to develop it into a viable website. You can sell that website later in the thousands of dollars. Your $100 investment makes several hundred percent for a return on investment. Try doing that with any other type of product or service and you will see that domain names are unique in their ability to generate large sums of money, very quickly.
So, you see, the business model itself is very profitable, but volume, hard work, and some luck play a role in how much you actually make. You will not be working with 10 domain names per month. Your goal is to work with hundreds of domain names per month. If you bought 10 domain names every business day that's 200 domain names you have in your monthly portfolio. Assuming the rate of return on the last investment, even without a stellar domain name, you can end up with about $13,600 per month income.
There is no guarantee, however, that you can manage that much volume or that you will be as successful as the previous example demonstrates. One thing is for sure though, by the end of the year, you will have a portfolio of 2400 domain names. Considering that many domain name resellers have portfolios of domain names in the hundreds of thousands, you can see that volume is the key to a successful domain name business.
Now, comes the bottom line. How much money are we talking about? It all depends on the volume of your domain name business. The higher the volume, the more likelihood you will make a bigger profit. That's because each individual domain name that you park or buy is not going to be profit leader. You will have some losers and some big winners. In addition, you will have a lower volume to work with if you are developing the sites instead of just flipping them. That's because it takes more time, but the profit can be more too. It all depends on what model you are using.
The simplest way to make money off a domain name is to flip it. So, say you buy a domain name for $6.50/year. This pricing is set for volume buyers of domain names. If you are not a volume buyer, you may end up paying a lot more. But, for someone who owns their own domain name business, you can get pricing for $10 or less per year for each domain name your register. These are the domain names being registered under the .com, .org, or the .net extensions.
You buy the domain name and then you want to sell it. What's a reasonable profit for flipping it? There's no way to tell, actually. The sale price is usually determined by the value buyers perceive the domain name to have. That's why most sales are done in an auction format with multiple bidders. The price of a domain name is completely arbitrary, and some do not sell at all.
The average resale value of domains is less than $200 for those that sell. If you have multiple no-sells then that eats into that profit. So, you are working a volume business with some domains selling and others not. You can get rid of any domains that aren't selling and try new ones, but you do have to spend to either taste the domain or register it. For the most part, if you sell your $6.50 for $13.00, you've made 100% profit. And, that's the way you have to look at your numbers.
You can buy other domains that are worth more like $200 and flip those, but there's not guarantee those sell either. However, those that do sell, are sure to make a very large return on your investment when you look at the percentage of monies made in comparison to what you spent. There is no other place right now where you can put down money and get such a large rate of return. So, obviously, the risk is that it doesn't sell at all. With a large enough portfolio, those dead domains don't really affect your overall earnings. Instead, you might want to try a different strategy other than flipping for those to see if they can sell later, or recycle them back into cyberspace after the year is out.
For instance, say you buy 10 domain names for $10 and only half sell. Your expense was $100 for the entire year. The half that sold made a profit of 200% on average or $300. So, now you have pocketed $200. With the other four you decide to park and make advertising revenue through campaigns and affiliate programs. They generate maybe $10 per month each. So that's $40 per month or $480 per year of additional income. So, now your $100 investment has netted an annual return of $680.
But, wait, there's still one domain name left over. It didn't flip, you decided to park it, and the traffic skyrocketed. You decide to develop it into a viable website. You can sell that website later in the thousands of dollars. Your $100 investment makes several hundred percent for a return on investment. Try doing that with any other type of product or service and you will see that domain names are unique in their ability to generate large sums of money, very quickly.
So, you see, the business model itself is very profitable, but volume, hard work, and some luck play a role in how much you actually make. You will not be working with 10 domain names per month. Your goal is to work with hundreds of domain names per month. If you bought 10 domain names every business day that's 200 domain names you have in your monthly portfolio. Assuming the rate of return on the last investment, even without a stellar domain name, you can end up with about $13,600 per month income.
There is no guarantee, however, that you can manage that much volume or that you will be as successful as the previous example demonstrates. One thing is for sure though, by the end of the year, you will have a portfolio of 2400 domain names. Considering that many domain name resellers have portfolios of domain names in the hundreds of thousands, you can see that volume is the key to a successful domain name business.
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