Category: case study

In short, I haven’t won any more auctions even though I have bid on a load:

I’m actually impressed with how many auctions I am able to bid on and not win.

I was surprised that virtualtutorials.com and miniwebs.com sold for so much. I’m really not sure who would be buying miniwebs.com as an end-user to make the $1,500 sale price justifiable. Perhaps I am missing something, but neither even has SEO history.

What is surprising me, is just how many domain names I am bidding on without winning. Many of them finish at $106, meaning that there was only 1 other person who bid above me – I think that is significant, although not really sure why.

There were also 2 domains that I only bid $51 for.

One thing, that this exercise is teaching me is about discipline. We all get caught up in auctions and perhaps pay more than we should. However, by being strict about my upper price, it means that I am not getting caught in the emotional aspect of it. At this low price, the majority of the domain names are not greatly valuable and if I lose, it really doesn’t matter so much.

From this selection, my favorite domain name was kingofcrabs.com, which under normal circumstances I probably would have spent much more than it sold for.

Since my last post, it has been the weekend. This means that there are far fewer domain names being sold. It probably also means that there are fewer people bidding or watching the auction. In my case, I don’t work on Friday or Saturday night (I am on Europe Time), which means that I place my bids up to 30 hours ahead of time. I think this could affect the number of auctions that I don’t win and also the number of auctions that I don’t bid on. The reason for this is that an auction would not appear on my search if there was not already a bid more than 24 hours before. I don’t have a great solution for this, but am just accepting as something that happens.

One thing that I could do that would probably improve my chances of winning more auctions, is to go through the list of auctions that haven’t had any bids on. I am currently loathed to do that, as even looking through the number of domains that I have to just to get those that do have a bid is large enough…and to be honest mostly boring.

So, still, just 1 domain bought and zero sold.

So, here are the domains that I bid on and lost:

You can see with Sprezi.com that I bid less than $50 as I was quite unsure about it, but thought at $50 it was a good punt. croots.com was not part of this case study, but a domain that I wanted for my main portfolio. I think it’s a great domain name and that someone got a good deal. It just wasn’t my focus to bid high enough to win it and I didn’t do any proper research before bidding. My highest bid was $750.

My favorite domains out of the ones I bid for were:

obesitymatters.com, cutetopshop.com, bassfishingworld.com (in that order)

In retrospect, I was pleased that I didn’t win kahunaproperties.com, startupgovernment and especially iheartyourcoffee.com . I think that I misread the last one as iheartcoffee.com which I why I bid on it.

The Good News!

So, the good news is, that I didn’t actually win 1 auction which was for….

(Drumroll)

otcinvestmentsxxx.com (remove the xxx).

I won the auction for $20. Taking into account the registration fee, it cost me $39.17 in all.

Why do I like the domain?

OTC is a well-known shortened form of Over The Counter which is a term used with investments. It is both a good keyword domain and also a good branding name with around 5-10 companies in the US called OTC Investments.

With the way that expired domain works, it will take a few days to clear and push to my Godaddy account at which point I will put it on Afternic and a couple of other marketplaces and hope for the best.

One thing that has become very clear to me already, is that it is much more difficult to buy a sub $100 domain name than I had thought. I have bid on 15-20 domains at $100 and only won 1 auction. There are several obvious reasons for this.

Many people see that there is more than 1 bid on a domain name and that therefore becomes more attractive to bid on. Especially, if the original bidder auto bid against me.

There are probably more people who are prepared to bid on a $100 domain than a $3k domain.

I assume that there are certain bots out there who are programmed to immediately bid on signals that I am setting off when bidding on a sub-100 domain name.

So, I now have $9,960.83 left to buy domains. And I also have 1 domain with zero domains sold.

I have been buying and selling domain names for quite a while. The vast majority of my sales are $3k-$20. I like the price range, as each time I make a sale I receive 2-3 times the amount that I paid when taking into account my fees.

So, if I purchase a domain name for $1,500 and sell it for $5,000 then I receive:

+$5000 (Sales Price)

-$1000 (Commision with Afternic, Dan etc.)

– $60 (Approximate Paypal Fees)

– $20 (Approximate registration fees)

= $3,920

which in my opinion is a nice bit of cash that I can then use to buy further domain names and build up my portfolio.

My portfolio consists of approximately 100 domain names and the rule of thumb industry standard is 1%-5% sales a year. So, if I made 5 domain sales a year, then my profit would be approximately $20k ($3,920*5). However, I also need to pay the renewal fee per year on domain registration. On 100 domains, that would be $1k if renewal is $10 each. So, the profit would be approximately $19k a year.

Obviously, the above figures are approximate but are based on my experience.

For example, you can omit the 20% commission fee if you sell directly. However, in my experience, most of my sales come from Afternic and are usually at full price.

Using the above approximate figures, that is a $20k return on $150k of spend or an annual return of 13.5%.

Problems with the $3k-$20k market:

1. The biggest problem is the infrequency of sales. They are fairly random. I could go a few months without any sales and then a few sales in a week. I haven’t even noticed any particular seasonal trends.
2. There is a large outlay. Most people don’t have $150k lying around that they can tie up in an investment that isn’t so liquid (in general).
3. Mistakes are expensive. If you buy a domain name that never sells, then you have lost potentially 1000s of dollars. I recently bought a domain name on a whim which I regret as it was an impulse buy rather than a thought-out buy.

These may not be problems with a more active trader, however, most of my selling is fairly passive. I put it on the marketplaces and then it sells (or not).

Domains That I Buy

Generally, I buy expired domain names from Godaddy. I realize there are other places to buy. I also realize that I could potentially make more money using other places. However, this suits me and my style of business especially as I put very little time into this.

Domain names that I buy are generally branding names. I consider whether a new (or old) company would be interested in buying this domain as their main website. Also, if a company would be prepared to spend the amount of money that I need to sell it for in order to make a profit.

My three most recent sales were similar to:

hatshop.com

ph33.com

powertothenation.com

NOTE: These are NOT the domains that I sold. They are just similar in concept so that I can describe why I bought them.

hatshop.com is a great name for an eCommerce shop that…well sells hats. If you are setting up a new hat shop then you may be prepared to spend several thousand dollars on that name.

ph33.com is a bit of a funny one as it seems quite generic. However, if a company calls themselves ph33, then it would be a perfect domain name and they actually have little choice but to buy it from you. You need to be lucky with this one. Obviously don’t buy a domain that already has a trademark etc.

powertothenation.com is a very different kind of domain name and not one that I usually buy. However, it is very brandable for an organization or someone that wants to use that slogan or a new company.

Another kind of domain name that I also sometimes buy is a keyword domain name. An example here could be farmersinalaska.com . However, I generally wouldn’t buy this to resell but to use myself to build a content site around. It’s not very brandable and I don’t think that a farmers union would pay a premium to buy this domain name. However, if I wanted to do a content site about farming in Alaska then it would be the perfect domain. I very rarely am able to sell a keyword domain name to an SEOer. I assume because if they don’t get the exact domain name, then they buy something similar. eg. afarmerinalaska.com that is available to register from new.

Plan for the $10k Domain Buying Case Study

Taking the above into account, I want to try an experiment to see if a different tactic will work better. That is to take $10k and use it to buy approximately 100 domain names at $100 each. I am keeping the number of domain names approximate as there will be some cases where I consider a domain name so good that I need to bid higher. However, that will be on a rare occasion and only up to $250.

I will then list each domain name for $500 and hope that sales will be more frequent.

Doing the maths if I buy at $100 and sell at $500:

-$100 (for domain)

– $3 (Paypal fees)

– $20 (registration fee)

+ $500 (sale)

-$100 (commission)

This basically means, that using this figure I will get back $277 for each $100 that I spend.

If my sales rate increases to 10%, then I will make $1770 on an investment of $10k or 17.7%.

The other thing to realize is that with each sale, I will be able to buy 2-3 more domains which should increase my sales rate.

How I Find Domain Names:

I’m going to keep it simple. Each day, I will go to Godaddy Expired domains and do a search for domains where the auction is ending in less than 24 hours. Also, that there is at least 1 bid, and that the current price is under $100. I will then put a bid for $101. This is so I will beat people whose standard bid is $100. There are ways that this could be improved in terms of tactics and strategies, but it also keeps it very systemized and automated.

In the case study, I will show you which domains I bid for and which I win and lose, and also a running total of $10k. When I win an auction, I will replace a letter of the domain with an xx so that it won’t appear on a search of a potential buyer. As this blog has started off with next to zero readers, I don’t feel that it gives me an unfair advantage to reveal the names I have for sale as this is tactical that anyone else could use without any name recognition.

After doing that search, I then search by time left so that I have the soonest ending at the top and ‘watch’ any auctions that I find interesting. I then go straight away and bid $101 on each domain.

These are my results from yesterday:

I lost the following auctions:

I didn’t actually win any auctions!

My favorite were:

mraustralia.com

comicbookmuseum.com

hookupnation.com

etheriumsilver.com

I think the best of those is etheriumsilver.com

So, at the end of day 1, I still have $10k and 0 domains!