Challenge of Being a Domain Flipper
Most of my business comes from flipping domain names. I buy domain names in private or at auction, and I try to sell them at a profit as quickly as possibly. I subscribe to the churn and burn method of domain sales, aside from those names I keep for development.
One of the most difficult aspects of being a domain flipper is deciding whether to quickly flip a domain name or hold out for a higher offer. To illustrate this, let’s say I bought a domain name for $20,000 and received a $30,000 offer to sell it a week later. For most people outside the domain industry, a 50% ROI in a week’s time is outstanding, especially when we’re talking about making $10,000 profit. However, if I feel the domain name is worth $50,000 minimum, I would likely pass on the offer.
The issue with passing on a $30,000 offer in the hopes of selling it for $50,000 is that the higher offer may never come. Additionally, the $30,000 offer may not be there days or weeks later should I decide that I want to sell the domain name. It’s easy to make an assumption that a domain name is worth a specific figure, but getting a financial commitment for that number is a different story.
The need to maintain liquidity is always in consideration, too, because I need to have enough cash on hand to pay bills and make other acquisitions as well. This is critical because if I have inventory that can’t be profitably turned into cash, my business is sort of dead in the water. I always need to be investing to keep growing my business.
If you buy and sell domain names, how do you cope with this challenge of being a domain flipper?
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