How I Determine Whether to Develop or Flip
When I buy a domain name, the most significant quality I evaluate is the likelihood of it being used commercially. Using common sense, my marketing background and my consumer-savvy mind, I analyze whether a company would be willing to spend money building, marketing and branding a particular domain name as an online business. If I believe the answer is “yes,” and the price is right, I will usually buy the domain name. Since is not a tangible quality, I think this is where a huge disparity lies between people who have been financially successful and people who haven’t been as successful.
Once I purchase a domain name, I determine whether I will develop the domain name into a commercially viable business or sell it to someone else with that inclination. My first step after purchase is to try and determine the value of the domain name on the market – both to other domain investors and to an end user. If the value is worth considerably more than I paid and it’s not a project I’ve dreamed about working on, I will usually sell it. When I can quickly profit and/or upgrade easily by selling, it’s usually a no-brainer.
If the profit margin would be somewhat slim, I think about how I can develop the website on my own (with my developer) to increase the value and generate a passive revenue. Determining the type of site it would be best as is important, as there can be considerably more work depending whether it’s an informational website, offers a service or a commercial endeavor offering products for sale. I need to then figure out if I have the ability, capacity, and drive to operate and manage such a site. Additionally, I need to determine how long it would take to be profitable.
If I don’t particularly have an interest in the industry but I can build an easily manageable informational site, I might develop it with the intention of selling down the road. I have been doing this with some mini-sites, and I hope to share the results in a few weeks/months.. If I have little interest in the industry, and the site would take time and a considerable amount of money to develop, I will look to sell – even at a slim profit margin.
For me, development is equal parts enjoyment and equal parts profit. I am a history buff, and I like direct marketing (I was a History & Business major in college and have a Master’s Degree in Direct Marketing). This is just one reason why geodomains (such as Lowell.com and Burbank.com) are perfect for my business. My goal is to make a comfortable living – to enjoy life without many worries about money. I earn hotel and job revenue, and I am going to begin soliciting local businesses very soon. In fact, I received this nice submission on Lowell.com while in New Orleans:
subject : Lowell Form Submission
redirect : thanks.html
Name : xxxxxxxxxxxxxxx
Company : xxxxxxxxxxxxxxx
Email : email@example.com
Phone : please email
Website : xxxxxxxxxxxxxxx
Comments : Could you please send me a rate package to advertise on your website, it would be a small 125/125 button preferably on your main page for a small business I own
submit1 : Submit
Personally, I would prefer a solid geodomain over almost any other type of domain name for several reasons.
- The branding is already accomplished (assuming it’s the exact name of the city/town)
- Many people type-in the domain name directly (57% for Lowell.com)
- Can be informational or service oriented with ad sales depending on how much involvement owner wants to have
- Huge opportunity to grow via search engine optimization
- Almost all large US city .com names are currently developed (largest 250 cities in the US), so they don’t come on the market often I would still pay up to $100,000 for an east coast US city .com (I didn’t receive a single offer meeting my requirements.
It’s important to note that I am still generating most of my revenue by selling domain names. I am a “one man show” here and it wouldn’t make sense to overwhelm myself with development projects as there aren’t enough hours in the day. I love my fiancee and my friends enough not to become a slave to this business, although they all know how much I love this business. I will slowly develop some of my domain names into revenue-producing websites while I continue to sell other domain names. As my websites continue to grow and generate more revenue, I will be able to scale down my selling to develop other websites.
This is the first business I have run entirely on my own, and it’s a learning process. Just like learning which domain names to buy is important, it’s equally important to learn which domain names to keep and develop and which names to sell.
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