Pros and Cons of Selling New Registrations Cheaply to End User Buyers | DomainInvesting.com
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Pros and Cons of Selling New Registrations Cheaply to End User Buyers

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Over the past couple of weeks, I’ve written about a few of my recent end user sales on new registrations that were for less than $1,000 each. A couple of people have made comments and sent emails asking about whether these lower value sales are worth the time and effort when it can take a similar amount of time and effort to sell a much higher value domain name at a significantly higher profit. These comments are worth addressing because they are valid concerns.

One of the primary reasons I became fascinated by the domain investment business was because I could virtually create something from nothing, pay around $10, and sell the name to someone else for a nice profit. Much like some people go on vacations where they can dig for gold, hunt for gems, or search for other objects of value at a minimal cost, domain investing at this basic level is exciting to me.

Don’t get me wrong, my company wouldn’t be around if it wasn’t for the high dollar sales, but I enjoy creating names after doing research and then flipping them for a large profit.

Below are a few pros and cons to consider regarding selling new registrations to end users:

PRO: When buying newly registered domain names, there is far less risk than paying $5,000, $10,000 or $50,000 for a domain name in the after market. If it sells for anything over $10, I will make a profit (not considering the cost of my time to research, contact, negotiate, and transact).

CON: If a newly registered domain name sells for $1,000, there’s a huge profit margin, but the actual realized profit would not be enough t sustain my business unless there was a significant number of these sales each month.

PRO: There is very little carrying cost to domain names that don’t sell. If I buy a $10 name and email 30 companies who don’t express an interest, the cost to maintain the domain name is just $10 a year, and I can later decide whether it’s worth keeping.

CON: Although I don’t usually (well, ever) purchase dozens or hundreds of domain names at a time, I know there are plenty of people who do.  Despite the fact that a domain name can cost $10 to register, if you own dozens, hundreds, or thousands of these new domain names that generate no parking revenue, the carrying cost on virtually worthless domain names can be considerable.

PRO: It’s fairly easy to find decent unregistered domain names that would be coveted by companies in those specific markets.

CON: It can be very easy to go overboard, purchase thousands of dollars in domain names that don’t receive any interest from potential buyers, and those thousands of dollars could have been spent on one very good domain name.

PRO: Making the decision to buy a $1,000 domain name can be easy for some end users and not require approval from higher levels at a company because the cost is relatively low. This generally makes transactions go quickly.

CON: Some companies may not like the idea of enriching you when you literally just spent $10 to buy the domain name and turned around and asked for $1,000.

PRO: Deals under $1,000 can be done very easily (and quickly) using Paypal, and the cost of escrow is relatively cheap.

CON: New registrations can’t be transferred to a different domain registrar within the first 60 days of registration, which could pose a problem for a buyer.

Ultimately, I think it might be wise for domain investors to try to buy interesting domain names for end user sales slowly and pitch the names to potential buyers. If you find that you aren’t having luck, perhaps hiring a domain consultant (NOT me) might be beneficial. It’s a good idea to hone your domain research, sales, and negotiation skills on lower value domain names before moving up and making more expensive investments.

Selling newly registered domain names is a small aspect of my business, but it’s been enjoyable for me so I am thinking about doing it more frequently as time permits.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (4)

    Mike

    great post thanks. Yes, I am sure no one would mind selling $1000 or less if you can do a lot of these. But think about it, even if you could sell 10 per month, the profit would be better than most day jobs.

    @Elliot, I would love to see a post on tools you use to find/email end users and to minimise the time taken for this process.

    Thanks.

    June 7th, 2010 at 6:26 pm

    Jason

    Selling newly registered domains is not as easy as it seems. I’ve ran into a few instances where an end-user used the potential domain sale to trick me into giving them information. Afterward, they had no interest in purchasing the domain.

    I wouldn’t deal with auto businesses because they have little to no customer service. I would even consider them to be unethical. I put in a ton of work to sell newly registered domains. I seem to be getting reverse results. The more I call and send e-mails, the harder it is to make a sale.

    I have no problem with directly calling a company. Cold calls are easy. Today, I may have generated one lead because I contacted a specific place that deals with the targeted product and service. For the first time, the person seemed very interested, even asking for my number and name. You could hear it in their voice. They mentioned they have to discuss the two domains with the group.

    These domains are the exact name of a location. I sold one of them in the past, and have two other extensions. To be honest, selling a newly registered domains is a hard sale at $50. I would be happy to push a domain for $50, then looking to make $1000.

    Do some research before registering new domain names. If you spend $2000, then you have to spend that same amount next year to keep them. It may not be worth the money to keep some names. Know what products and services will continue to be popular.

    June 8th, 2010 at 3:58 pm

    Jason

    I think that it is who one knows that helps them to make a sale. Any random person calling a business may find it to be frustrating, and even dejecting after constantly being rejected.

    Quick story: I watched a musician handing out his jazz CD in Times Square last weekend. Mostly every person ignored the guy. The guy continued to chip away at the crowd. He managed to find people who were interested in what he had to offer.

    With every 20 people that passed by, he was able to find one person. I think that approach may work for domain investors who have very little contacts. I feel that it is much easier to know the right people than to buy the right stuff.

    It is no too common for people to come looking for your domains. You have to know the right people and spend money to advertise your stuff. However, having a popular blog seems to help because I noticed that domainstryker.com put up 50 domains for sale on their website. With that approach, they moved quite a few domains.

    Keep chipping away until you find one interested party.

    June 8th, 2010 at 4:07 pm

    Igor Mironyuk

    And what 2012-2013 years is later?
    New registered domain names to sell during next month is hard or impossible?
    And what position is take now 3-word domains?

    January 5th, 2013 at 11:25 am

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