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Stop Looking for End Users & Sell to Other Domain Investors

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Stop!Brian from TeenDomainer.com has a post today that brought up some good points about selling domain names to end users rather than to other domain investors. He is right in some respects, but that isn’t the full picture. My primary clients are and always have been other domain investors, and it makes sense for my business.

If I buy a domain name for $10,000, my goal is obviously to sell it for more than $10,000. I can either try to hit a home run and sell it to an end user for much more, or I can settle for a single and sell it much more quickly but at a lower profit margin. While many people like to hit home runs and make huge sales, it can be more lucrative over the long run to make more domain investor to domain investor sales.

If I sell the domain name to an end user for $20,000, that’s a great 100% profit, but it could take months to move it. However, if I sell it to another domain investor for $12,500 within a week, I now have a profit in my pocket and the ability to buy an even better domain name with that base amount.

Yes – selling to end users can be much more profitable. However, you need to consider your time finding the end user and closing the sale into that equation. I generally find it less appealing to sell to end users as a result. My question for Brian is, how many end user sales have you made, and has it been worth your time? This isn’t a knock, but I have been down that road and generally find that end user sales take up much more time and have a far greater rejection rate.


About The Author: Elliot Silver is an Internet entrepreneur and his company earns revenue from domain names. Elliot is President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Elliot is the publisher of DomainInvesting.com. Read this blog's disclaimer for information about the publisher, comment policy, disclosures, and conflicts.

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Comments (35)

    Leonard Britt

    Yes, finding end users is not difficult. Selling to end users is time consuming and the lack of response at times can be frustrating.

    December 7th, 2009 at 5:57 pm

    Alex

    But then you end up paying out of that 2500 profit a very high tax rate. Not sure it the end gains are worth it. I think a balanced system it best.

    End users are often other domain investors don’t forget. Hell.com appears to be finally sold and now its just pointing to a parked page

    December 7th, 2009 at 6:26 pm

      Elliot

      @ Alex

      How would your tax rate be any different if you sell to an end user or a domain investor? As far as I know, you are going to pay the same tax rate. I’d rather pay more taxes at the end of the year than less :)

      December 7th, 2009 at 6:28 pm

    Alex Shen

    @ Eliot – I’m not a tax expert but what I think he means is capital gain vs normal operating tax.

    @ Alex – hell.com is very old site, I’m surprised to see it parked

    December 7th, 2009 at 7:37 pm

      Elliot

      @ Alex

      One of my companies treats domain names that I sell as inventory, so no capital gains breaks on those regardless of how long I hold. I am not a tax professional/expert/novice. I leave that up to my CPA.

      December 7th, 2009 at 7:39 pm

    Shane

    you’re doing much better than I am if you’re biggest worry is what taxes you’re going to pay. Also, does anyone else feel a bit old reading domain advice froma teenager?

    December 7th, 2009 at 9:55 pm

    dnclips.com - Domain feeds and more

    I would suggest waiting for an end user if the domain can pay itself for the renewal fees and more. Provided you don’t need the money for any other investment (including domain).

    December 7th, 2009 at 9:57 pm

    David J Castello

    If you want big money always sell to endusers.

    December 7th, 2009 at 11:35 pm

    Elliot

    … but if you want a hassle-free transaction (usually) and liquidity, sell to domain investors.

    December 7th, 2009 at 11:36 pm

    David J Castello

    Elliot:
    We’ve sold plenty of under 20K names to endusers. Used Escrow.com. Never had a problem.

    December 7th, 2009 at 11:46 pm

    Elliot

    I’ve had more issues dealing with end users than domain investors… contract issues, transfer issues…etc. Payment was the easiest – and yes, Escrow.com was the best because I could show them the link on Ebay that says Ebay trusts them.

    The big question is, did you go searching for the end users, or did they find you? I posted my article in response to TeenDomainers post saying that domain investors should focus on selling to end users by contacting them. I think that’s a tedious and time consuming process. If the end users contacted you, the point is moot.

    December 7th, 2009 at 11:49 pm

    Borat

    My couzin now domain investor who sell to all poppy plant farmer who need webpages. He have no letter because postman steals domain. He knock on farmer door and take 3 goat for 1 domans.

    December 8th, 2009 at 2:12 am

    Mike

    So you buy a domain 10k, flip it for 12500, minus out your cost to buy it using escrow.com and to sell it using escrow.com (spilt fees whatever) that leaves you what?

    2000 profit?

    Take out tax 30-40 percent and that leaves you what 1200 net in your pocket?

    And that is if you land another buy, if not your funds are stuck in a domain which pays nothing to hold, you have carrying costs and costs of lose income due to funds being used for that domain.

    Sounds like your in the wrong game son.

    December 8th, 2009 at 6:13 am

      Elliot

      @ Mike

      I guess my example may not have been 100% accurate in terms of my actual results, but it was just an example. Some names I sell have much better profit margins, some are much higher value but the same profit margin, and some are in the middle. At the end of the day, I’ve been doing this full time for the last 2 years (and I live in Manhattan), so I don’t think I’m in the wrong “game.”

      BTW, do you refer to people as “son” in real life, or only when making anonymous comments on Internet blogs? “I’ll take a six pack of Natty Light, a pack of Marlboro Reds, and some beef jerky, son.”

      @ Ryan

      All of those sales were made when the buyer had $ and contacted the owner looking to buy. They weren’t made when the owner spent time and money contacting potential buyers. Of course, end user sales can be much more lucrative, but usually it happens when the buyer is looking to buy rather than when the seller contacts potential buyers.

      December 8th, 2009 at 7:13 am

    ja.ryan

    this one depends on the domain.

    1 word domains like vodka.com, diamond.com, candy.com, toys.com and beer.com is best suited for end users.

    December 8th, 2009 at 6:44 am

    bruce J tedeschi

    Elliot I don’t know you, but bad form to slam a young man trying to make a sale to the public. If he wants to invest his time trying to make an end user sale, why not? I also sell to end-users exclusively. End-users get it, when I sell to fellow domainer, they want to pay below wholesale prices. It is also the thrill of making contact, negotiating and in my case, I often sell like names to the same person/company such as proctor & gamble. No offense I am positive you are a good guy and I am really happy for your success and popularity. I encourage Brian to keep going and if he needs some contacts I am there for him.

    December 8th, 2009 at 7:49 am

    Mike

    @ Elliot

    You live in Manhattan, lol.

    When I hear people say that, I think of a 300 square foot apartment, built in the 50′s, shared with at LEAST one other person and chances are you wash you underwear in a public washer down the hall. If you were trying to impress me you’ve failed.

    TeenDomainer has it right, put in the effort, make the calls and you’ll get results. Flipping to other domains is a poor mans game, bottom feeding at best.

    I think the reason you’ve had such poor results with your direct sales is you simple don’t know a) quality domains, b) know how to find real interested end users.

    Anyone who thinks in 2010 that selling domains to other domainers instead of real end users is a newb in my mind. And yes you can do something for 2 years+ and still be a newb if you haven’t learned anything in that time junior.

    December 8th, 2009 at 8:05 am

      Elliot

      @ Mike
      Funny… I thought the same thing before I moved here. I live at 15 W. 72nd Street, and my apartment is not 300 square feet (about triple that). I’m in a 36 story building built in the 60s – it was the tennis courts for the Dakota before they put the building up – several years before John Lennon was killed (today’s the anniversary and there are a lot of people outside). I live with my wife and our dog and we paid cash for our apartment (no mortgage).

      I don’t waste my time with direct sales any more. DogTrainer.com is an example. I could have called dog trainers and other dog companies, but I ended up selling it to a domain investor a week after I purchased it (last week). Purchase and sales prices are confidential, but these are the sales that pay the bills :)

      December 8th, 2009 at 10:03 am

    John

    Sell to everyone, as long as they PAY!

    December 8th, 2009 at 8:12 am

    Stephen Douglas_SuccessClick.com

    El-Silver,

    I’ve been in this biz for over a decade. Your “quick profit” business model is sound, but it loops around until it builds such an incestuous cycle of “false values” of domains, because we haven’t solved the MAIN PROBLEM OF THE DOMAIN INDUSTRY:

    End User Education

    Yours and everyone’s domains will stay fairly stagnant at some point when every buyer of any domain for sale is another domainer. That domainer is probably thinking you’re desperate for cash, and they can flip the domain to another domainer for 50-100% more than when they bought it.

    But never considered is this: THE DOMAIN’S FULL VALUE WILL NEVER BE REACHED UNTIL IT IS DEVELOPED OR POINTED TO AN ESTABLISHED END USER’S WEBSITE.

    This is a fact. Your thinking, with all due respect my good buddy, is just a “temporary quick fix” that will eventually fade. The true destination for the domain industry – which I’ve been screaming about for over five years – is an educated end user market. Everything you do with your domains should be to reach that goal… unless, of course, you need that quick cash.

    But don’t justify the need for quick cash with the false adage of “selling to other domainers is best”.

    It’s actually the worst.

    I can show you this clearly by offering a domain I just bought, PLASTICBOWLS.NET, for $75. If any domainer thinks this domain is worth $75, contact me and we’ll make a sale at that price. Then I expect that in two years, that domain will be boughth by a Tupperware member, or Amway distributor, buying this domain for $500. Or, if luck would have it, Rubbermaid contacts you and offers you $5,000.

    Seen it all, and selling to other domainers is the bottom of the barrel selling practice. Still love ya bro!

    December 8th, 2009 at 8:33 am

    bruce J tedeschi

    There are some newbs in this business that are empty suits. They have a blog, visitors etc. but they post other peoples stuff. No dignity anymore… People who invest 1-2 years in this game and then think they are an expert blows my mind.

    Brian keep on rocking my brudda…. You are on the right path grasshopper!

    December 8th, 2009 at 8:36 am

      Elliot

      @ Bruce

      Brian was not “slammed” here, and he and I chatted about this in private when I posted my article. I presented a different viewpoint based on my six years of experience in this business (not one or two as your second post seems to imply). I’ve sold to end users via direct inquiry and the success rate and sale amounts are what made me post my opposing view. I even posted a similar suggestion a couple of days ago: “2) I would do geo-keyword research to find unregistered geo profession .com domain names and email people in those professions.”

      I wasn’t rude, wasn’t insulting, and I certainly didn’t put Brian down in this post whatsoever. There wouldn’t have been a point to it and that was not my intent, as Brian knows.

      Out of curiosity about the names that you often sell to P&G… can you give some examples with or without sales prices?

      December 8th, 2009 at 10:08 am

    Anthony Hanner

    If you are in sales and in this business it is all about sales in some form or fashion, you should “always be selling.” It is good for salespeople to keep that confidence that only comes through making sales and that happens through diversification.

    I have only sold domains to end-users personally, but I think selling across the board is a good way to stay focused and keep your sales skills sharp by actually making more sales.

    IMO, the bottom line is to, again, always be selling…whether that is selling domains to other domainers or end-users or selling display ads to direct advertisers…keep selling and success will follow.

    December 8th, 2009 at 10:15 am

    bruce J tedeschi

    I will give you an example of what I sold to Microsoft. The P&G is confidential. I recently sold h1n1test.net and h1n1tests.net for xx,xxx for the package. They have h1n1test.net forward to a bing.com page to take a test to see if you have the h1n1 flu.

    This is an end-user sale… I have sold to fellow domainers once, and quickly realized that the sales price was way too low. In regard to Brian, my apologies about your post and assuming it was a retort to his article.

    I am now going after the cctld market. U.S. buyers do not have any money. My .de sales have eclipsed any other extension I own in the past 3-months. Have http://www.genericcctlds.com has helped me make contacts in this market.

    December 8th, 2009 at 10:19 am

      Elliot

      @ Bruce

      That is a very good sale, indeed. Those sales don’t come around very often. How many emails did you send to make that happen? How did you get in touch with the domain buyer at Microsoft? Did they put you in touch with Marksmen, Tenpenny, or Media Market (http://www.domaininvesting.com/did-microsoft-buy-vaccination-com-3371)? Was this sale a result of you reaching out to potential buyers, or did they reach out to you?

      My post was a reply to Brian’s post, and it wasn’t caustic nor did it have any malicious intent. In addition, I didn’t take any personal shots at Brian and simply provided an opposing viewpoint.

      December 8th, 2009 at 11:26 am

    Kevin

    Selling to end users is clearly the most lucrative sale. However these high profit sales don’t happen ever day and certainly not without a good deal of prospecting and effort.

    Many portfolios I see where the domainer thinks every domain he owns has the potential for an end user sale are living in la la land. It just doesn’t work that way in the real world.

    So I certainly don’t see why anyone would beat down also selling some of your reg fee domains for $100 or $250 or $500. That’s up to 70 times your investment. Where else can you make that kind of markup??

    I think the best strategy is to do all kinds of sales. Having a nice balance is the key to scoring some big sales and having tons of small sales also to keep your cash flow humming.

    December 8th, 2009 at 10:35 am

    whoknows

    Just my .02.

    One should always try to maximize profits….be that other domain investors or end-users. Whoever it may be, make a profit.

    1: have a target audience for each website. If you want to make a sell, I think it is best to try and communicate with businesses and their needs. They are more likely to buy a service if it is needed. For instance, making appointments or scheduling staff, or paying pay roll. These are the type of websites/companies that can last long term.

    2: A quick flip is a good way to go about things, but one should try to grow it as much as they can. I would advice taking at least 3-5 years to grow a website before trying to sell it. Why so long? Well, your website/business needs time to grow and this gives you enough time to get a regular customer.

    3: Selling to other domainers that may have the cash to buy a website is fine, but is it the best long-term for the website? I guess it depends on what your goal is as a domain investor. Is it to just make a profit, or provide a service?

    4: I think it is worth the time to try and make a big sale then a quick sale. For example, a website today may be worth about $3,000. You could try and sell it for $4,000 tomorrow. Why not spend the time to try and grow it and sell it for $20,000 five years later.

    December 8th, 2009 at 12:47 pm

    Elliot

    @ who knows

    All good and valid points. For me, I generally take the churn and burn approach… buying a name and selling it for as much as possible as quickly as possible.

    I also develop businesses on many of my domain names to increase their value. Unless you have an endless supply of money, it’s nearly impossible to keep every good name. I also don’t think it’s wise to spend time developing a bad domain name. I liken it to the phrase throwing good money after bad money. If the development project fails, you lose your time and money on the development and you’re left with a bad domain name :)

    Yes, selling to end users is the goal of most, but in the time it takes to sell to an end user at an optimal price, I probably could have sold many other names and made more with the initial investment.

    December 8th, 2009 at 12:52 pm

    Open Domain Market

    Every one agrees on one thing. Finding an end user is time consuming.

    Domain Investors will wait for the end user to come to them. Domain flippers run around and search buyers. Just to mention the terms correct.

    What about a place where end users meet Domain Owners? i had this idea around me for last couple of months and quickly developed a mini site.

    The idea is to provide a listing service to Domain investors free of any kind of fee. The buyers offer will be forwarded to the domain owner with contact information. What do you guys think about it?

    Check it out!

    December 8th, 2009 at 1:19 pm

    Jay

    I only sell to end users or domainers that wish to spend end user type money. Selling to end users takes zero effort besides building your own domain sales site and a little advertising. I also use some of my parked domains for sale to link back to my for sale site. Running around sending thousands of emails to sell your domains will not bring top dollar sales as you are showing desperation. Instead of spamming people with your names for sale take all that time and scan the drop lists better as I pick up many domains for $7 that turn into 2-8k sales on average. There are a few blogs/newsletters that send dropped domains out as well for some freebie lists without doing any work. Would you rather spend all day sending emails out for a bunch of low domainer sales or kick your feet up and not work and only have to close a handful of end user sales per year at higher margins. When my end user sales slow down then I’ll consider being a domain flipper but I think the flippers are burning the furniture as there are only so many good domains and selling them so cheap is only a good model if you can continue to find them in the future and with more and more domainers coming in I think you will regret not finding the end user sales stream in years ahead as the quality of your flips will continue to decline. I started 7-8 years ago and have filled my phone book with end user leads which I think is more valuable then knowing a few domainers that buy domains. Build your own sales platform and over time sales will improve assuming that your inventory is quality and you have the guts to end user price them.

    December 8th, 2009 at 3:50 pm

    kannan

    where can i find domain investers. please tell me domain investers website.

    December 8th, 2009 at 9:05 pm

    borat

    open domain market . .. great idea! so many original too! in my country we call it craiglist.

    i like to make domain investers too kannan. domain investers have a playboy mansion party . VERY NICE

    December 9th, 2009 at 3:26 am

    Open Domain Market

    @borat,

    Yes, I think its a great Idea. But the success depends on Domainers.

    December 20th, 2009 at 3:00 pm

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