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Advice to (New) Domain Name Investors

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  • Advice to (New) Domain Name Investors

    Bob Hawkes, a Canadian domain name analyst and investor published an extensive set of guidelines for domain name investors on his personal blog; It's All In The Name. We reproduce below the top 8 items, and a link to the entire article is given at the bottom.

    The other day someone asked what advice would domainers have with respect to their first attempted or realized domain sale. I decided to answer the question more generally than only the first sale attempt. Here is my advice, expanded considerably from my original reply on NamePros. I have put some of the key phrases in the figure below, but please read the entire list for the complete set of suggestions.
    1. Start slowly. Resist urges to go out and quickly hand register or drop catch or bid on a bunch of domains. I know it is natural to be excited about gems you have found, but a slow start is something almost all experienced domain investors recommend to newcomers. I would set limits for yourself on number and dollar value of domain names you will acquire in your first six months.
    2. Be realistic. While it is human nature to focus on the big success stories in the domain name business, hand registered or cheaply acquired domain names that a few months later sell for five figures, those are the exceptions. Even in a portfolio of solid names, not much more than 1% of the portfolio will sell in any one year. Also, the median sales price, the one you are most likely to encounter especially in domain names recently acquired at modest cost, is only a few hundred dollars even for those names that sell.
    3. Emphasize quality over quantity. Almost all of us register too many domain names, especially in our first year, and impulsively purchase some that we later realize lack enough quality. The advice that most experts give to emphasize quality over quantity of domain names in your portfolio is indeed wise.
    4. Join Domain Name Forum. Basic memberships in forums are free, although with restrictions. The one million plus membership of NamePros has a wealth of accumulated expertise. From trends and news, to help with technical problems, this is a lively and valuable site. That being said, there are some opinionated views not supported by evidence found from time to time on such a large and diverse community. Therefore be sure to take responsibility for your own informed decisions, but definitely join, learn from, and contribute to NamePros. Did I also mention that it is fun and satisfying to be part of such a vibrant global domain name community? It will also help you not get discouraged during lows, and share your excitement with successes you find in the industry.
    5. Price your domain names correctly. It is easy to fall into the trap of thinking your 'almost as good' domain as one that sold for a huge price will also command a high price. Small differences like plural vs singular, the extension, etc. make a big difference. Do your research on what has sold. Lots of domain names are listed for sale with completely unrealistic prices, and don't let those sway you into what your prices should be. As part of that, see the next item.
    6. Even if sceptical of their worth, learn to use automated appraisals, but know limitations. By far the most well known automated domain name worth tools are Estibot and GoValue. While you can use them simply (enter the domain name and press return!) to obtain an automated estimate of domain worth, they each provide much more than this. You should know the limitations - Estibot sometimes splits words incorrectly, and as a result values them as <$100. While they don't relate their algorithm for obvious reasons, the checked extension availability in Estibot seems outdated. Estibot give you search and advertiser cost per click (CPC) information. This is valuable information, so note it for each domain name including how CPC has varied over time. Estibot gives search and CPC stats for both the exact and broad term. For example if your term was 'duck' the exact search is for those who did searches for just that term, while the broad one would also include searches like 'lone duck' or 'black duck'. You are permitted two free Estibotsearches per day, and they have plans for those needing additional features, like lead generation, as well as larger numbers of searches. GoDaddy GoValuehas only been around about a year, but because it is freely available and GoDaddy has such great brand recognition, it is already well known and used. Estibot does not handle brandables effectively and will value most at <$100 (this is because of their emphasis on search and online advertising). GoValue overall may provide in my opinion slightly better estimates, but with new extensions they rate almost all extensions at the same value, which clearly makes no sense. This means that you need to interpret their estimates by applying a correction for how well the name and extension match. Estibot does attempt to meaningfully differentiate extensions, although to me it seems to have extension biases lacking clear evidence. One important point is that GoValue estimates of worth change almost daily, sometimes by a factor of 2 or even more. At least on the names that I checked, Estibot values seem to stay constant over long periods, although others have reported that after sales of a name are publicly reported the worth in Estibot is adjusted to that value, or very near it. GoValue provide many comparator sales that do not show up in NameBio, and this is one of the most valuable features of the service. In most (not all) cases the automated appraisals will be more than you can likely get for your domain name. Also, in some cases they will be wildly wrong in either direction. Because potential purchasers may well use these automated estimators, you need to know about them, even if you are personally sceptical of their quality.
    7. Really learn to use NameBio fully. With more than 610,000 domain name sales recorded, and a cumulated sales totalling more than $1.6 billion, NameBio is a treasure chest of information both on what has sold and at what price and the venue. By learn to use fully, I mean learn how to do searches for domain names that start or end with a certain word, or are exact, or that contain a certain pattern of numbers or letters, or are from a certain category. Do pay attention to the date sold information when you look at results. Results can be ordered by ascending or descending date sold or price. You can obtain statistics such as average sales price and number of sales for any search.
    8. Get your names listed. The most important mistake that I made when I started was to sit on domain names without them being listed anywhere. At first I was waiting for the 60 day ICANN transfer period to lapse, but even after that I sat waiting to decide how best to sell the names. Don't procrastinate, and get your names in front of potential buyers. That brings us to the issue of marketplaces covered in the next point.
    9. ......

    Full article can be read on Bob Hawkes website.
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