Domaining can be a great way to make money, but it can also be a terrible way to convert your time into money. In fact, you’d be surprised how many Domainers end-up making less than a typical McDonald’s employee. I have always paid careful attention to how I spend my time and how this converts to real revenue for my business.
It can be easy to trick yourself in this industry and say, “I flipped this domain for twice what I paid so it was a great investment.” Not always true. If your flip was from $100 to $200, and it took you 10 hours to do it then you made $10/hour, if that’s what you make in your day job you might be happy with it, but in most cases this leaves you converting your time into a very small amount of money.
Of course when you’re first starting out it’s okay if your time doesn’t convert very well, you’re learning and there’s a cost to that. You may (okay, you probably will) lose money in the beginning but that’s all part of learning something new. However, if you’ve been doing this for years and taking time away from your family and friends to do it, make sure you are making more than your average janitor or you may be better off doing something else.
Here’s an example. I had a guy contact me this week who said that he’s been Domaining for three years now. He said he makes around $1,500/month selling domains (all in the $xxx range) and that he spends about 30 hours a week on his business. This takes just about every minute of his free time outside of his day job. So let’s do the math:
$1,500/month divided by 120 hours = $12.50/hour
I don’t know about you but I don’t see this as a great way to convert my time to money. While he may be making over $1,000/month on top of his day job, he’s trading just about all of his free time which means nights and weekends are spent working for $12.50/hour rather than spending time with family and friends.
Everyone has a number that they assign to their time, if you’re used to making $12-$15/hour this might be fine for you but for many it is actually giving away their time for far less than their time is worth.
I typically tell new investors to benchmark their time based on what they make with their day jobs. If you make $30,000/year you might be okay with $15/hour, but if you make $120,000/year then you may be giving away your time for far less than it is worth, or at least less than someone else is willing to pay you.
So take a step back, make a quick spreadsheet and figure out how your time is converting to money. If you’re happy with what number comes back, congratulations, keep on trucking! If, however, you find that you’re making a tenth of what you make in your day job you may need to look at changing your business model.
I think that time with your family and friends is much more valuable than time getting someone to buy one of your domain names. So if you’re prioritizing your Domaining activities over family, make sure you’re not doing it for $10/hour.
Last but not least, as I said above, if you’re still getting started don’t worry about this too much. This article really is aimed at Domainers who have been in the industry for 3+ years and consider themselves at an intermediate level. If you’re just starting out, you may be converting your time for next-to-nothing but this might be worth it to you in order to learn the business. Just don’t fool yourself into thinking your making a great investment until you factor your time into the equation because as they say, “time is money.”