I was talking with a new domain investor this week who asked me the question of all questions, “how many domains should I expect to sell this year?” which of course was followed by, “how much money am I really going to make doing this?”
Whenever I hear this question my typical answer is, “well – it’s impossible to give any kind of realistic answer. The domain name world works in mysterious ways and you could have a great year where names sell all the time and for more than you expected, followed by a down year where nothing sells.”
I tried that answer but he pushed me to give him something. He said, “can you give me a way to just get a rough estimate? There has to be some general assumptions out there right?”
So I thought I’d take a stab at it, and since I don’t have a crystal ball, the best I could do is buy an image of a crystal ball and put a cartoon of my face in it. My point is, this is not an exact science, or even a science at all, but it is a way to get a rough estimate, which I guess is better than having no idea…or worse, setting unrealistically high expectations which I think way too many investors end up setting.
My estimation magic here is based on two assumptions that we’ll need to just roll with in order to move forward.
Assumption #1: the average domain investor sells 1% of their domains a year (or less, but let’s try to be optimistic here)
Assumption #2: you’re only going to be able to sell your .COMs
sorry but there’s just not enough proven repeatability with any other extension so you’ll have to consider all those non .COMs as gravy (and as MUCH riskier investments)
So here’s what you can do to get a rough estimate of how many domains you’re going to sell this year. Take the number of .COM domains you have in your portfolio and multiply it by 0.01.
If you own 100 .COM domains, selling 1 domain per year should be your expectation. Own 500, expect to sell five. Pretty simple right?
Well of course it’s not that simple. The reality is you could sell less because what you’re not accounting for is the number of domains in your portfolio that are junk. Since it’s hard for you to consider any of your precious babies as ugly, you might think none of your domains are junk, but trust me, some are.
Here’s what I’m going to use to filter, some of you are going to like this, others are going to hate it, but let’s give it a go. Take all of your .COM domains and plug them into Estibot, we’re not going to use this to get estimated values, instead we’re going to use it as a binary junk detection machine.
Consider any domains in your portfolio that Estibot values less than $20 as junk and subtract them from the number of .COM domains in your portfolio. Now take this new number and multiply it by 0.01, and that’s probably a more realistic estimate of how many domains you’re going to sell.
Well kinda…but of course there’s one more wrinkle.
I think this 1% assumption really applies to people who are passively waiting for people to make offers on their domains. If you actively try to sell your domains, I do think you’ll see more sales velocity. DNAcademy has a pretty cool new program in beta specifically focused on outbound sales that can give you a bit of motivation if you don’t know where to start with outbound.
I’m not sure exactly how much to increase the sales velocity if you’re doing outbound but to make the math easy, let’s just say it doubles the amount of sales you make. So if you’re doing outbound, take the total number of .COM domains you have, minus the junk names you filtered out using Estibot, and multiple by 0.02.
There’s your rough estimate…and yes – it’s probably a lower number than you thought, but there’s nothing like a good reality check every now and then. I was joking when I called this “The Linton Equation” in my post title but if you want to call it that, go for it.
As for the second part of my friend’s question – how do you know how much your domains will sell for. The best things I’ve seen in this space is what Andrew Rosner put together and has coined “The Rosner Equation” you can learn more about that here. Just note, this equation is for valuing premium generic domains…and there’s no chance you have a portfolio full of premium generic domains, so be honest with yourself when it comes to applying this to your own names.
Now I’m 99.9% sure that there will be people who disagree with my approach here in one way or another…and that’s okay because in all honesty this isn’t something that I feel is a hard and fast rule or a scientifically accurate formula. Instead, it’s my best attempt at helping someone estimate how many domains they’re going to sell, which like I said in the beginning, really is an impossible answer to provide.
That being said, I’m very interested to hear what you think. Is this estimation technique useful at all? Does it estimate too high? Too low? Is it just ridiculous?
I want to hear from you, comment and let your voice be heard!