What ROI do you target when you sell a domain?

domaining-roi

Lately I have been thinking about decreasing the ROI that I look for when I sell a domain to align closer to what I would be more than happy with in any other investment vehicle. What got me thinking about ROI is a conversation I had with two different friends, one is a real estate investor, the other invests in stocks.

My friend in the real estate business was bragging about how well he had done over the last four years – his ROI, 3x. My other friend who invests in stocks was teasing him and bragging about her ROI, she had seen a 4x ROI over the last four years.

When I sell a domain name, my target is 10x or higher, has been for over a decade…but this conversation got me thinking, I wonder what would happen if I lowered my ROI expectations? The strange thing about being a domain investor is that you start to become comfortable with insanely high ROI numbers. Sure, some people got lucky with crypto, but your average investor looks for a much smaller ROI and 3x – 5x is an absolute home run.

So I was thinking, what if I lowered my ROI expectations to 5x rather than 10x? Would my liquidity increase, if so, maybe that’s worth it since it’s still an incredible return. What do you think? What ROI do you set for your domain names?

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{ 7 comments… add one }

  • Snoopy August 6, 2018, 6:25 pm

    Do your friends realise that most names never sell and that the 10x sales are a rarity compared to all the names sitting waiting for a buyer? 3x on realestate is totally different to 10x on a domain sale. Imagine if he told you 50% of the properties he buys end up being worthless, barely sellable or would get the price of a pizza if put on auction?

    I’d say if people dropped their margins to 5x they’d lose money over the long term and the portfolio model would not work.

    Reply
  • Duffer August 6, 2018, 6:56 pm

    Sale $5000, Cost in 2010 $43 8 Year Renewals, $80 =
    Investment Gain $4,877.00
    ROI 3,965.04%
    Annualized ROI 58.90%
    Investment Length 8.00 years

    Reply
  • Braden Pollock August 6, 2018, 8:02 pm

    I’d say that it depends on the quality of the domain. Instead of pricing your domain at 10x what you paid, price the domain at what you think is a fair value.

    Reply
    • Morgan August 7, 2018, 9:04 am

      @Braden – good point and probably a better way to look at it.

      @Snoopy – yes, I made sure to let them know that it’s not really up to you when a domain sells and the average investor sells 1% or less of their portfolio each year.

      Reply
  • Frank Mueller August 7, 2018, 5:58 am

    I quote a huge brandable domain marketplace here:
    “We have removed the ability to drop the price below our suggested price as we have no historical evidence that a cheaper price helps a domain on the marketplace sell more quickly. On the contrary, we’ve heard from buyers that when they see similar quality names side-by-side, it makes a name look less enticing if it is significantly lower than the others.

    We’ve also seen a negative impact of offering more discounts to buyers, both in unreasonable expectations and lack of purchases once discounts are provided. “

    Reply
  • Alex Verdea August 7, 2018, 2:40 pm

    2018 I decided to increase my pricing and remove ALL my names from ALL marketplaces.
    The best decision ever made for multiple reasons! The result? Had the biggest sale ever in 2018, and multiple other deals pending.
    Your potential client will complain at 100k price tag and they will complain at a 5k price tag.
    WHY drop your price?
    99% of all reported domain sales reported daily are people selling to CHEAP.

    Reply
  • Isaac M August 9, 2018, 1:43 pm

    I bought my very first domain in May 2017.
    14 months later I’ve made 2 sales from 19 domains. Both in high XX.
    I’m satisfied with 3x ROI

    Reply

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