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Before You Quit Your Day Job, Read This

October 6, 2010

Exactly how hard is it to make a livable income off selling domains?

Whether or not you’ve just been bitten by the domain bug, or for those who are already on their way but struggling to hammer out a decent living from selling domains, this post is worth the next 5 minutes of your life.

I’ve put together a simple graph to help you get a handle on the type of sales volume you’ll need to achieve in order to produce a desired annual income strictly from domain sales.

Note that the numbers shown are the amount of average profit needed per domain, NOT average sale price. Below the graph I will give you a few examples to illustrate.

domainer income vs. sales chart

Domainer Income to Sales Cheat Sheet

Example 1 – You hand-register 365 domains and attempt to sell one per day.  To earn $20,000 for the year, given a ballpark registration fee of about $8/domain, you will actually need to sell each domain at an average sale price of $63, in order to see a $55 profit per domain and realize your goal.

Example 2 – You buy 52 domains on the aftermarket at $99 a piece, and attempt to sell one per week to end-users. To earn $50,000 for the year, you will actually need to sell each domain at an average sale price of $1,061, in order to see a $962 profit per domain and realize your goal.

Example 3 – You buy 4 premium one-word dot com domains for a total of $20,000.  To earn $100,000 for the year, you will actually need to sell around 1 domain every 3 months at an average sale price of $30,000 in order to see a $25,000 profit per domain and realize your goal.

So How Hard Is It To Sell Domains?

The answer to that question is, like most, “it all depends“, but I believe there are several ways to look at these numbers to help put this question into context.

1. Firstly, whether you’re just starting out or if you’ve already been buying and selling domains for some time and are not making the kind of money you’d hoped, this chart might serve as a reality check.

Imagine for a moment you were to take any of the figures above and apply them to a formal business plan. What would your outlook be? What steps would you outline to take to sell $1,000 worth of domains on a weekly basis, and thereby achieve what I believe at this time is considered to be a ‘comfortable’ living of $50,000/yr if residing in the United States?

2. The second point that I think one can safely extrapolate from this cheat sheet is that:

high volume/low margin sales are a tougher road to hoe than low volume/high margin sales.

(This is actually a topic that deserves its own discussion, and I will dedicate a future post to that.)

Said another way, which would you see as more feasible:  Selling one good domain per month at a $4,167 profit, or 30 mediocre domains in a month at a profit of $137 each?

Maybe the answer to that questions is, neither, or both. Maybe it is a trick question.

I am certainly not trying to discourage anyone here or to step on anyone’s hopes and dreams, and I do know of domain sellers on both sides of the spectrum that are doing well at this moment.  But I would not dare to say that its all a matter of happenstance.

Suffice it to say that while we all know there is a certain allure to selling domain names, the fact is it still takes a LOT of hustle to achieve a reasonable living or build the practice into a self-sustaining enterprise.

Many new to domaining fall victim, at the low cost of registration, to approach registering new domains as one approaches walking into a convenience store and buying a scratch-off lottery ticket – without much foresight.  This is fine for the enthusiast, but before you quit your day job, to see it all laid out on paper, (much less attempting to do it) I believe these numbers give pause for more serious consideration.

Let me also take a moment here to qualify this post by saying that I am by no means making what I consider to be a comfortable living strictly on domain sales, yet.  I was prompted to create this chart for my own benefit, and hope it will benefit you as well.

What are your thoughts?

*****

UPDATE (December 10th) – Domain investor Morgan Linton has just written what I would consider a companion post to this topic.  He’s conducted a survey on the annual income of domainers and the results are very worth a look – How Much Money Domainers Are Making.

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