Real World Domaining

April 21, 2007 Posted by ROI_Guy
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Tyler mentioned buying and selling domains as a good way to make a profit online recently.  I notice several comments, along with my own request, wanting to know more on this subject.  Fortunately I can contribute an example or two of how not to do it … with a bit of how to do it from Tyler and perhaps some others who have put their portfolio it good work you can be off and running.

One of the key ways people make money is to go after domains with good sounding names … names that suggest something popular (without using anyone’s trademark) and names that “smell” like money.  Sometimes people find these names by diligently investigating what keywords are being searched for, other times you might come across a good one by chance.

I was working for a little company in Colorado that did a lot of work with web-based GPS tracking and high precision web-based maps.  A few of our clients were in the EMS field, like ambulances and fire engines and I found out that basically every fire engine or EMS provider carries a book of maps and local city/county information commonly called a “runbook”, typically in a big loose-leaf binder.  I thought we might build up a business computerizing these runbooks so I went looking, found that the domain runbook(dot)com was in redemption, paid $18.95 to stake my claim and was the successful bidder.  Paid GoDaddy another $9 bucks and I was the proud “owner”.

Long story short our business never developed along those lines and the domain was lying dormant.  I got an email from a fellow in Holland asking me if I wanted to sell it.  I think at one time I may have had it listed for sale somewhere for $200 and never an offer.  My wife told me to tell the guy $500 at least, but typical of most of my bad decisions I ignored her, thinking it sounded too greedy, so I told him $250.  By return email he sent me a Western Union MCTN (the number you use to get your cash) and I transferred the domain to his GoDaddy account.  When I went to pick up the cash it was actually 250 Euros (nearly $300 USD back then) so I really thought I was the cat’s meow … more than 10 times my investment for no work at all.

Did I do good?  Any of you read ahead and looked at that domain yet?  Ummhmmm, it 301’s to runbook(dot)nl, the web site of a very big … and profitable … company that sells very high-end software called “RunBook” to mainly Fortune 50 (no, not those penny-ante Fortune 500) companies.  Could I have made millions? Doubt it.  But, at the level of business that company does I think 250 Euros wouldn’t even qualify as petty cash.  Were I asked today, knowing who the customer is, I think something on the order of $20,000 would be more in line as something fair to both sides.

Whatever the price might have been, the object lesson here is, I didn’t do any research to see what the name was being used for, what it might have been used for and who any potential customers might have been.  I didn’t do what smart people call my “due diligence”.  There’s an old computer writer friend of mine whose slogan (especially when he writes about mistakes he has made) is, “I do these silly things so that you don’t have to.”  Well, I done it for you then … if you’re buying or selling a domain, don’t copy me, do better.

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Posted: April 21st, 2007 under Guest Posts  

5 Responses to “Real World Domaining”

  1. Cam says:

    Excellent post, very informative.

  2. Techified says:

    ouch that has to hurt

  3. krillz says:

    damn that had to suck hahah.. sorry :(

  4. Some very good points in there for all business transactions. I’ve recently been aproached to sell some land so your ‘due diligence’ has got me thinking on what research I need to do.

  5. ROI_Guy says:

    Thanks for the comment, Daniel. yes, since many folks refer to domains and web sites as “virtual real estate” the process you should go through with land or a domain name have a lot of similarities. It’s not about greed or trying to extract “evil” amounts of money but rather something that is fair to both parties.

    Just find out what the prospective purchasers have in mind for the property, because, like with a domain, there’s no real “market price”. It could be worth what some neighbor recently sold for … or a lot less or a lot more.

    And @ Techified and krillz … it doesn’t really hurt, I look at it similar to paying a lot of money to go to grad school … if you learn from it the tuition was worth it ;-)

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