3 Examples of Getting Great Value on Drops

Jan 04 2013

Recently there was an article at a domain blog (since removed for some reason) about the lack of value in picking up cheap auction names at Namejet and Godaddy. He said he simply didn’t understand why people would load their portfolios with leftovers.  I can give you three examples of how much value you can get with these “leftover” names.

There are a lot of ways to make money from your domains but one of the simplest ways is to park.  Parking has been overlooked lately because over the last few years, domains have simply not been making as much as in the past.  Buying a $12 or $69 name and getting good parking revenue is like finding gold.  Internet Traffic has helped find this gold over the last year by offering better payments.  Something that, in my opinion, should continue for the next couple years.  I think we’ll continue to keep the income levels of parked domains steady and may even rise a bit.  It’s with these payments that some domains that would be overlooked and considered of little value, actually provide revenue and add unexpected value.

There simply is no way to find out how much money a domain is making parking without the owner sharing.  Godaddy gives some hint at traffic in their auctions although it’s generally considered a lot less than reliable.  You’re on your own at Namejet. Over the last few years I’ve been rather fortunate.  I’ve been buying domains that I think are good brands and easily will return my investment and more with a sale.  I have been more than correct.  Then the unexpected bonus of making money parked while I wait. Enough parking money to pay for their renewal and then adding something to paying for their cost.  After a few years they are paid for and each year they add profit to the bottom line.  As an example, here are three such names

529CollegePlans.com   Ironically I was putting money into my daughters 529 plan when this came up for auction.  I was surprised there only three bidders considering the CPC is pretty high.  I ended up getting it for $99.  Honestly, it doesn’t get very much traffic.  Under 100 the entire year to be exact.  But it makes over $25.   That’s $15 that goes towards it’s payment.  Yes this is a 7 year payback but it’s also a 15% return on money.  Much better than I’m getting at the bank.  I can only imagine that it’s going to do fine once I develop it.  And it’s at the top of my list.

Pakku.com  I bought it because I thought it was a nice sounding 5L.com.  I paid $60 or so on a drop back in 2008.  I’ve never been sure of where the traffic comes from or why people type in in.  I doubt it could be from Pakku of the Last Airbender.  When I bought it I had no idea it would get over 3000 visits a year and make more than $25.  It’s now paid for itself and I get $25 for doing nothing every single year.

Fleto.com  Another 5L.com I bought because I thought it would make a good brand.  I paid $70 for this one as well.  I had no idea it meant “gay” or “homesexual” in Chilean.  This gay domain gets a few thousand visits and generates over $50 a year.  Again, has paid for itself and gives to the Shane fund each year.

I have at least 20 or 30 more of these and my portfolio is only 300 names deep

And a bonus…a Sale.  I sold this past week Hooku dot com.  For $5500 at Godaddy.  My cost.  $12 plus the renewal over the past few years.   I took home $3800 after commission.   The first thing you may say is “that’s great but I bet you have a lot of names that DON’T pay for themselves”  This is true.  But do the math from the sale above. That’s fifty five $69 names that I can buy and still break even.  That’s less than two percent.  I sell more in the 10% range.  Add in $2000 from parking and we’re already making profit. The names I buy are purchased because I think they make great brands and have a great resale value vs purchase price.  The fact that a lot of them are paying for themselves simply by waiting is a bonus.  I have a business model of trying to sell just a few names to pay for everything I purchased for the year.  This has worked now for 6 straight years as all my domains have been purchased with domain investing profits.  They fact that I buy names in the $XX,XXX merely means I have sold enough names to have that money to put back in.   The $2000 a year parking almost covers renewals and the sales allow the purchase of more expensive domains.

The point of this article is this.  Just because somebody is letting go of a name doesn’t mean it’s worthless.  Every name I’ve purchased was a name that somebody thought was was worth getting rid of.  It all comes down to how you can monetize a name.  If it receives no parking revenue, no whois searches, and no offers in a year then most likely you are holding a liability, not an asset.  Those are the types of names that you should drop.  But assuming that all dropped or auction names fit in this category is a big mistake.  You’re giving people too much credit.


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Outsmarting the Dumb, Outworking the Smart

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  1. John Harrison

    Ive read a few posts towards the end of 2012 damming the small return that some names can make parking but I really respect your model which is that the parking acts almost as a bonus while you sell names you bought believing them to be brandable. Great post and great honesty. It is appreciated 🙂

  2. AbdulBasit Makrani

    One of the great post I have read on your blog. Thanks for sharing. Congrats on your sale.

    I think these days Shane park his domains with InternetTraffic. Correct me if I am wrong…

  3. @Domains

    You should forward Fleto to a good gay dating affiliate program, in that language (maybe at AFF?) and see how it does. Or, get a white label dating site on the domain. Seems like a natural for it.

  4. David Gruttadaurio

    You never really know where the ‘gold’ will turn up in a domain name. Two months ago I bought zangfu.com at NameJet for $79. I bought it because it was Chinese and I thought it sounded cool. Turns out its the core basis for acupuncture. I sold it privately for $2800. Ironically, it was previously owned by an acupuncture guy for years and he just let it go. Never underestimate the power of indifference.

  5. RH

    This is a really good article and spot on. The whole parking is over is only over for people that don’t have names that get traffic.

    You can study the drops and find many good names and along with other research see there can be some traffic to monetize.

    InternetTraffic certainly has been a help. I have been doing well with Voodoo as well. I had a $49 click mid December and no it was not an aggregate or more than one click. 1unique 2 searches 1 click $49.56.

    I am surprised too by some 5l Shane, I have one which I don’t want to use your comments to advertise but it made $75 in 2012 with over 700 uniques.

  6. Uzoma

    I am against drop-catching service, as a matter of principle; I don’t think it is right to have such an inside job going on. It makes fools out of domainers. Domains should be allowed to drop without any insider playing games with the names. Having said that, Names like Zangfu, pakku, etc you can find on ebay, especially back in 2008, when Shane bought his, and usually at much better prices. I don’t invest in names like that, but I saw them sometimes, in the past.

  7. corey

    Shane congrats on the all the sales and finding the names. Was going to ask do you use freshdrop to pick some of these up?

    @David, congrats on the zangfu sale

  8. Adam Strong

    Drops aren’t as good as they used to be for sure but domainers who know the game still are making boatloads off of that “trash”. One less competitor is fine by me.

  9. asdf

    I’ve done very, very well in domain names with “other people’s leftovers” to the point that I’ve completely abandoned any idea of there being much wisdom in this community at all.

    The vast majority people are hard-wired to go along with the herd. Its understandable, it is a common behavior type has a distinct Darwinian basis. Ultimately, everything ‘followers’ do is reliant on the noise, twitches and chatter of other people. It’s possible to prosper as a follower but it’s equally impossible to explain anything to them that involves developing your own proprietary insight. They’ll never understand that. Everything they do is based on looking around at what everyone else is doing and operating in that realm.

    Followers are the classical musicians of the business world. Forward thinkers are Jazz.

  10. Matthew

    Can’t seem where to find the number of Whois searches for a domain at DomainTools. Are those stats available somewhere else?

  11. Arseny

    Totally agree! I’ve won LLLL.com (that I’ve found on your blog) at NameJet for $190 on the August2012 and sold it to end user in December2012 for $3000. Nice ROI. Thank you Shane!

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