Domain Flipping Revealed

Earlier this week, Namepros.com member Randomo revealed that he sold exactly 1,700 domains in 2007 mostly through quick turnaround sales (domain flipping). At first glance, 1,700 domain sales would seem to equate to easy profits but a closer look at the numbers reveals that flipping domains is, in fact, hard work.

First off, in order to sell 1,700 domains in a year, one would have to average just under 5 domain sales per day (7 days a week). Flipping 5 domains a day is one thing, getting high sales amounts for all of them is another. Randomo was kind enough to disclose that his average selling price was 3 to 5 times registration cost. This exact amount is open to interpretation but when totaled up, it appears that he was able to generate somewhere between 50k and 70k in revenues through domain flipping. These are my estimates based off the information provided.

To determine profitability we need to factor in the acquisition costs for the 1,700 domains that were sold. Again, the exact figures were not provided but I can safely assume a minimum of 12k if all domains were bought at standard registration fees and perhaps as high as 22k if the average domain acquisition cost was $12.95. Deducting the acquisition costs reveals the domain sales profits to be somewhere between 28k and 58k. This is a very wide range but it should be helpful in determining a worst case and best case earnings scenario.

The last factor we’ll consider when it comes to domain flipping is time. After all, these domains don’t find themselves. Once registered, it also takes time to market and sell them. Receiving payment and transferring domains to a buyer’s account isn’t always the smooth transaction that one would hope for. Randomo estimates that on average, he spends between 3 to 6 hours a day domaining. That comes out to 4.5 hours a day or roughly 1642 hours a year.

Using my guesstimated figures and translating them into an hourly wage, the best case scenario would have Randomo earning approximately $35 dollars an hour for his domain flipping efforts. The worst case scenario would still be pulling in $17 an hour. Either way, I believe the data shows that domain flipping, while profitable, does require work and is not a quick path to easy riches. Having said that, don’t discount the current and future value associated with the list of domain buyers that he has built through his efforts. That’s a valuable asset that’s hard to place a value on.

Many other factors were revealed in the Namepros thread namely, the types of domains sold as well as a list of the locations they were sold at. Visit the domain flipping thread for more details.

.