As mentioned yesterday, I liked the Dot Investments extension but at 80+ bucks a pop, I decided to pass because I just don’t see how there can be any money in it for domainers at these price levels.
Let’s crunch some numbers and start with some basic considerations.
First and foremost, the very best domains will not be available at the General Availability registration fee (either because they were not available at all or because they were taken during the Early Access Program).
This leaves a lot of “not the very best domains but good enough” inventory.
The cheapest Dot Investments registration fee I found was $80.
Essentially, the value proposition is this: 80 bucks gets you a decent but not great Dot Investments domain.
Let’s crunch some numbers to see if all of this makes financial sense.
We’ll assume you like the Dot Investments string and register 100 domains. An initial investment of $8,000.
We’ll assume the renewal fee will also be 80 bucks, so the annual carrying cost will also be $8,000. In other words, you’ll pay $8,000 initially to register the domains and then roughly $8,000 each year to keep the portfolio.
Let’s assume you’d sell 2% of your inventory per year. It would be an ok-ish performance for a dot com portfolio, so for a new gTLD one, it would obviously be even better.
The average sales price? Let’s be generous and say $3,000, which would once again be a better performance than what dot com offered in 2012-2013. As you can find out by taking a look at this infographic, the mean sales price of a dot com was between $2,000 and $2,500 in 2012-2013. Closer to $2,000.
A short recap: your portfolio generates a 2% turnover rate and has a mean sales price of $3,000, in both cases better than what you’d expect with dot coms, so this is a reasonably optimistic scenario.
So, how much money would you make?
Well… you’d actually lose money.
Why? Because since you own 100 domains and have a turnover rate of 2%, you’re basically selling two domains per year at $3,000 each. In other words, the $6,000 in revenue doesn’t even cover the $8,000 yearly renewal fees.
And keep in mind, my numbers are reasonably optimistic.
In my opinion, it’s not that Dot Investments is a bad extensions. In fact, I consider it an ok one.
But at this price level, the likelihood of making money is quite low.
Maybe some of you guys can help me see the light and figure out how domainers can make money with registration/renewal fees such as $80, I for one just don’t get it.