Categorized | Domaining Tips

At Which Point Do You CHANGE Your Strategy?

Posted on 07 February 2019 by Andrei

This is perhaps one of the trickiest questions in domaining, an industry where “hopium” tends to abound, along with many mistakes such as the ones I’ve mentioned earlier this week.

The word “potential” is very dangerous in my opinion, because you can use it as an argument in favor of a losing strategy indefinitely. Let’s assume you’ve hand registered 2,000 domains based on a certain strategy. Maybe geo domains, perhaps something else, we’ll just call it StrategyA.

At which point is it time to pull the plug on StrategyA?

Well, maybe the first renewal cycle. Unfortunately, you’ll have to pay let’s say $18,000 per year to keep your domains, which essentially means you’ll need to generate $18k in sales just to break even. Ouch!

If your renewal season calculations are disastrous, such as for example generating only $2,000 in sales (which are not nearly enough to offset your $18,000 renewal bill), it would probably be wise to consider dropping the entire strategy, eating your $16k or whatever loss and moving on.

Unfortunately, the word “potential” creeps up on you and whispers in your ear that if you only wait another year, it’s all going to be just so wonderful. Plus, you’ve already invested money in these domains, so why let that go to waste?

This idea that you’ve already invested money and it would be a shame to pull the plug is actually a logical error, commonly referred to as the sunk cost fallacy (I’ve linked to a one minute video about it over on my One Minute Economics YouTube channel) or, as they say, throwing good money after bad.

Don’t do it… just don’t!

If the numbers make sense after the first renewal cycle, good for you, keep up the good work.

If they don’t, ask yourself:

  1. How close to break even you were, because sure, if you’re only down let’s say $1k or so, the risk/reward ratio associated with giving it a go for a while longer makes sense
  2. If you were not close to breaking even, what kind of a reason do you have to keep going… do you for example know someone who has tried a similar strategy, had a very bad first year and then recovered? Ask yourself if you at least have SOME rational reason behind your decision

… whatever you do, don’t just play the “well, it has potential” card because that’s unfortunately a surefire way to lose the farm 🙁

Sometimes you win, sometimes you lose… it’s just as true for domaining as it is when it comes to pretty much any industry. Those who do well in the long run are definitely not people who never lose, who don’t screw up. Not at all, everyone makes mistakes.

A wise domainer, however, knows how to pull the plug. Please remember that good money management can be just as important as having solid domain selection skills, being good in the sales department (negotiation expertise, hustle, etc.) and so on!

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