I notice this way of thinking a lot among beginners.

A domainer hand registers a domain for $8, then flips it for 100, 200 or even 1000+ times more and thinks he generated a huge return. But what about the other 1,000 domains in his portfolio that cost him $8-$9 each per year in renewal fees?

Let me explain.

You have to look at your domain investment business as a whole.

For example, if you only have one domain that you hand registered last week for $8 and flip it today for $800 then yes, that’s a huge return on your domain investment.

But if you own 1000 other domains aside from that one (in other words $8,000 – $9,000 in yearly renewal fees), the $800 sale isn’t as impressive and, in fact, you need 10-11 more such sales just to break even on your domain investment. In other words if you have 11 such sales during a year, that’s $8,800 in revenue which is barely enough to cover your yearly renewal fees.

Selling a domain is great and everything but don’t let your emotions get the best of you, always look at the big picture.

When analyzing your domaining business in order to calculate your *real* returns, ask yourself:

1) How much money did I spend on domain acquisitions this year?
2) How much money did I spend on domain renewals this year?
3) How much money did I earn via parking this year?
4) How much money did I earn via domain sales this year?

… and so on.

Only after figuring out the grand totals in terms of revenue *and* expenses can you be certain that you’re in a good position to calculate how much money (if any) you’re left with 🙂