… things are a bit more complicated than that and domainers have to understand the anatomy of Mike’s portfolio. First of all, I definitely agree that yes, the numbers don’t lie and the headline is awesome. Mike Mann generated $32,500 in liquidity through 3 sales of domains he spent $157.5 acquiring. However, he owns 267,516 domains at the moment of writing according to DomainTools and this is the most important variable that gets overlooked, especially by beginners.
Time for some arithmetic and simple logic.
Let’s assume he spends $8 per domain each year in renewal fees.
267,516 multiplied by 8 is $2,140,128. This is how much Mike has to spend each year to renew his portfolio.
A year has 52 weeks.
$2,140,128 divided by 52 is $41,156. These would be his weekly renewal costs.
Even if he were to have no other costs whatsoever, he would still need more than the $32,500 he generated through the 3 sales just to break even.
This tends to put the headline into perspective.
Now of course, I’m sure Mike had more than just three sales during the week in question. The three sales which made the news are just the ones with the best ROI. The main message I’m trying to get across is that yes, he made over 200 times the money he invested as far as the three sales are concerned but what matters most is the overall profitability of his portfolio.
If you own a six figure number of domains, you’re bound to have some amazing sales every now and then. What domainers (especially beginners) have to understand when analyzing situations such as the one I’ve referred to through this post is that being pragmatic is paramount. Overall profitability (subtracting the total costs from the total revenue) is the most important metric. Outlier sales are fascinating, can’t argue with that, but they’re not all that useful as domaining metrics.
Don’t make the mistake of assuming that what Mike Mann does is as simple as withdrawing money from your ATM each week. It’s anything but. Also, don’t assume the overall return of his portfolio is anywhere near the return he generated through these three sales. He’s running a business in a professional manner and if you want to do well with a business model such as his, you can’t afford to have unreasonable expectations.
July 25th, 2015 at 5:19 am
Excellent post – thanks! Glad that you are blogging again.
July 25th, 2015 at 6:02 am
Thanks for that. Really important reality check into what it takes to make a business run.
July 25th, 2015 at 10:00 am
Good to have you back, Andrei.
July 25th, 2015 at 10:23 am
It is also likely with that many domains there are some weeks in the year where renewal costs exceed sales.
July 25th, 2015 at 11:24 am
Here’s math that’s a bit more closer, based on his postings over the years, ballpark.
Let’s say 300,000 domains x $8 renewals 2.4 million
He’s posted he gets about 20k a day in sales, that’s 7.3 million a year. That’s 4.9 million left, I’m sure some of that to buy even more domains.
July 25th, 2015 at 4:12 pm
This is definitely a great reality check for those new to the industry and even veterans that need to look back at the basics to get back on the right track and their heads out of the clouds. It’s easy to slip into a dream state after making a decent sale and thinking that they will just keep happening. Slowly allowing yourself to slip through the cracks and work less on research. Which inevitably leads to head scratching as the that next expected sale doesn’t arrive.