1. Dump Non-Performing Domain Names

Domain names are investments and should be assets, not liabilities. They should either earn profit through parking revenue (profit means covering their annual registration fee plus at least 50% more), or be built into profitable websites, or appreciate in value in a way that can be measured. If you are holding them for the long term and counting on appreciation, there should be enough liquidity in the domains to be able to capitalize on that appreciation when you choose, in other words, sell them.

If the domains meet none of these conditions then they are bad domain names and represent a bad investment, and should be dumped immediately. You could do this by selling them at a deep discount, or by simply declining to review.

Don’t get caught in the trap of holding dozens or hundreds of non-profitable domains because you think they are cute, clever, or somehow “brandable”.

Or both. If it does not, then it is a poor investment and should be divested as soon as possible in order not to incur more costs.

2. Transfer Domains Away from Exorbitantly Expensive or Even Unethical Registrars

There are domain name registrars out there that charge $30 per year, $50 per year, even $100 per year for a dot com that you could just as easily keep at GoDaddy or Moniker for less than $10. They are counting on your negligence. Maybe you acquired the domain at auction and it was already held by one of those larcenous registrars. You tell yourself you’ll transfer it out later, but then you forget, until bam, you are hit with a costly autorenewal.

Keep good records of domain name purchases and registrars, and if you have any domains with rip-off registrars, transfer them out immediately.

3. Focus on Your Money Makers

If you’ve got domains that pay very well per click (whether parked or developed), pay attention to them. Develop them further, add quality content, build backlinks, create marketing campaigns, always making sure that you stay profitable. The goal is to multiply the domain’s profitability by a factor of 10, or 100, or more.

Follow these rules and you can’t help but make a profit in the domain name industry, even if you started out with losses.

Sedo is in the middle of another premium dot Mobi domain auction, running through November 7th. Some of the names on auction are fetching impressive bids: the bidding for hotel.mobi stands at $28,536, and adult.mobi is at $19,500.

Are those two a little too rich for your blood? How about two of my domains instead? They are one-word premium domains, but because I submitted them at the last minute they’re tacked on at the end and the bid is still low, with no reserve. Take advantage of my mistake and get a good price on these nice domain names.

The domains are:

Installer.mobi

Updater.mobi

What’s so great about these two domains? Let’s look at the stats and possible uses for the domain names:

1. Installer.mobi – The word installer has an OVT score of 2,507 (that means 2,507 people searched that word on Yahoo in only one month), and a search on Google yields 55,600,000 results! Clearly this is a term that interests many people.

• Possible Uses:
  • A software installation management tool for mobile devices. A program that monitors your installations and allows clean uninstallations. This is a no-brainer.
  • A website for a company that installs real-world products – for example, auto stereos, alarm systems, cable tv, or satellite dishes.

2. Updater.mobi – The word updater has an OVT score of 164 – not as many as installer but still a decent number – and 6,370,000 Google results.

• Possible Uses:
  • A website provided by a manufacturer of mobile devices for users of their mobiles to update their operating system or other programs. Another no-brainer.
  • A third-party software manufacturer could use this domain for the same purpose. Suppose, for example, you’re a software company that creates programs for the Palm OS. Anyone with a Palm device could visit Updater.mobi to update all of their programs. Very easy to remember, since it’s so obvious.
  • A plugin that will automatically detect, download and install updates to your mobile.

As you can see, both of these domain names have a number of obvious uses. If the mobi extension really takes off, these two domains could appreciate rapidly.

Whether you’re buying and selling stocks, options, futures or domain names, the biggest mistake is to make decisions based on greed and fear.

Several years ago, before I became interested in domain names, I bought and sold stocks and options. Options in particular fascinated me. Because of their volatility the profit potential is incredible. I remember one trade where I bought $4,000 in CISCO calls and sold them a few days later for $12,000. Another where I bought an Intel straddle (puts and calls on the same stock) on expiration day! – confident that the price swing would make me money either way, and indeed, at the end of the day I was thousands of dollars ahead.

Where else can you (legally) make so much money so fast? It was elating. With profits like that, going back to a job with an hourly wage seemed unthinkable.

That’s where the danger lies. That elation is addictive. I had developed certain systems for spotting good options opportunities, and my systems worked well. There were times when I would plan a trade carefully, waiting many days for the right set up. I had rules for when to buy and when to sell. So I’d follow my rules, take my time and make a highly profitable trade, and do you know what I’d do then? I’d be so excited at the money I’d made, at how easy it was, that I would jump right back in and buy something that looked good to me at that moment, confident that I would repeat my previous success.

In other words, I’d ignore my system and trade based on sheer joy and greed. I had visions dancing in my head of what I would do with the millions I would reap. And also fear: fear that by not jumping right back in, I was missing opportunities and thereby “losing money.” So what would happen? I would lose, of course. I ended up losing my entire bankroll. That was a difficult time for me, but I learned valuable lessons in the process.

I’ve read that many professional traders – the guys with seats on the floor – make the same mistakes. They buy and sell based on the thrill of victory and the fear of being left out. And they lose. Greed and fear strip of them their rationality and, inevitably, their cash.

The traders who succeed over the long term, who make money year in and year out, are the ones who develop time-tested systems based on rigorous rules, and follow those systems no matter what. Of course the system can be adjusted and evolve, but they still stick to the system. They are not ruled by greed and fear.

I believe the same is true for successful domainers. They develop systems, and stick to them. For example, you don’t buy a domain unless it meets certain criteria, which might be based on OVT score, Alexa ranking, type-in traffic, brandability, or whatever. Then the domain must be profitable on PPC, highly developable or clearly brandable, or you sell it. If you’re selling a quality domain, you determine in advance how much you want for it, and if you get that offer you take it. You adhere to your system.

What you don’t do is think, “Oh no, people are making a fortune in domain names! If I don’t cash in my stocks and buy $200,000 worth of domain names right now, I’ll miss the boat.” You don’t make choices based on panic (fear) or on fantasies of getting rich overnight (greed).

If you’re a beginner, read the experts’ blogs. Join forums like NamePros and DNForum and look for the sticky threads that are chock-full of valuable tips from experienced domainers. Use these to develop your own system that works for you. Not just a system you think will work, but one that succeeds for you repeatedly! Then stick to your system and repeat times ten, one hundred, or whatever works with your time and budget.

I love DNJournal’s detailed profiles of major players in the domain name business, telling how they got started and how they made it big. Today I re-read Sahar Sarid’s story for the third time. I’m also big fan of his blog, TheConceptualist.com. I learn something from it every day. So I went back and read his story again, because I am in need of some encouragement…

Like Sahar, I am intelligent and I read voraciously, but was a rebel in school. Like Sahar, I struggled for many years and once drove an ice cream truck. Like Sahar, I believe in looking ahead and creating my own opportunities, and like Sahar I believe in doing something that will benefit people and make the world a better place, not just enrich me personally.

And yet I’m struggling. I’ve been in the domain name industry for two years, but I don’t feel that I’ve gotten the return that I had hoped for. I needed to be reminded that many of the very wealthy domainers of today came from humble roots. I needed to be reminded that it doesn’t take a lot of money to get rich in this business. It takes grit, study, perseverance and the ability to learn from your mistakes.

Don’t get me wrong, my situation is not totally bleak. I’ve made some nice sales, and I’ve managed to build a portfolio that gets a lot of traffic, but only about 20 of my domains are truly profitable. As for the others, I have yet to figure out how to monetize the traffic properly. For example, I’ve got this one domain name, WebPark.net, that gets 500 uniques per month but has only a 1% CTR. The result? It makes a little over $1 a month. Ok, technically it’s profitable since it makes more than its reg fee, but it’s not nearly fulfilling its potential. Another, merkezi.org (merkezi means market in Turkish) gets 270 uniques per month and only 0.75% CTR. Less than one percent! You want one of them? Make me an offer. Maybe you can monetize them better than me.

I have many like that, and they’re driving me batty. Good traffic, low CTR. Almost all are parked at Sedo. I need to begin working on strategies to monetize them better. I’ll move some to other parking services, and for others I will build small websites. Others may become blogs. And some I will sell.

I spotted a few suggestion’s in Sahar’s bio that may help me, such as brokering domain names to gain experience, and finding a system that works and building on it. I do believe in this business, and I do believe in what I’m doing. I think I’ve got all the pieces of success laid out in front of me; I just need to figure out how to assemble them properly.

Are you struggling in your chosen industry, whether it’s the domain name business or something else? What strategies do you use to keep yourself motivated? Are there certain people at the top of the industry who inspire you? Tell me about them.

A recent study published in the Journal of Personality and Social Psychology analyzed the tactics people use when negotiating, and how well buyers and sellers feel that they negotiated once the deal is done. The study contains some interesting lessons for domain name professionals and anyone else who deals with products with negotiable prices. It turns out that most people don’t bargain very well, and don’t get the best possible price, whether they are buying or selling.

Many People Don’t Bargain Well

The study was carried out by professors Richard Larrick of Duke University’s Fuqua School of Business and George Wu of the University of Chicago’s Graduate School of Business. By talking to buyers and sellers – including professionals with MBAs – about how much they would have been willing to either pay or reduce a price, the professors found that the people in the study generally captured only about 50% of what was available. So buyers only captured 50% of the possible discount, and sellers only obtained 50% of the price increase that the buyer was prepared to accept.

The funny thing is that both buyers and sellers felt that they had done quite well, pushing the opposite party to the limit. Why does this happen?

Self-Fulfilling Estimates

Professor Larrick says:

“The problem is that we rarely learn the truth about how far we could have pushed the price in a negotiation. We talk about the fact that if you’re a buyer and are too optimistic about how low you can push a seller, you’ll figure out that your ‘ambitious’ estimate was wrong. But if you incorrectly believe you won’t be able to push the seller much at all, you begin the negotiation too modestly and give away too much, too easily. Your modest estimate becomes self-fulfilling through your modest actions. It’s this lack of feedback on the truth that really traps people into thinking that they have always pushed the price close to their opponent’s limit.”

To put it in domaining terms, suppose I want to sell UOLV.com, and suppose I am hoping to get $5,000, but would settle for $4,000. I might set a price of $8,000. The buyer comes at me with an offer of $4K, I counter with $6K, and we settle at $5K. I come out of it feeling good because I got my price target, and the buyer is happy because he got the domain for $3K below the asking price. Since we don’t talk to each other afterwards and say, “How much would you really have settled for?” we both believe that we bargained well, when in reality I would have sold for as little as $4K, and maybe the buyer would have paid as much as $7K if I had pushed.

So my $5K price target became a self-fulfilling reality, and I’ll never know that I could have gotten more.

Street Market Negotiating Skills

The professors say that people who come from countries where street markets are common and haggling is standard practice do better in these kinds of negotiations. They are able to recognize the following kinds of statements as bluffs or negotiating tactics:

Buyer: “I absolutely can’t go any higher.”

Seller: “This is barely above my wholesale cost.”

Buyer: “My boss won’t approve the deal if I go higher.”

Seller: “I’ll be losing money if I go any lower.”

Buyer: “Take it or leave it.”

Seller: “This price is firm, non-negotiable.”

Once when I was fifteen years old I was at a sprawling street bazaar in Saudi Arabia, looking for a watch. I had grown up in the United States and knew very little about negotiating. I found a Casio that I really liked. The seller, a wizened Yemeni fellow, gave me the price. I responded with an offer about 30% below his asking price. The seller suddenly became angry. “Are you trying to take food out of my children’s mouths?” he said loudly. “Are you trying to ruin me?” Shocked, I apologized and walked away.

Now, looking back, I recognize that his behavior was nothing but a particularly dramatic negotiating technique. Every culture bargains in their own way. I live in Panama now. People haggle here as well, but the style is more apologetic than accusatory. I’ve learned to ignore the bluffs that are commonly thrown up. Of course it also helps that I’ve been here long enough that I am familiar with the normal price range.

On the other hand, long negotiations have a downside: they take time, which for some people affects the opportunity cost of the deal. A big-time domainer with 100,000 domains earning millions of dollars a year may not want to spend three days bargaining over a $5K domain name. His time is worth more than that. A speedy deal and a little less aggravation may be worth another $500 to you on a given deal. That’s a choice you have to make.

Three Important Price-Setting and Negotiating Tactics When Selling a Domain Name

1. Pricing: The professors came up with a specific conclusion about the best way to price something for sale and get the best price possible. Professor Larrick says, “For us, the key is to get an accurate picture of the range of prices, target the favorable end of the range, and then be a little more aggressive than that in setting your opening offer. It’s only by doing this that one avoids the ‘self-fulfilling’ cycle…”

2. Countering Bluffs: I would add that you should learn to recognize and counter the most common bluffs that buyers use. If a buyer says, “I can’t go any higher,” don’t give in, and don’t call him a liar either. Instead counter with a reasoned argument like, “I understand what you’re saying, but this domain name will ultimately save you money by bringing you targeted leads. The extra money is worth it.”

3. Small Increments: To get the best possible deal, move away from your initial offer in small increments. So if I’m selling a domain for $5,000 and the buyer offers $2,000, rather than counter with $4,000 I might come down just $200, to $4,800. This causes the buyer to move upward towards my end of the price spectrum, rather than me moving downward to his end. Of course it also results in a longer negotiation.

Know the market, learn as much as you can about your buyer, and bargain hard.

I received a domain name renewal notice today from a company supposedly based in Brussels, Belgium. I did not spot it right away as a vicious phishing scam because I own many domains at many different registrars, and I don’t always remember where each particular domain is hosted. So I clicked on the link to renew my domain name (I won’t make that mistake again). I found myself at a renewal page of a company called Domain Renewal that was charging $79.95 for a one year renewal. I was stunned. Almost $80 for a one year renewal? That’s 10 times what I pay at top registrars like Moniker.com and GoDaddy.com!

But there’s more to it than just a costly transfer scam.

This is how the email that I received began: (I removed the actual domain name):

domain renewal

It is time to renew your domain name www.@@@.com

----------------------------------------------------------------------------
---------------------------------------------------------
Your domain name www.@@@.com will expire within 90 days.
You may renew your domain automatically with Domain Renewal. Click on the
link in this -mail to renew the domain for another year.

Domain Renewal had a slick looking website displaying the logos of several major companies, including Cisco, Oracle, IBM and Microsoft, implying that these companies are partners. Their (unsecure!) payment page offers a wide array of credit card payment options.

I immediately checked my records, and discovered that the domain in question is not hosted by this registrar at all! It’s in my account at Answerable.com, which charges only $6.99 per year for renewals. This Domain Renewal company was trying to scam me.

I looked around at Domain Renewal’s website and noticed that they claim to be based in Brussels, Belgium. On their About Us page, they explain:

Domain Renewal has developed a system which constantly monitors and reminds companies about their domains. It is not uncommon for companies to have purchased their domains with different suppliers which make it even harder to keep track of their domain portfolio. We at Domain Renewal will find and renew your domains for you.

So they monitor WHOIS records, and when a domain is close to expiring they contact the owner with a renewal message. Other registrars do this as well, trying to get you to switch registrars without realizing it.

But here’s the real insanity: Domain Renewal is not a registrar at all. On their website, they explain:

How does it work?

• Step 1. We receive your order to renew your domain.
• Step 2. We interact with your Internet Service Provider/ ISP to renew your domain name. In cases your ISP requires your login information we will contact you by mail and you will have to provide us with login information so we can preform a renewal. Note! No other changes on your account will be made.
• Step 3. You receive a confirmation that your domain has successfully been renewed and you can see your new expire date on whois.com

So they claim that they act as your agent, contacting your registrar or ISP and asking them to renew your domain. And you are expected to hand over your login information to them, to facilitate this process.

So what’s to prevent them from stealing your domain name at this point? Nothing. Worse, if you have your credit card information stored in your account page at your registrar, they can steal that as well, as well as whatever identity and contact information you have in your account.

A very clever and ruthless phishing scam.

Some steps to take to protect yourself:

• Be wary of emails asking you to renew your domain name. Even if you think the email is genuine, it’s best to navigate manually to your own registrar’s website (by typing the URL into your browser bar) and renew the domain name there.
• Also be careful of snail-mail letters advising you to renew your domain, even if they look very official. Most registrars don’t send paper mail, though a few do. Again, go to your registrar’s website to renew.
• If you’re not sure who your domain is registered with, check the WHOIS, the public database of domain name ownership. You can do this at most registrars’ websites. One good WHOIS lookup tool is DomainTools.com.

When I first got into the domain name business almost two years ago, I began accumulating domains rapidly. Many were hand registrations. I registered assorted typos of popular websites, celebrity names, and future technologies that might one day be viable (like QuantomComputer.com, a typo of “quantum computer”, which is a theoretical technology that might one day exist).

If I had it to do over, by the way, I would not register the typos. Some of them infringe on other companies’ trademarks. Most are not profitable and the resale value is limited. Instead I would take all the money I spent on 300 typos, and instead buy one or two good generic dot coms with traffic.

I also bought several domains at auction, focusing on domains with traffic. Almost all of these are profitable, some very much so. At least I did something right.

Parking My Domains

I ended up with a stable of several hundred domains. I created accounts with several different parking services. I will not divulge the names of the parking services, for reasons that will soon become plain.

I found that the income from parking was meager, because the traffic on most of the domains was low. I began looking for ways to increase it. I had some experience with using Google Adwords to drive traffic to websites, so I thought I would try creating Adwords campaigns for my parked domains.

I was completely unaware that this is a violation of the terms of service of almost every domain parking service. I was a newbie, remember? I had read the TOS of each parking service, but I did not understand from the language employed that traffic resulting from Google Adwords was not “natural traffic.”

A Highly Profitable Experiment

The first month I tried this, I made several hundred dollars profit. I began fine tuning and optimizing the parking pages based on which advertising links were being clicked on, and I adjusted my Adwords campaigns as well, trying out different ad variations to increase the CTR, and experimenting with different keywords. I checked on all my campaigns three or four times a day, calculating exactly how much profit I was making per campaign, and adjusting my Adwords bids up or down as necessary.

The second month I made almost $3,000. My parking service rep increased my commission by 10%. The payout on some of these parking pages was fantastic – sometimes as much as $2.50 a click, consistently. I was making money hand over fist. I continued creating new Adwords campaigns. Some were not profitable, either because the CTR was not high enough on the parking page, or the pay per click was too low. I shut those down, keeping only the ones that were profitable.

The income continued to increase. In the third month of this experiment I made $10,000 profit – that’s right, ten thousand dollars – by the third week, and was on track to make $15,000 for the month. I was elated.

I know, some of you domain veterans are shaking your heads right now, thinking, “What a moron!” Hey, I was a newbie! I didn’t know any better.

A Crashing Halt

My excitement came to a screeching halt when I received an urgent email from my account rep at the parking service:

“Our compliance department says that some of your traffic appears to be coming from paid advertising. This is a violation of our TOS. Please explain your actions or we will have to terminate your account.”

What! I was stunned. I contacted a friend of mine who’s much more experienced in the domain name industry.

“Yes,” my friend said, “What you’re doing violates the TOS of every parking service. They can shut down your account and even confiscate your earnings.”

Panicked, I immediately terminated all my Google Adwords campaigns. I wrote back to my parking service rep, saying, “I’m very sorry, I was not aware that I had violated the rules. I have ceased my ad campaigns.”

The rep responded the next day with a short email, saying only, “Ok, no problem. Just don’t do it again.”

Whew! I was lucky. It had cost me about $3,000 to make that $10,000 profit, and if they had confiscated it I would have been $3K in the hole. Not to mention that I did not want to lose my relationship with the parking service.

Even worse, I have since found out that what I was doing violates Adword’s TOS as well. Losing my Adwords account would have been a disaster.

Back to the Grind

So what have I done since then? Well, in the course of this experiment I learned a lot about how to use Adwords effectively. I don’t want to waste that knowledge. So I have been creating blogs based on some of my domain names, and monetizing these with Adsense or other forms of paid advertising. I am free to promote these all I want, since they are legitimate websites with useful content. I write all the articles myself, or I contract them out to freelance writers. I make sure to comply with all Adsense guidelines.

It’s time consuming, but making money is always hard work. You know what they say: if it looks too good to be true…