What’s my take home pay on $100k in domain sales?

Most investors across their entire portfolio, would say their average is 2% – 3%. They’ll sell 2% to 3% of their domain names per year. 

 – Michael Cyger

This past week Andrew Allemann at Domain Name Wire did a great interview with veteran domainer, Mark Levine, about his 2018 brandable domain sales.  In the interview Mark lays out his domain acquisition strategy and sales philosophy as well as sample sale details, his portfolio size, acquisition costs and other items you don’t often hear in this type of  discussion. So I highly recommend it.

At the same time, despite his best efforts, Andrew may have left many readers with a skewed picture of Mark’s actual bottom line profit on the 48 domains that he sold this year through Afternic, BrandBucket and Efty landing pages.  Some might think that Mark’s $114,000 in sales minus the $3,400 he paid for those domains would mean a 97% profit. Right? 

Nope. Not even close. 

I would estimate his bottom line profit at 50%.

Here’s why.

Your new reality

Let’s imagine a scenario loosely based on Mark’s laudible 2018 sales performance. Let’s say that you have a portfolio of 1500 domains with a 2.6% annual sell thru rate.  Let’s assume you sold 40 domains in 2018 at an average sale price of $2,500. This means your sales total for 2018 was $100,000. Nice!

But how much of that $100k goes into your pocket?

$100,000 = Total sales for 2018 

Subtracting commissions

$9,750 in Brand Bucket Commissions  (13 domains X $2500 = $32,500 X 30%)

$6,500  in Afternic Commissions (13 domains X $2500 = $32,500 X 20%)

$83,750 After commissions

Minus Expenses

$3,500   in acquisition costs for the 40 domains that sold (40 X $87.50)

$1,148    for private sale escrow fees (14 domain sales @$2,500 = 14 X $82)

$15,000  in renewals (1500 domains X $10)

$64,102  After commissions & expenses

Minus income tax

$14,102  Income tax  (22% X $64,102) 

$50,000  Profit

That’s a very nice profit and a 50% profit margin is almost unheard of for a side gig or even many full-time ventures. For example, the average profit margin for restaurants is 3% to 5%. Yikes!

You could be anywhere 

Now domaining is fun but time you spent domaining could have been spent on other money making endeavors instead.   In addition, you likely had a long and expensive learning curve.  But now, after a few years of long hours, hard work, financial investment and modest profit,  you’ve just had a $100k sales year.  Hooray!

So to continue this imaginary scenario let’s assume that you’ve done the hard work in years past and this years sales were the result of a lean, mean, well curated and executed portfolio.  

Even so, you still spent 15 hours a week (or more):

  • Researching new acquisitions
  • Updating existing sales listings
  • Creating new Efty landing pages
  • Liquidating stale domains 
  • Negotiating private sales
  • Executing payments and domain transfers
  • Doing your bookkeeping, tax filings and office maintenance

So let’s say you worked 15 hours a week times 52 weeks.  That means 780 hours you worked on domaining this past year. 

Oil and hairy backs

We then divide your $50,000 profit by 780 and we get $64 per hour.  Less than what a licensed massage therapist makes per hour before expenses. 

Now, I think domaining is 10 times more fun than rubbing oil on someone’s hairy back but I bring it up to keep things in perspective.  

The point I’m trying to make is that domaining can be very lucrative but…. even after a six figure sales year I would not call it easy money or a get rich quick scheme.  If you are one of the precious few who gets to the six figure sales level you’ll have created an awesome and lucrative side gig. Congratulations!

But nothing fell in your lap.

At every level of your business development you got what you deserved.  That is, lucrative monetary rewards for working hard, and smart, with a patient, multi-year business plan.

So forget the myth of overnight wealth through domaining.

There’s no free lunch…….   except on Thanksgiving!

  • This analysis is USA-centric. My apologies to our readers who live outside the USA. You’ll have to adapt the above numbers for your specific country, currency exchange rate and financial situation.
  • The figures in my analysis are estimates and there are many potential variables in acquisition costs, commissions, tax rates, capital gains computation methods and on and on.  Those variations could raise or lower your bottom-line, profit.

12 thoughts on “What’s my take home pay on $100k in domain sales?”

  1. Thank you Keith for the breakdown so newbies dont think its a get rich scheme.It takes a lot of hours and then research and guts to be a successful domainer

  2. Great analysis! I’m a Hungarian domainer, and my profit ratio is also around 50%. It would be great if I could spend 15 hours a week domaining though (now I spend 2-3), I could easily double my revenue…

  3. Great post, Keith. Opportunity costs, taxes, renewals etc are often easily ignored so it’s great to dive into this deeper.

    A couple of side notes – Mark’s portfolio includes a larger percentage of .io domains than most investors so his renewal costs must be higher than the $10 per domain you are suggesting.

    As you point out, the analysis is US-centric. A domainer in a low cost of living country might be able to live off these profits like a king and there are of course many domain name investors that live in no or low-tax countries too. These things can make a significant difference to once bottom line.

    On the other hand, Mark is an experienced entrepreneur with a solid understanding of the web, online business who also seems to have this natural aptitude and creative thinking to pick the right type of brandables and spot trends. This means he most likely did not have the “cost” of education that most newbie domainers have to pay when they start out and slowly grow towards profitability through trial and error.

  4. Richard Morris aka Bulloney

    This is all so interesting, but it’s the Sedo’s, BrandBuckets, and Uniregistries that make the serious money in this game. Yet the “average” end user has never even heard of them…..sad☺

    Stay tuned for ThatNameShow™.com scripted by ThatNameGuy™.com. This is ALL a name game just like you’ll hear in nCredibleVegas™ Enjoy!

  5. I have been at this for 12 years and for the last two put in about 70-80 hours per week easily. No one works harder in this business than me. I might make $20k profit per year, which gets re-invested. My sell through rate is a good 3% and I always sell way too cheap. I might be making minimum wage or less, but it is still a lot of fun. I hope to make $10 per hour within the next few years, and maybe in another 12 years I can hit a six figure year – who knows?

  6. Richard Morris aka Bulloney

    Chris…about your comment, “No one works harder in this business than me, 70-80 hours a week easily”????, I’m not so sure about that. I sleep just four hours a day/night, but it’s four hours of “good” sleep. Ever since I discovered the domain industry a little over a year ago, it’s consumed my every waking hour. Whether I’m sitting at my computer creating domains for my portfolio, making industry connections via Linkedin around the world, having a beer with friends, playing golf (i own 60 .Golf domains), watching television, playing scrabble with my wife, or driving across town (vanity “name” tags everywhere), planning my “name” blog, or scripting a reality TV show ALL about names, there’s no time for anything else. There was once a time where almost every waking hour was spent thinking about sex, but I’m a little too old for that now. The 20 hours a day or 140 hours a week I’m awake is spent thinking about this industry, and I’m not so sure there aren’t others just like me.

    Good Luck to you Chris…from what I hear you saying you love what you’re doing, and if you get a little smarter at it every day, the $$$ will follow.

    Bulloney aka ThatNameGuy™

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