Sharing your purchase price, but what regarding cash flow?

Patting yourself on the back can have adverse effects.

Earlier today, domain investor @tonynames posted a request to domainers on Twitter:

It is a humble request to the domaining community not share your purchase price. We by now face a lot of Hate from potential end user community and it gives out the wrong message without understanding our total carry cost of a portfolio etc Just share the price, that is enough

Tony is referring to a common practice of domain investors: mentioning how much they bought a domain for and how much they sold it for.

The problem with this is twofold.

First, it gives ammunition to people who hate “squatters”. You charged me $4,000 for something you bought for $40?! That’s crazy!

Second, it ignores the reality of domain investing for most domainers. The unit economics are spectacular, but the overall economics are tough since you only sell a modest portion of your portfolio each year.

Consider this response from @domain_org:

Maybe share your carrying cost with every sale posted. Eg. $120k/year in buyout and renewal fees and only $6k in sales this month. Out of pocket costs are more than what most people think. It's not profitable yet.

When someone tells me they sold $100,000 of domains last year, I often ask them what their carrying costs are. On top of that, how much did they spend on fresh acquisitions this year to keep the sales flowing? In other words, what’s their cash flow?

Anyone can build a portfolio that generates a lot of sales, but are they actually adding money to their bank account?

Join the conversation here.

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