One topic that took me years to get comfortable with was the idea that some domains in your portfolio are easily replaceable, others, not so much. It can be easy to just look at each domain in your portfolio and assign it a price based on whatever pricing theory you use. Some people look at search volume and CPC, others look at similar names, others have some gut feeling or secret sauce they try to apply to pricing.
There’s no hard and fast rule on how to price your domains and I’m not going to get into a detailed discussion on how to price your domains here. Instead I want to talk about a topic that can take a while to wrap your head around, or at least it took me a while!
What I’m talking about here is dividing your domain investment portfolio into replaceable and non-replaceable domains. If cashflow is your goal, you’ll want to keep your portfolio topped up with replaceable domains. For me, I stay pretty laser-focused on two-word .COM names when it comes to replaceable names, and I typically try to buy these names for under $500 and sell for under $5,000.
Many domain investors have commented lately that it’s getting harder to buy replaceable names at the wholesale prices we’re all used to given all the increasing bidding activity in the aftermarket. What this means is that it’s actually harder to replace domains than it used to be so the balance of replaceable to non-replaceable domains in your portfolio may buoy in a different direction.
When it comes to non-replaceable domains, these are names that you can’t just pop over to an auction site to replace once they sell. Investors (myself included) price Non-replaceable names higher and expect to have a longer hold time on these names sometimes in the 10+ year range. The reality is, buying non-replaceable names is tricky and involves being at the right place at the right time, and likely paying more than you normally would, but for something you know is pretty darn special.
There’s a lot of discussion about domain pricing out there but not as much discussion about dividing your portfolio into these two categories. I think this is a step investors should actually take before applying a pricing strategy since it can help to guide your pricing process and help you on the buy-side when it comes to identifying what you might need to buy more of after a sale.
Like most things in the domain investing world, how you approach this topic is going to be different from others, and that’s okay – we all have our own way of seeing our portfolio and the market potential. The key is to tie everything to your own goals as an investor. If your goal is to make $100k a year, having too many domains in the non-replaceable category could make this a bit precarious. On the flip side, if you goal is to sell a domain for $250,000 – pricing non-replaceable names in this range likely means way overpricing.
Last but not least – there’s a good chance your balance between replaceable and non-replaceable will change over time as your own investment strategy changes. The more aware you are of the balance you have, and the balance you want to keep, the more deliberate you can be with both your pricing and your buying strategy.
I hope this gives you something to think about. As always, I’d love to hear more about how you approach this – comment below and let your voice be heard!
Disclosure: The content on MorganLinton.com is for informational and educational purposes only and should not be construed as professional financial advice.