I had a brief discussion about this topic on one of the domainer forums just the other day.  I believe it to be an important subject and a possible education opportunity for other domainers new and old.

What lead to the conversation was this.  I purchased a domain name for $150 and was willing to sell it for $180.  The comments that followed were, that’s not a high enough return on investment (ROI) for me or I wouldn’t sell it unless I could double my money.

Take that same domain name in two scenarios…

Example.com purchased for $150 and sold for $300, but say twelve months after initial purchase giving it a profit of $150 minus any fees.  It may have taken twelve months because they were looking for an end buyer, making several calls, sending many emails and maybe some regular mail trying to reach the right buyer.  Using this method you turn a 100% ROI over the course of one year.

or

Take that same domain name purchased for $150 and sell it within 30 days for $180 giving a smaller profit of $30 minus fees if any.  Lets take that money and do the same thing every month for one full year.  Your total profit at $30 a month would be $360 for the year which is a 240% ROI.  Also assuming you sold the domain name at a good value your buyer pool opens up tremendously, maybe even selling wholesale at these price points.

Which method is better?

Personally I would have to say the answer is both.  If you are running a domain name business you have to utilize both strategies to succeed.  As a business you have to continually turn your money bringing in enough new money to cover your monthly expenses.  While doing this you are also trying to find the right buyer for certain domain names.  An example from my personal collection, I own DryRoastedPeanuts.com, you better believe I am going to contact every peanut and snack company possible before I let this domain name go at wholesale pricing.  Now lets take that domain name with a slight variation like DryRoastedPeanutRecipes.com, my first thought would be to wholesale the domain name and turn a quick profit.

Understand that turning a 100% ROI is not always the best scenario, as I have shown turning $150 for a smaller profit on a consistent basis you could turn a 240% ROI.  Of course I am talking about a small amount of money, but say the same domain purchase was $10,000, that may have been all your spending capital for the year.  If you wait a year to find the right buyer you have lost opportunities in using that money for other domain names.

Bottom line, keep turning the money, that is the recipe for success.