analysis Turning $10,000 into $1,000,000 in 6 Years of Domaining

[Ategy]

As many of you know, I'm constantly confronting and challenging people about how the math behind their portfolio will not lead them to profits. When I do so it's because I actually DO THE MATH as opposed to many who just blindly guestimate.

Obviously when it comes to domaining there's as much art as their is science. Having a few years under your belt might not make you an industry expert, but at least at that point after making several sales you're able to generalise and categorise domains well enough to make approximate long-term averages ... and from that we can then develop a detailed portfolio projection based on math.

I've posted more details as well as charts with actual numbers over at NameCult. but just as a bonus for NamePros members, here are the raw numbers behind a couple of projections discussed in the article.

If you'd like me to post a personalised alternate projection based on your own variables (or numbers you're curious about), then please post in the comments at NameCult or in the following NamePros thread.
https://www.namepros.com/threads/get-your-1-000-000-domaining-path.1175267/#post-7614555

Full article ... [Namecult]


Example #1: $1,000,000 in 6 Years.

Example #2: $1,000,000 in 10 Years.

Original article: http://namecult.com/turning-10000-into-1000000-in-6-years-of-domaining/

 

[wwwweb]

Nice projections, I can see a lot of work went into it with all the different scenarios.

I think at one time pre 2011 it might have been possible, but now with huge domains ruling over godaddy auctions, and the dropcatch with a monopoly, and bidding no way this model works.

Names you could acquire in closeouts, or for a single $12 plus renewal are being forced into the hundreds just in 2 way bidding wars, by a bot simply for your single digit interest.

The acquisition costs throw these projections off, given a different period I think if you were good enough, and disciplined enough, and with a bit of luck, and some outlier sales some of these targets could be hit.

We have to take into account a strong stock market, and low rates help the domain industry, along with the current administration who is doing everything it can to keep the economy going. If the economy stalls, your acquisition costs may go down, but so will your sell thru rates.

Also with the new found greed of registry operators you might have to change renewal forecast costs, even $2-3 up in 6-10 years, will throw the projections off.

All in all, still good to run projections like this, really puts hings in perspective.

People are paying way to much for domains, how do I know because some of them I held for 10 years before I sold them to end users, who might have dropped them after a few years. When they resell, they are going for multiples much to high, that I can see from my past inquiries would make reselling a very tough feat. Especially with all that is going on in China, which has the ability to stall World markets if this epidemic has no cure for a few years. Household debt is at record high levels also, a misstep in the stock markets could crash the economy as they have some really eager multiples priced in.

A good portion of people pay thousands at Godaddy for some of those 2 keyword combos are going to lose money, and opportunity cost of holding those names for many years without getting the price they need. Finally they will have to sell at a loss. People in auctions, are paying more then some actual end users are willing to pay, over hyper appraisal, and bidding bots with unlimited spends, along with dreams of domain riches by human bidders is creating the perfect storm. Sometimes even the best names take years to find the single right buyer, I think we are in the wrong end of the financial cycle for many people to be able to hold on. Long enough to see that thru.

 

[alcy]

Nice projections, I can see a lot of work went into it with all the different scenarios.

I think at one time pre 2011 it might have been possible, but now with huge domains ruling over godaddy auctions, and the dropcatch with a monopoly, and bidding no way this model works.

Names you could acquire in closeouts, or for a single $12 plus renewal are being forced into the hundreds just in 2 way bidding wars, by a bot simply for your single digit interest.

The acquisition costs throw these projections off, given a different period I think if you were good enough, and disciplined enough, and with a bit of luck, and some outlier sales some of these targets could be hit.

We have to take into account a strong stock market, and low rates help the domain industry, along with the current administration who is doing everything it can to keep the economy going. If the economy stalls, your acquisition costs may go down, but so will your sell thru rates.

Also with the new found greed of registry operators you might have to change renewal forecast costs, even $2-3 up in 6-10 years, will throw the projections off.

All in all, still good to run projections like this, really puts hings in perspective.

People are paying way to much for domains, how do I know because some of them I held for 10 years before I sold them to end users, who might have dropped them after a few years. When they resell, they are going for multiples much to high, that I can see from my past inquiries would make reselling a very tough feat. Especially with all that is going on in China, which has the ability to stall World markets if this epidemic has no cure for a few years. Household debt is at record high levels also, a misstep in the stock markets could crash the economy as they have some really eager multiples priced in.

1million$ bitcoin anyone?

 

[wwwweb]

1million$ bitcoin anyone?

Bitcoin is trying to make it to $10k, you can probably put the recent rise on the flu epidemic, especially being in China, a crypto strong a Country. Crypto was meant to flourish in the face of chaos.

 

[alcy]

Bitcoin is trying to make it to $10k, you can probably put the recent rise on the flu epidemic, especially being in China, a crypto strong a Country. Crypto was meant to flourish in the face of chaos.

yes that was my point... you talked about tons of instability due to virus... and what can happen if we dont get it under control for years... so then i suggested 1btc worht a million.. as store of value.. and or new global currency.

 

[BrandEntrance.com]

Thanks for running the numbers I suggested @Ategy. I realized of course they would be negative, but suggested those values because I think they are representative of what many can achieve. Your numbers clearly show, they do not result in profitability.

So one either needs to get sell-through rates substantially above industry averages, or achieve your model 1 to 1.5% sell-through with average net prices of several thousand dollars, or get moon level prices on the odd name. Another option is to assemble names that can earn more than their holding costs in monetization. Profitable domain investing is not easy or assured. As wholesale costs increase, and it looks like renewals will increase, it will get even harder.

Thanks for clearly presenting the numbers for a reality check on how hard it is to make money in domain investing. I hope readers give your article a careful read past the eye-catching title that might lead them to think it is easy money!

Bob

AND a sprinkling of luck is needed to. So many variables.

 

[Ostrados]

Please take in consideration that sell through rate (STR) is not fixed but variable:
STR is inversely proportional to selling price
STR is proportional to acquisition cost

 

[Sutruk]

Congrats for this projection study Ategy. Your effort is appreciated!

Although the domain science is not an exact science, your maths are very interesting!

 

[bmugford]

So when I see someone like @bmugford talking about issues of scale-ability, it tells me that he likely operates at a higher STR. The good thing about the lower end of the STR spectrum is that there are plenty more gems in closeout than there are good domain buys in the $100+ acquisition range. You're living it large if you're buying domains at $18 and have a STR of 1% @ $2500 (138x multiple and rising over time as your portfolio ages).

I do have a higher STR than 1%, but most of my domains were bought several years ago now.
There is no doubt there has been a massive rise in reseller prices in the last several years.

The domains you could have bought years ago were a lot higher quality than today, on average.

I am skeptical you can find a sufficient quantity of investment grade domains for $18-$25 in today's market, at least ones that would be able to consistently maintain a 1% STR @ $2,500 year after year.

As time goes on it would be harder and harder to find that supply, aka the scalability of it.

Brad

 

[Recons.Com]

First, the title is based on 1.5% STR, not 1%. Second, even then not sure about the numbers.

Could you explain your "sales" column? I see much higher than 1.5% of the portfolio sold in there, if that is what it means.

For example, in year 3 it shows 5354 names, about 2000 increase from year before, and 80 sales there. That is average for the year about 4400, so at 1.5% it should have been 66 sales, not 80.

And how did the guy get 1814 domains in year 1? Supposedly he had only 10000 to invest, at $15 a piece, he could have bought only 660 names?

Reality is much less sexy. Even if you have cracked the formula for what sells, you will achieve something like 50% on the capital employed, especially if you keep scaling up and don't have any other costs besides renewals and your time cost is zero.

to get from 10000 to 1000000, it would take about 11 years and 4 months with that assumption. And that is assuming within next 10 years you can still get names of that quality in $12-20 range.

To get to $1MM in 6 years, you'd need to be making over 100% on the capital employed, essentially more than doubling your money every year. (Simple math 2^6=64<100>2^7=128)

 

[Ategy]

@Recons.Com .. I'm not sure if you read the article or all the posts in this thread.

This really isn't about any single model .. it's more about the need of being aware of the math behind your (speaking generically) portfolio model.

Also, the key point behind the math issues you're having that you missed is that the initial investment on all of these projections is a very different number from "Peak Investment".

Basically the projection keeps a running balance starting with $0 on day #0. "Peak Investment" is at some point in the future when your profits start to outpace your costs (effectively the lowest balance of the entire projection). That's why I put a date there. In the $10K > $1M projection the investor reached $10,062 in the 4th month. After that they are still spending, but making enough profits so that any further expense is subtracted from their ever growing balance.


As for the rest of the comments and questions, I was late with today's lists at NameCult because of this thread all day yesterday (I admit .. portfolio projections and tinkering with Excel are two very fun distractions I find hard to resist .. lol). I want to get the VIP list up in the next hour or so .. then after that I'll come back here and reply to the rest of the questions and comments I didn't answer yet.


Those of you who haven't please read my earlier posts in this thread as it explains a bit more how the projection works. One key factor many overlook the the increasing multiples over time due to a shrinking average cost as the portion of your portfolio with costlier acquisitions shrinks in comparison to Year 2+ domains where your only cost is renewals. (Explained earlier)

 

[Recons.Com]

@Ategy your unorthodox financial methods either deserve their own scientific dissertation or require that you do spend time studying how financial analysis and projections are made.

So this theoretical person is able to make enough sales by 4th month of starting to somehow finance buying 1200 more names while also paying renewals?

Also, are you seriously assuming $2888 average sale price on closeout names? AVERAGE? Is that before platform commissions or after, by the way and are they factored?

You can't have everyone reading through all your posts in the forum. It should be already clear in your NameCult post and that is quite confusing.

There is a reason around 50% of investors lose money, while your projection is pretty much is built on 100% return on investment. You could as well have assume 200% return and have shown 10000$ to 2.5 million in 5 years. Why not? Just assume something like acquisition cost of $6 from handregs and sale price of $3K with 1.5% sell through. There! Even more attention grabbing headline.

 

[james haw]

Am I getting this right.. Your model suggest 5 domains sold per day at average of $2.8K per domain?
I mean, your maths may add up but the issue isn't mapping out maths.

 

[Manish Rawat]

Everything take time, New domain investors should learn; who want $1000000 as cup of cake just under one year....

 

[winst]

I've made a spread sheet back in 2005 with a plan to make $1M with domain name sales, parking revenue, plus develop websites with Adsense. Parking revenue died. After several Google algorithm changes, my auto-blog site revenues died too. Domain name sales swings quite a bit from year to year for me. I wish there was some kind of formula to turn $10k domain investment into $1M, so far I have not found one yet.

 

[Ategy]

@Ategy your unorthodox financial methods either deserve their own scientific dissertation or require that you do spend time studying how financial analysis and projections are made.

Usually when I do these sorts of things I start with a relatively simply Excel sheet with over simplified calculations. From there I make them more an more accurate and relevant then a few hours/days later I find myself with a very complex (but accurate) monster of a spreadsheet.

What you see in the pictures I post is just a tiny summary revue of all the calculations. That being said, it's still tiny compared to the computer-crushing epic spreadsheet system I have to maintain my lists for NameCult. Sometimes after some time I look at my own multi-line formulas and have no clue what I did .. I just know I got it to work (usually with a lot of help from Google .. lol)

Am I getting this right.. Your model suggest 5 domains sold per day at average of $2.8K per domain?
I mean, your maths may add up but the issue isn't mapping out maths.

No. "Domains per Day" is acquisitions. Domain sales are shown for each year. In the case of the first example in this thread there are 13 domain sales in the first year. 41 in Y2, 80 in Y3, etc.

So this theoretical person is able to make enough sales by 4th month of starting to somehow finance buying 1200 more names while also paying renewals?

Kinda. You understand the concept, but for that first example the first sale actually is not enough to cover the ever shortening spread until the next sale. But it does happen after the 2nd sale. On the day before the 2nd sale the "running balance" bottomed out at $10,060. The day before the 3rd sale the balance is $10,040. Then as every sale comes faster due to an increasing portfolio, the balance slowly swings into positive territory.

In this specific model, by the time renewals start to kick in, the overall sales are strong enough to pay for 5 new domains a day as well as the renewals.

NOTE: That's for this particular theoretical projection. Everyone has different things that happen and different inflection points. That being said, here's that original 10k>1M projection with my updated spreadsheet:

Also, are you seriously assuming $2888 average sale price on closeout names? AVERAGE? Is that before platform commissions or after, by the way and are they factored?

I already mentioned that the sales price is obviously before any commissions. It has to be since different domainers use different venues to sell domains .. including their own (commissionless) websites.

Again, the $10k to $1M theoretical projection is just one of an infinite number of possible routes to domaining success (or failure).

You can't have everyone reading through all your posts in the forum. It should be already clear in your NameCult post and that is quite confusing.

I had actually set this up deliberately as two separate threads. One for the article to simply discuss the theory and math and concept of being aware of your own portfolio's potential projection.

And also a 2nd discussion where I specifically invited people to give me numbers to plug into spreadsheet so we could then indeed specifically discuss what are and aren't realistic projections. I felt they were two very different conversations, but @NamePros felt it was a duplicate post/thread, so they merged what were two different discussions, and in turn made this merged thread a little harder to follow.
(@Mod Team Alfa @Mod Team Echo @Mod Team Bravo @Mod Team Foxtrot)

That said I'm not saying you need to read every post in the forum .. I'm saying you'll find the answers to most of your questions as well as my reasons for doing this (not what you've assumed) in some of my previous posts in this thread. So if I don't go into much further detail, it's simply because I've already addressed most of what you said.

There is a reason around 50% of investors lose money, while your projection is pretty much is built on 100% return on investment. You could as well have assume 200% return and have shown 10000$ to 2.5 million in 5 years. Why not? Just assume something like acquisition cost of $6 from handregs and sale price of $3K with 1.5% sell through. There! Even more attention grabbing headline

lol .. what you're saying is actually kinda the reason I did this. And obviously I agree with most of what you're saying (things I've said myself several times in the past ). And by "this" I'm not talking about any single projection (as you seem to be focused on, but the actual point of this is more to be aware of and explore the math behind your own portfolios and domaining methods and tactics.

You could as well have assume 200% return and have shown 10000$ to 2.5 million in 5 years. Why not?

Yup .. again .. that's the point .. just to explore viable and ridiculous projections just for the sake of see what would happen .. so here it is .. the same variables but with 2.00% sell-through rate (which i think is what you meant because "Return" is more the end result, and not one of the starting variables):

Domain name sales swings quite a bit from year to year for me. I wish there was some kind of formula to turn $10k domain investment into $1M, so far I have not found one yet.

Again .. as I've warned in the article and said a few times .. this is just theoretical projections .. domaining is far too random with a lot of luck involved to truly ever have constant results. Once your portfolio grows to significantly larger sizes supposedly there is more consistency on the portfolio level. But to be clear "more consistency" does not mean "actual consistency".

Just assume something like acquisition cost of $6 from handregs and sale price of $3K with 1.5% sell through.

lol .. again .. because I can. But feel free to propose what you consider more realistic varibles .. because that's what the point of all this was!

Reality is much less sexy. Even if you have cracked the formula for what sells, you will achieve something like 50% on the capital employed, especially if you keep scaling up and don't have any other costs besides renewals and your time cost is zero.

Yes again! You aren't saying anything I don't agree with. This is a relatively simple spreadsheet (although I'm adding things as ideas come up in this discussion). I suppose I could factor in a time cost based on both (1) portfolio size (management and sales correspondence, etc) and (2) the time involved to find your 5 domains a day. But again .. everyone values their own time differently, so it would need to be yet another variable. Very doable .. but needless complex for the sake of this theoretical discussion.

To get to $1MM in 6 years, you'd need to be making over 100% on the capital employed, essentially more than doubling your money every year. (Simple math 2^6=64<100>2^7=128)

Again, my math is several generations more complex. I'm not doing calculations on a yearly level, but right down to the daily level. Also, my previous simply spreadsheet (similar to what most people do) didn't factor in reduced inventories due to sold domains. At the end of the day however .. yes .. someone with a good command of their portfolio or who is already successful in domaining, doesn't really need to know down to the finer details that my spreadsheet provides.

To Be Continued ...

 

[Ategy]

... Continued from previous post.

Names you could acquire in closeouts, or for a single $12 plus renewal are being forced into the hundreds just in 2 way bidding wars, by a bot simply for your single digit interest.

The acquisition costs throw these projections off, given a different period I think if you were good enough, and disciplined enough, and with a bit of luck, and some outlier sales some of these targets could be hit.

We have to take into account a strong stock market, and low rates help the domain industry, along with the current administration who is doing everything it can to keep the economy going. If the economy stalls, your acquisition costs may go down, but so will your sell thru rates.

Again .. obviously while this is a complex spreadsheet compared to standard simplistic projections, there will always be things that fall outside the scope of what can be translated into math and formulas. This was never intended to be an exact hard projection. Just a way to project out that if you keep doing what you're doing now, will you be profitable long term or not. If my spreadsheet spits out yes, it's still not a guarantee .. but far more importantly, if it spits out that based on your current domaining methods it shows a long term loss, then that's when you really need to focus on where and how your portfolio math is leading to those losses.

Also with the new found greed of registry operators you might have to change renewal forecast costs, even $2-3 up in 6-10 years, will throw the projections off.

All in all, still good to run projections like this, really puts hings in perspective.

Now you've hit the nail on the head for the whole point of why I created a complex spreadsheet. While I haven't factored in inflation at this point, it is just a few keystrokes away for me to change the numbers to come up with 2 different projections to compare the differences. Just for the sake of doing just that, I've kept the original first $10K to $1M projection that everyone seems to be focused on. Then right from the start increased acquisition and renewal costs $2.50 each. And while you'd expect a big difference, the only difference is that your peak investment goes from $10.0k to $12.2k and you hit $1,000,000 in 6y5m instead of 6y1m. Let me know if there's a different specific pair set of variables you'd like me to compare! (I've already done a few earlier in this thread).

Acquisition costs seem very low to develop any kind of decent portfolio.
From what I quoted, wouldn't it be time better spent getting your portfolio "organized enough to sell optimally". Go all out for a year and see what the results are.

lol .. I certainly can't argue with you there. So much crap going on in my life right now. Still not finished dealing with 3 of my previous 6 water incidents over the last 15 years (neighbours, insurance etc) .. and guess what happened last Friday? Yup .. neighbours upstairs had their toilet overflow and everything leaked down to me! Still also dealing with my knees with regards to work. I do enjoy tinkering with Excel .. it is a bit of an escape for me to build monster sized spreadsheets with tons of complex inter-related equations. Don't take that away from me please! lol

That being said .. my acquisitions aren't too dissimilar from the ones many people seem to be complaining about here. Yet I had a profitable 2019 .. and while I most certainly didn't make a fortune, it wasn't a small token margin like 5% .. it was comfortably more than just a few percent. But I obviously started the year with domains and made fewer acquisitions than in my first two years, so those lower costs helped make my multiples most pronounced.

Hi Ategy, thanks for the numbers! Do you plan to share the table in a google doc or smthg, so that we can play with it ourselves?

It's rather big and more importantly an on-going work in progress .. so likely not at this point. But again, feel free to post some replacement variables and I'll definitely share the results!

So one either needs to get sell-through rates substantially above industry averages, or achieve your model 1 to 1.5% sell-through with average net prices of several thousand dollars, or get moon level prices on the odd name. Another option is to assemble names that can earn more than their holding costs in monetization. Profitable domain investing is not easy or assured. As wholesale costs increase, and it looks like renewals will increase, it will get even harder.

I want to be very clear that nobody should be expecting any guaranteed results ever. And obviously hitting $1M in six or even 10 years is not something that most people could do. the problem most run into is acquiring the quality of domains that fall into the 1%, 1.5% or above thresholds. As many people who didn't see the real point of this discussion have pointed out, the $10k to $1M in 6y scenario has significant challenges. Finding five "1% STR at $2,500" domains for under $20 is possible (I my opinion), but it most certainly is not easy .. and nothing most should take for granted. I work very hard to find some of the best value domains out there .. and obviously I did not account for time in this spreadsheet, or my 2019 domaining profits would likely be break-even and likely a loss (it's hard for me to judge how much time I spend because chunks of that time is also for my blog and curating the daily auction and closeout lists that I share with everyone here and at NameCult).

As for getting sell-though substantially above average. Nobody should set the prices of their domains to fit a certain model. People should price their domains at what they think they are worth. You then plug those numbers into a projection modeller to see if you're on the right track or not. In the end the most challenging aspect of doing projections is indeed assigning and setting your projected sell-through rate .. that number is strictly based on your pricing/multiples and QUALITY of your domains. But ironically perception of quality of individual domains is very abstract and random on the individual domain level .. but as you get to know your domain type(s), that number becomes clearer on the broad scale portfolio level.

there's too much random in individual domains .. but with enough volume randomness can begin to form statistical averages. It's those broad numbers that need to be understood hopefully sooner than later by new domainers.

What I'm curious about is what sort of marketing and business strategy is the sell-through rate of 1% -1.5% based on? What sort of effort is actually being put into making sales? How many potential buyers actually see your domain names listed for sale?

Again .. your questions are somewhat beyond the scope of this discussion. I didn't post that original example to say it's what I've personally done (I only started domaining seriously 3 years ago). This whole thing is actually to look at things the other way around. Ask yourself what are the potential different marketing and business strategies that could be applied to domaining, then assign variables to those concepts. Then post those numbers here and I'll plug them into my database for all to see and learn from!

Sell through rate can vary greatly depending on the quality and level of domain. There are domains that can easily hit 10% sell-through rate. but with those the likely expected multiple is more in tune with 10x to 20x than with 100x or 200x. There are countless paths (/projections) to success in domaining .. and for each of those successful paths, there are probably 10 paths to failure! lol

Very interesting but
$18.5 acquisition cost , combined with $2888 average sale
Is unrealistic

I'm inclined to disagree because I've actually seen similar-ish numbers. However .. again .. the point of all this is not to dwell on any specific projection (particularly just the first example one I gave). Please by all means .. give me some numbers to use as different variables in my spreadsheet and I'll share them here!

AND a sprinkling of luck is needed to. So many variables.

"Luck" is probably the biggest variable in all of domaining. But ironically as you progress in domaining, you get more of a feel for the chances of different domains potentials to sell at different multiples. The funny thing is that most people (even experts) are probably more wrong than they are right for the bulk of their portfolio .. however .. as people get better, their "guesses" are closer to reality .. and .. on the portfolio level, often the over-valuations and under-valuations help cancel each other out towards finding a "sell-through rate" that is moderately accurate. (Or at least enough to fumble your way though finding a portfolio projection that comes close to simulating your domaining strategies.

 

[Recons.Com]

Again, my math is several generations more complex. I'm not doing calculations on a yearly level, but right down to the daily level. Also, my previous simply spreadsheet (similar to what most people do) didn't factor in reduced inventories due to sold domains. At the end of the day however .. yes .. someone with a good command of their portfolio or who is already successful in domaining, doesn't really need to know down to the finer details that my spreadsheet provides.

Honestly, doing daily doesn't make your calculations "several generations more complex". If anything, it is complicating your analysis without any need for it.

I have been in charge of financial analysis and valuations for multi billion assets, investment decisions, acquisitions, valuations, incremental analysis for various options, complex calculations with decision trees to factor in the risks, valuations with the whole value chain including upstream, midstream, downstream etc. in case of energy, factoring in tax/fiscal regime, contract specific terms etc.

What you are doing is absolutely unnecessary. Going to monthly or daily level is rarely necessary if you are building multi-year outlook, especially if your contract doesn't mandate some specific changes based on daily quotas etc. Annual does the job just fine. You should familiarize yourself with sensitivity analysis. If parameters are not sensitive to change, you have much more leeway to be less precise with them. If you want to reflect for the gradual accumulation of names, just take mid year numbers for everything. We, finance professionals, have special appreciation for elegant simple solutions.

All you have to do for such a basic investment model as domain investing, you should just look at past few years data, how many names you had and how much you invested, your opex, your income after expenses but before taxes, figure out your average IRR, then just use to figure out how much you will have after x years by this formula:

Investment x (1+IRR)^x

That is it. Your whole "several generations more complex" spreadsheet in one cell simple formula.

 

[Ategy]

Honestly, doing daily doesn't make your calculations "several generations more complex". If anything, it is complicating your analysis without any need for it. ...

lol .. you aren't entirely wrong. Part of my doing this in the first place was actually simply to see the results and explore and discover what actual parameters were indeed sensitive and which weren't.

As I started this a few days ago, I had no clue I'd end up making a little post about it and having a super long discussion about it. not only that .. but I actually had no clue how even my own spreadsheet would end up (if indeed it even is finished?).

That being said .. I actually did have a simplified version. But what led me to this more complex one, was a series of "oh wait .. I didn't account for X" .. "nor for Y" .. then "nor for A, B or C" .. lol.

What makes it more complex is the shifting multiples over time. Also how and when to account for the adjustments because of sold domains.

Yes I could probably go back realising what was missing at the start and come up with a simplified version .. but where's the fun in that? lol

More importantly the way I have it now it's shows the specific days of milestones .. even if yes .. I admit .. those target dates are only theoretical and likely have a margin of error larger than the moon!

 

[Recons.Com]

@Ategy exactly! When you do projections, there are so many uncertainties that the precision on the daily level is not required or even isn't desirable.

Honestly, if I offered to the management analysis with daily stuff, unless, again, it was needed per contract terms, law etc., I'd be laughed at.

Here is a simple way, if you still want to make a spreadsheet for it:

For year 0, take the number of names you'd have on month 6, have a cell for per domain cost and multiply by that cell to arrive at your required investment.

For your renewals, just factor in into your acquisition cost that it includes at least 1 year of renewal in it.

For your sales, have a cell for STR and multiply by number of names. Have a cell for average post commission sale price and multiply by that number to arrive at your revenue for the year. Deduct your investment to arrive at the free cash flow. Could be negative.

For year two, use number of names at 1.5 year point, deduct renewal for total names you had by the end of year 1 from your revenue calculated as above, deduct required investment and arrive at your free cash flow for year 2.

Repeat for following years. Just sum up the free cash flow for the years to see at which year you'd arrive at desired investment outcome.

And, of course, you can use the free cash flow over the time to calculate Net Present Value (NPV), IRR (internal rate of return) and other investment metrics.

 

[BrandEntrance.com]

Investment x (1+IRR)^x

That is it. Your whole "several generations more complex" spreadsheet in one cell simple formula.

what is x?

 

[Ategy]

@Recons .. That's not very dissimilar to what I originally had.

While there are things you haven't accounted for, most of the extra stuff I've factored in could indeed just have separate columns and be added/subtracted/etc.

I will also admit much of the complexity was in actually getting it down to the daily level because indeed I was curious to see just where exactly on which days the earliest sales theoretically happen.

So in the end much of the complexity was a journey of discovery for me. However .. it should be noted that while you all only see the final summary, I personally did find a lot of the information you can't see to be interesting and enlightening. The actually process of building the spreadsheet led me to have a much deeper understanding of the overall math and logic of theoretical portfolio math.


What is cool about my more detailed and refined version, is in comparisons. Because while there obviously are huge margins of error when it comes to domain sales probabilities. What's interesting is changing the less random variables. Here's a good example:

Scenario #1: Slightly more attainable numbers due to lower average sale amount.

Scenario #2: Same numbers but after Verisign increases prices 10%:

Scenario #3: Here's a third after the 4th 10% increase

Again .. yes .. you could still have a more simplistic version .. but I really do like how mine has turned out. And there are most certainly things that I've included in this more complex version simply due to the actual process of making it more complex. Much could be retroactively simplified, but again, there are extra things I get to see in my detailed layout like how the math flows and bounces around from day to day and month to month.

 

[koolishman]

what is x?

Number of years aka holding time.

.investopedia.com/terms/c/compoundreturn.asp

 

[BrandEntrance.com]

Number of years aka holding time.

.investopedia.com/terms/c/compoundreturn.asp

Thanks.

 

[Recons.Com]

what is x?

the year. So, for year 5, it would be 5 )

 

[BrandEntrance.com]

the year. So, for year 5, it would be 5 )

Of course. I didn't look up the formula but time is an obvious factor. Thanks.