How JustDropped.com profits from domain names by focusing on volume
Behind a popular expired domain site lies a business model of selling lots of domain names for under $100.
There are a handful of people and companies that make a living buying and selling domain names.
There are some, like Frank Schilling, who make money selling a small percentage of their portfolio each year for very high prices.
There are others, like NameMedia, who sell a bigger, but still small, percentage of their portfolio with a typical price of under $2,000.
Then there’s Dan Rubin, founder of JustDropped.com, who sells a big percentage of his domain portfolio, but mostly for under $100.
Rubin’s story began in 2003. He was working full time, but started the expired domain search site JustDropped.com on the side that year.
Back then the options for expiring domain data were rather limited. He had one big competitor who suddenly decided to start charging for its search service. That sent hundreds of users a day over to JustDropped, where they could search for domains at no charge.
Rubin made money from affiliate links to domain name registrars. When a visitor found a domain they liked that had “just dropped”, they’d click on a link to buy it and Rubin would pocket a commission.
It was a good business model, but Rubin saw another opportunity. He realized he had a knack for finding good dropping domains. What if he were to acquire domain names himself and offer them to customers at prices typically found with domain backordering service?
He sent out a newsletter with around 20 domains with buy-it-now prices of $70 or so. The response was phenomenal.
Revenue from domain sales quickly dwarfed how much JustDropped.com made from commissions. Although it’s a bit under-the-rader, JustDropped had perhaps one of the first domain sales newsletters. Its readership has grown to 75,000 and there’s now a companion iPhone app.
Part of the trick to making this low priced domain business model work is only paying $8 when registering expired domains rather than paying a backorder service to do it for much more. Rubin did this with the help of backordering software DNWare. As an affiliate of DNWare, he was the software creator’s top sales channel. He eventually bought the DNWare business.
The second key is knowing which domains to go after. Although many of the best domains are sold through competitive auctions at NameJet and SnapNames, Rubin realized he was particularly good at spotting brandable domains that could be quickly resold.
“A big part of my time is spent analyzing the drops,” Rubin said. “A lot of people just look at the metrics. Those types of domains [with good domain metrics] are highly competitive because everyone’s looking at the same metrics.”
Rubin’s business continued to grow. In 2008, he quit his job of 20 years to focus solely on the domain business.
In 2009, he was approached by Rob Monster about selling JustDropped to Epik. The two struck a deal, but it later fell through.
Rubin hasn’t looked back. He continues to buy domains for about $8 and sell them for 10x that.
Is there really a business selling domains for under $100?
Rubin points out that the ROI on buying a domain for $8 and selling it for $80 is better than buying one for $1,000 and selling it for $2,000.
And, to be fair, he does sell some of his inventory for more. He holds on to domains that don’t sell right away and adds them to domain marketplaces. 75% of them have buy-it-now prices.
Rubin is playing a volume game, and it’s not easy. But by making shrewd purchases and quickly flipping them, his business has been able to thrive along with some of the bigger guys who make headlines every day.