Tag Archives: Costs

Acquisition Costs v Sale Price

On an almost daily basis, I get email from potential customers looking to buy the domains I hold in my portfolio for pennies or close to standard registration fee, who are then shocked by the counter offers they receive. Domain Names are very much like Car Number plates, when you see your name on a car or number plate dealers site, do you expect it to cost the same as the first person who bought it? There is only 1, and possibly dozens or 100s of people who want that one name, so cash is the great decider.

I thought I’d talk a little bit about costs involved with drop catching, and the significant costs involved.

Nominet Membership
Firstly you need membership to Nominet, which costs £400+vat and then £100+vat per year, additionally you will need DAC membership is £25+vat per year on top again.

You require all of these to gain access to the basic systems which you will need to run a drop catching script.

Once you have your Nominet account, you have 3 main options…

Catching Software
Option 1: You can buy a script at around £10,000 for what is considered the best available to the public. There are cheaper ones often in slower high level languages, but when you’re talking in millisecond speeds, you need as fast a language as you can get. Lower level languages have a steeper learning curve, and thus cost more to have developed.

Option 2: Alternatively you can code your own script and spend months, years honing the intricacies of low level network programming, working out which language is faster for the specific job etc. Those who code their own software are often the fastest and most successful but have many years experience, generally they have been drop catching for 5, 10 or more years.

Additionally with Option 1 and 2, you will need Suitable Dedicated Server hosting. Any old server won’t be “fit for purpose”, you one which is close to the nominet servers, and in general you are looking at £300+ per month, I just checked a reliable provider and the yearly price was £3,651.60 inc basic support. If you are competent with Linux server management, you can save some money there. Server management can be £150-300 per month depending on who, where and how much “support” you need. The support is generally to install software, update software, patch security issues, fix faults, etc.

Option 3: Lastly, you can lease or rent a “catch system”, these can be as high as £1,000 a month for the top catchers, who are usually self coders (Option 2), but the average is around £400 per month for the best chance systems. As with script purchases, there are other options available, I’m working on averages and easy for the context of this post.

Drop Lists and Metrics
In addition to Option 1, 2 and 3, you will need access to “Drop Lists”, which are lists of domains due to drop on specific days and often you need “Metrics” which is information such as how many back links a domain has, what domain authority it has, things like that. Metrics are a whole other category, and not for this post.

Some basic drop lists are free, others are up to £15 per month. Metrics Data can be upto £4o per month but includes drop lists. Again cheaper limited options do exist, DCE.co.uk is once such example.

Drop Lists take some time to go through, and it takes a degree of skill to know what is of value, and what is trash. This again isn’t for this post.

Registration Fees
On top of this are the nominet registration costs, which are £5+.

Sales and Stock
Like all businesses, we have to hold stock, 100s or 1,000s or domain names, at £5ish per year. Sales are not regular, and we expect to sell around 5-10% of our stock per year, which means they need to sell at enough to cover our costs, pay our bills, buy new stock (which is from previous owners, auctions and catching) and pay wages on top.

In Summery
The bottom line is, it isn’t cheap to operate in this niche. I hope this goes some way to explain why drop caught domains are not sold for the price they are purchased for. Its not the domain you are paying for, its the time and costs taken to obtain, the skill learned to recognise it and the money invested up to this point.

Drop Catching IS a business, and as such it has overheads. Above are just a few such overheads. Remember this when you’re looking buy.

A Manchester Based Photographer and Website Developer with interests in Strongman, Fitness and Geekery.