Investing in Domains in these days more profitable than putting the money in bonds, stocks or any other financial instruments. Of couse, this is November 2008 and the markets are quite upset. My view is that they will come back to almost normal in a month or two. In the mean time, Domain Development is a very good alternative.
Since I started DomainGrower.com I am trying to predict how a domain will perform, depending on its name, the intended market, and the investment the owner is ready to do. Every domainer wants to make sure the investment will be highly profitable, and they ask about Google Ranking, Traffic, Adsense revenue, maintenance cost, increased domain-site value and finally, profit.
I am not able at this point to provide exact projections or a formula. However, I have now a pretty good idea of how the domain can grow and how much will return.
Very good domains convert visits into sales at 1% or more. This is quite unusual, but sometimes we see it. When your domain does not sell any particular item, just adsense clicks, the conversion rate can be 0.5% and be very good. It is also important to assess the quality and quantity of the traffic. If your visitors are real estate investors ready to buy expensive property, the clicks will be very valuable. Maybe U$D 40 or 50.
On the other hand, if they are poor Hispanic teenagers looking for free music or porn, their clicks will be much less valuable, maybe $ 0.03.
My advice would be to focus on a niche audience, providing some free service that could mean value for them. Adsense revenues will help pay the bills.
After that, you can start thinking into selling some valuable items. As your audience grows you can find new demanded fields where you can offer quality contents. At that point, maybe 6 months after start, you will jump from red to black numbers. In a year, the increased value of your site will be also reflected in the domain name value.
Ask us about the value of your existing domain or developed site, and listen to our domain growing suggestions.