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Thursday, March 25, 2010

How to Invest in Domains

How to Understand the Domain of Functions

Domain
Domain

Is your instructor talking Greek when he talks about the domain of a function? This article will help explain domain in English.

Difficulty: Moderately Easy
Instructions
  1. Step 1

    First, let's understand real-valued functions. We can think of functions as sets of ordered pairs (or triples or n-tuples) or as special rules. For the sake of simplicity let's think of functions as rules. These rules pair one number to some input number or they pair one number to some list of numbers. Again for the sake of simplicity, let's limit our discussion to the case where the inputs are single numbers. Hence, a function is a rule that pairs a number with another input number. For example, the function y = 2x pairs a number with its double. If we put "in" 6 for "x," the function says y = 12. Hence, 12 is paired with 6. We write this pair as an (x,y) ordered pair: (6,12). Frequently, books let y = f(x) and then write f(x) = 2x. This gives us a notation for "putting in 6," which is f(6). The notation f(6) refers to the number that will be paired with 6 by the function. In this case, that number is 12; hence, f(6) is 12.

  2. Step 2

    Second, let's understand domain. A domain is a set of numbers associated with a function. Specifically, the domain of a function is the set of input numbers to which the function can assign a real value. In our example above where we have f(x) = 2x, the inputs include any real number since any real number has a double. Hence, the domain is the set of all real numbers.

  3. Step 3

    Third, let's think about a case where a rule might not be able to pair a number with a potential input. For example, let's consider a rule that pairs an input with its reciprocal, i.e., f(x) = 1/x. This rule would pair 4 with 1/4, 2/3 with 3/2, and -7 with -1/7. There is one number, however, that does not have a reciprocal. That number is zero. Since the reciprocal function cannot pair a number with zero, we call zero a restriction on the domain of the reciprocal function. Hence, the domain of f(x) = 1/x is all real numbers except zero.

  4. Step 4

    Fourth, let's recognize the three most common rules that restrict the domain. 1. Any rule that involves division might have domain restrictions. The reciprocal function above is an example. 2. Any rule that involves taking a square-root (or any even-numbered root) might have domain restrictions since the radicand of a square-root must not be negative. 3. Any rule that involves logarithms might have domain restrictions since the argument of a logarithm must be positive.

  5. Step 5

    Finally, let's find the domain of three specific functions with restrictions.

    1. Let's look at y = x/(x^2 - 4). This function involves division, and division is not defined whenever the divisor (the denominator) is zero. Hence, to find domain restrictions, we solve the equation below.

    x^2 - 4 = 0
    (x + 2)(x - 2) = 0
    x = -2 or 2

    These are x-values that will render the denominator zero, but a denominator of zero is not allowed. Therefore, the domain of this function includes any number other than -2 or 2.

    2. Let's consider f(x) = square-root(4-x). This function involves taking the square-root, requiring that the radicand be non-negative. Hence, to find the domain, we solve the equation and inequality below.

    4-x = 0
    -x = -4
    x = 4

    4-x > 0
    -x > -4
    x < 4

    Therefore, the domain of f(x) must be equal to zero or less than zero.

    3. Let's consider y = log(2x+5). This function involves a logarithm, but the argument of a logarithm must be positive. Hence, to find the domain, we set the argument greater than or equal to zero and solve as below.

    2x+5 > 0
    2x > -5
    x > -5/2

    The domain of y = log(2x+5) includes all real numbers greater than -2.5.

How to Invest in Domains

  1. Step 1

    Don't presume declining an offer of $100 for a domain in your portfolio will get you another similar or higher offer later. The market is always changing, and eight months from now your domain may be worth even less. Really weigh the factors before immediately declining what could be considered an offensively low offer: how long have you owned the domain, how much have you spent in renewals, etc.

  2. Step 2

    Unless you have a big wallet to begin with, don't start out buying anymore then 5-7 domain names if you are just starting. One, for every domain reseller that makes a few thousand, there are three domain resellers who just lost the same amount with their portfolios. Unless you have a few profitable sells under your belt, its best not to waste your money on an online business endeavor.

  3. Step 3

    Don't buy a domain name from an auction website for $250 if you think you can sell it for $500. That is not a big enough spread. For example, it is unwise to buy lxpe.net for $75 if the current market value is $100-120. Why? Because you are leaving yourself a $40-50 profit on a $75 initial investment (which in itself is a risk). Be patient and find the sneaky finds that are going for $500 but has the potential to go for several thousand. That way, you have room to experiment and more importantly make mistakes.

  4. Step 4

    When pricing your domains, always remember to pay attention to every cost you pay for maintaining those domain names. How much did you initially pay to register them, put up parking services, renewal fees, advertising fees, etc. When you get your total bill, a safe goal is to be making twice as much profit, or a %100 gain on your domain investments.

  5. Step 5

    Don't get caught up in the hype. For many domain resellers, the tried-and-true is usually the best bet. Just because LLLL.com's are selling well now, does not necessarily mean all LLLL.net and LLLL.org's are hidden goldmines in the future. Although the pioneers of a trend always make enough to pay for their retirements, there are only a handful of those and chances are you are not one of them. Be defensive with your money, stick to things like two-word .com's that have keywords that are both relevant and marketable.

  6. Step 6

    Don't waste your time trying to emulate other seller's domain prices. Just because someone is asking $5600 for PimpMyCellPhone.net does not mean they will get a single bid, and does not mean that your domain -- PimpMyIPhone.net will fetch that same price even if it DOES sell. Do appropriate research, set a BIN price you'd be satisfied with, and always entertain offers. You never know how many offers you'll get.

  7. Step 7

    Don't be too aggressive. Declining every offer that comes your way and setting your 'expected' price to skyrocketing levels will get you NO bids. Although there are plenty of domain resellers that attempt to snatch a few domains and wait it out for the big steal, the safer way from my experiences is to snatch up a handful of decent, marketable domains and sell them for two to three times their value. For example, buy a domain for $10 and sell it for $50-75. When you begin making a lot of $50-75 sales, that $2000 price you set on PimpMyIPhone.net won't look that promising anymore.

  8. Step 8

    Don't expect buyers to come to you. You must face the reality that your domains are probably not as good or profitable as you think they are. This does not mean you can't turn a great profit, but just because you think DogLeashes.com is a hidden treasure does not mean the rest of the world will think that way, especially with the thousands of other similar sounding domain names and keywords. Take the time to make it a blog, get daily hits from visitors, etc. so that your domain stand out from the crowd.

  9. Step 9

    Don't invest more then you are willing to lose. Many people fall into the trap of buying more domains to cover their past losses. This is a bad mistake. Though you can have a decent income stream from domain selling, do not expect it to pay the bills. If you are on a losing streak and none of your domains are selling and are in the red, back out before you make a huge financial mistake.

  10. Step 10

    Be wary of where you are hosting your domains to sell. Places such as GoDaddy are good bets and cater towards domain resellers. Others, such as iPower, are intended for hosting and not domain exchanges, and therefore customer service reputation, quick tech support, etc. are important things to consider. It's unwise to keep your 100 domain portfolio hosted with a place like Yahoo, you'll end up spending days on the phone talking to customer service representatives about why you can't unlock your domain or retrieve your authorization code!

About Domain Registry Rights

A domain name is the technical term for the name of a website. A lot goes into picking a domain name, and the domain name you want may not be available. Domain names are purchased from third-party hosting sites. Domains are not a permanent purchase, however. Each domain comes with an expiration date, and must be renewed by the owner, or else it becomes up for grabs.

From Quick Guide: Web Domains 101

    Picking a Domain

  1. Picking a domain can be trickier than it seems. You may have the perfect domain name picked out for your site, but that means nothing if it isn't available. Domain names, once purchased, are off limits, until they expire. However, there are sometimes ways to get around this. There are different forms of domain names, ranging from .com, to .org, to .tv. If the .com form is taken, you may be able to get a .org, or a .net. This is ill-advised, however, because it causes confusion in users. It is also rare, because businesses usually buy up multiple domain forms for this very reason.
  2. Reserving a Domain

  3. You cannot reserve a domain name. There is no staking your claim on the domain you want. People often assume that they can reserve the domain name, and then officially purchase it when their website is ready to launch. This is a myth. Unless a domain has officially been purchased, and certified as such, it is up for grabs. Buy the domain you want, and hold on to it. This is why you often see websites with "Under Construction," and other similar messages as their pages. They bought the domain so they would have it, as they built their site.
  4. Domains Don't Last Forever

  5. Contrary to popular belief, you do not hold the rights to your domain forever. You only hold them as long as you pay for them. You can purchase large blocks of time for your domain to be yours, but eventually you will have to renew them. Many domain markets offer automatic renewal, where your domain is renewed for you, and your credit card billed. This is a smart move, if you plan on having your domain for a long time. Failure to renew a domain means you can lose that domain. Domain pirates are people who stake claim on countless domains, and buy them as soon as the contracts lapse. They hold domains for ransom, and often get paid large sums of money from the original owner wanting their domain back. To previous this from happening to you, keep tabs on your domain's renewal date, and don't miss it.
  6. Domains Are Not Trademarks

  7. Having a domain is not the same as having a trademark. In fact, domains may not be considered registered trademarks, if their sole reason for existing is as an Internet address. Meaning, if you don't have a company to back up your website, you can't trademark your domain. First, you trademark the company name, then you make the domain your company name. That is considered a trademark. Google is a prime example of this. Because the name Google is trademarked, the domain name for Google also becomes trademarked.
  8. You Can Have Limitless Domains

  9. Technically, you are allowed to hold the rights to as many domains as you are willing to pay for. All you have to do is fill out the application, and the domain is yours. In practical contexts, this is generally frowned upon, however. The Internet, as a community, does not like when people buy up all the domains they can. The only exception is purchase of the varying forms of your domain, such as buying both the .com and .org as a way of preventing confusion. You have the right to buy all the domains you want, but you should try to just stick to the one.
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