Earlier this week, Namepros.com member Randomo revealed that he sold exactly 1,700 domains in 2007 mostly through quick turnaround sales (domain flipping). At first glance, 1,700 domain sales would seem to equate to easy profits but a closer look at the numbers reveals that flipping domains is, in fact, hard work.

First off, in order to sell 1,700 domains in a year, one would have to average just under 5 domain sales per day (7 days a week). Flipping 5 domains a day is one thing, getting high sales amounts for all of them is another. Randomo was kind enough to disclose that his average selling price was 3 to 5 times registration cost. This exact amount is open to interpretation but when totaled up, it appears that he was able to generate somewhere between 50k and 70k in revenues through domain flipping. These are my estimates based off the information provided.

To determine profitability we need to factor in the acquisition costs for the 1,700 domains that were sold. Again, the exact figures were not provided but I can safely assume a minimum of 12k if all domains were bought at standard registration fees and perhaps as high as 22k if the average domain acquisition cost was $12.95. Deducting the acquisition costs reveals the domain sales profits to be somewhere between 28k and 58k. This is a very wide range but it should be helpful in determining a worst case and best case earnings scenario.

The last factor we’ll consider when it comes to domain flipping is time. After all, these domains don’t find themselves. Once registered, it also takes time to market and sell them. Receiving payment and transferring domains to a buyer’s account isn’t always the smooth transaction that one would hope for. Randomo estimates that on average, he spends between 3 to 6 hours a day domaining. That comes out to 4.5 hours a day or roughly 1642 hours a year.

Using my guesstimated figures and translating them into an hourly wage, the best case scenario would have Randomo earning approximately $35 dollars an hour for his domain flipping efforts. The worst case scenario would still be pulling in $17 an hour. Either way, I believe the data shows that domain flipping, while profitable, does require work and is not a quick path to easy riches. Having said that, don’t discount the current and future value associated with the list of domain buyers that he has built through his efforts. That’s a valuable asset that’s hard to place a value on.

Many other factors were revealed in the Namepros thread namely, the types of domains sold as well as a list of the locations they were sold at.

Decent available domain names are becoming harder to find these days. Nearly 25 million “.com” names have been registered, and over 23 thousand are purchased every day. It also means that you’re more likely to win the grand prize lottery then find a great domain name.

Owning a domain name that helps to successfully “magnetize” a flood of incoming traffic is like gold to any online business. But the increasing scarcity of domain names that are simple to remember, short and suggestive have turned them into red hot commodities.

Just take a look at some of the recent domain name acquisitions:

business.com sold for $7.5 million
asseenontv.com sold for $5 million
altavista.com sold for $3.3 million
loans.com sold for $3 million
autos.com sold for $2.2 million
wallstreet.com sold for $1.03 million
forsalebyowner.com sold for $835,000
drugs.com sold for $825,000
cinema.com sold for $700,000
art.com sold for $450,000
engineering.org sold for $199,000
fruits.com sold for $160,000
perfect.com sold for $94,000

However, while some of these domain names may have been sold for millions, corporate buyers backed by large bank accounts are not alone in the domain name game. Even entrepreneurs are making a great living in purchasing and selling their own domains.

Not a day goes by, that a domain name sells for as less as $100 or as much as $1 million on public auction sites. For example, eBay.com recently featured actual bids for as little as $500 for “golegs.com” to as much as $20,000 for “arlington.com” — and thousands more drifting anywhere in between.

Some people seem to know where to get these “nuggets of gold.” In fact, a small handful know about an untapped goldmine that lies discreetly tucked away in the dark corners of the vast Internet. And the awareness of this source has helped these “lucky” individuals earn either outrageous fortunes or monstrous levels of traffic for their website.

The goldmine to which I’m referring is the pool of recently expired domain names. While only a few knows it exists, regardless it is expanding with every passing day. There are literally tens of thousands of unclaimed, non-renewed and expired domain names that become available on a daily basis.

An expired domain name is one that was registered previously but was not paid for in time for the renewal date, thus returning it to the listing of available domains. There are many probable reasons for non-renewal (e.g., forgetful owner, no more interest in site, no longer in business, no longer active or didn’t pay for whatever reason).

However, you may be asking, “Sure, but I’m never going to find good domain names before some other person snatches them up.” For a long time, being “lucky” also meant being alert for the numerous domains that become available, and being quick in registering them before anyone else does.

New tools are becoming available, making the process of searching, finding and registering great domain names much easier. In fact, some of them assist you to become aware of the near expiring domains, giving you an advantage over your competitors that permits you to grab names seconds after they’ve been dropped.

Nevertheless, a compelling domain name can help an online business become more visible, credible and accessible. And it will help someone earn a rather large fortune. While in the past, finding one was very prohibitive, with the help of tools that are now at your disposal, you now can be a part of the gold rush, too.