For years I did this math wrong, and I did it wrong in the direction that felt good.
You buy a name for $400. You sell it eight years later for $2,500. That's $2,100, right? Write it down, screenshot it, drop it in the year-end thread.
No, it isn't.
Start with what shows up on an invoice. You paid $400 for the name. Then you carried it for eight years. Call renewals $12 a year to keep the math simple. That's another $96.
So you're at $496 before a buyer ever emails you.
Then the sale happens. If it goes through a marketplace at 15%, $375 comes off the top before anything lands in your account. Your $2,500 sale is $2,125.
Subtract the $496 you already spent and you cleared $1,629 before taxes.
That's a fine outcome. I'd take it. But it isn't $2,100, and the space between those two numbers is where a lot of portfolio math quietly falls apart.
Commissions move around more than most people expect. Afternic charges 15% if you're on Basic with your names pointed at GoDaddy's aftermarket nameservers, and 25% on Basic if you're not. Boost runs 20% and 30% on that same split. Sedo takes 10% on a fixed-price sale through their lander, 15% on marketplace and auction sales, and around 20% through the MLS partner network. Spaceship's SellerHub sits down at 5%. Sell it yourself and you skip the marketplace cut, but escrow and payment processing still take a bite on the way through.
The number in the sales report and the number that reaches your bank have never been the same number.
Renewals are where I think we fool ourselves the most, and I'm including myself in that.
Twelve dollars doesn't feel like a decision. Neither does $15 or $20. But this is a business built on holding inventory, and small annual costs get big when you multiply them by years and then multiply them again by a few hundred names. My renewal bill has surprised me more than once. It has never surprised me in the good direction.
And .com isn't standing still. Verisign's wholesale fee goes from $10.26 to $10.97 on November 1, and the contract lets them raise it up to 7% again in each of the next three years. If they take all of it, wholesale ends up around $13.42. Retail follows. It always follows.
Now take that same $400 domain and drop it in an extension where the carry is real. The .ai registry moved wholesale from $70 to $80 a year back in March, there's a two year minimum on registrations and renewals, and most registrars are charging somewhere between $75 and $110 a year at retail. Hold one of those for eight years and you've spent $600 to $900 carrying a name you paid $400 for.
Which is why renewal cost belongs a lot closer to the front of how we judge an extension. A $3,000 sale on a cheap .com and a $3,000 sale on a name that costs $80 a year to sit on aren't the same investment. They just look the same on a sales chart.
Then there's the cost that never shows up on a registrar invoice at all.
That $400 could've gone into a different name. So could every renewal after it. Even when a domain is doing nothing, it's still eating a line in your renewal budget, and that budget isn't infinite.
I don't think you need to assign a rate of return to every dollar sitting in every domain. That turns into false precision fast, and I've watched people build spreadsheets that were mostly an elaborate way of not making a decision.
But time costs something.
Two names both sell for $2,500. One was bought for $400 and gone in six months. The other took eight years of renewals to get there. Those weren't equally good investments. The first one gave your money back fast enough to use again. The second held it hostage for most of a decade.
This is also why I've changed how I handle renewal season.
When a name comes up in year seven, the question isn't "I've already paid for seven years, so why quit now?"
That money's gone. It was gone the day you spent it.
The real question is whether you'd pay today's renewal to own this name for one more year, knowing what you know right now. Has anybody inquired? Have comparable names sold? Has the term gotten stronger, or has the world moved on without it? Would you hand register it today at roughly the price of another renewal?
If the answer's no, seven years of history isn't a reason to make it eight. It's just the reason you don't want to admit you were wrong.
This business produces great stories about the $100 name that sold for $10,000, and I've told a few of them myself.
But the purchase price is only the first line. What a domain really costs you is what you paid to buy it, what you paid to keep it, what you paid to sell it, and what you gave up while your money sat there waiting.
Sometimes the best money you make on a name is the renewal you don't pay.