We know that RegisterFly is a reseller of enom. They charge $9.99 on domain registrations.
I found on overture that they are bidding $5.01 on a search term "domain name". Since they resell a large volume of domains I assume they have better wholesale rates than "normal enom resellers", but they probably won't go below $6.10 - $6.20. With a simple math you find out that even if all visitors (???) sent by overture order a domain with them (I hardly believe that more of 10% will buy a domain), they still loose. Why are they doing this? They invest a lot now to make higher profits in the future?

I would like to know your opinion on this.

I found this message on their website:

"How can you sell domains for so little?
Our business model is based on high volume and keeping our overhead low. We do not believe in spending millions of dollars on ineffective advertising or being lavish. We have built a profitable, thriving business and owe it all to our customers. Our approach is to keep our eye on the bottom line while continuing to develop and offer new products and services to our customers, in other words, value for our customers."

Waiting for your comments.

You cannot sell one domain at a time and expect to make any money. Advertising is a long term investment in your business, and in growing your customer base.

Our cost of acquisition per customer on a typical ad campaign far outweighs the profits that campaign generates immediately. These customers however will order more domains over time, they will tell their friends and customers about us, and ultimately they will drive profits that allow us to contrinue to advertise.

If you try to make it in this business by selling one domain to one customer, either your acquisition costs must be $0, or your profit must be large. Registerfly obviously is not in either camp - therefor you can only assume they are spending ad money for a longer term customer. Finding these customers is not easy - they don't haunt forums like this one...

Yahoo ads are very expensive. One Yahoo ad however can bring in enough long term business to pay for itself many times over if you can pick the right point of presense.

The concept of growing your customer base at no profit, or even at a fairly significant loss, is the reason that that eNoms "viral marketing" approach has been so successful to date. When 80% of the eNom resellers fold up in a year and go away because their "hobby business" is only making them $10 a month and not even paying their hosting costs, eNom will still be the domain registrar, and eNom will have grown their customer base significantly for little or no cost.

Brilliant strategy. It will be interesting to see if it actually pans out, or if people transfer away instead of allowing their domain to be moved to another eNom "weekend registrar."

-t