One of my favorite online businesses when I was in school was buying funny domain names and transferring them to friends. Over the last few years, I learned that dozens of successful businesses do this full time and generate 7-8 figures in revenue each year selling domains.
With an average of 300,000 domains registered every single day and 109,500,000 (that’s over 109 million for those following along) domains registered every single year, there is a massive market. There are mixed projections for the volume of domains being sold, but most sources say its greater than $1 billion per year.
To give some context on the size of the domain name opportunity, this is a list from GoDaddy’s 25 most expensive domain names publicly reported:
- CarInsurance.com — $49.7 million
- Insurance.com — $35.6 million
- VacationRentals.com — $35 million
- PrivateJet.com — $30.18 million
- Voice.com — $30 million
- Internet.com — $18 million
- 360.com — $17 million
- Insure.com — $16 million
- Fund.com — £9.99 million
- Sex.com — $14 million*
- Sex.com — $13 million
- Hotels.com — $11 million
- Porn.com — $9.5 million
- Shoes.com — $9 million
- Porno.com — $8.8 million
- Fb.com — $8.5 million
- We.com — $8 million
- Business.com — $7.5 million
- Diamond.com — $7.5 million
- Beer.com — $7 million
- Z.com — $6.8 million
- iCloud.com — $6 million
- Israel.com — $5.8 million
- Casino.com — $5.5 million
- Slots.com — $5.5 million
The most expensive domain name ever sold was cars.com valued at $872 million. It is hard to wrap your mind around close to a billion-dollar purchase of cars.com but it’s important to think of domains as digital real estate. When buyers are acquiring a portfolio of domains they know there are multiple ways to monetize them long-term, similar to real estate.You should think of domain as digital real estate. Invest now and, in the long term, there are multiple ways to monetize your investment. Click To Tweet
A friend of mine who worked as an account manager at Google back in 2016 told me about how they used to manage relationships with domain portfolio owners. They would fly out to meet with the investors that hold hundreds of extremely valuable domains and discuss parking and ad revenue projections. Similar to real estate investors, domain investors can build up a portfolio of web properties and flip them to buyers after a year or so as the value increases.
If you are new to buying and selling domains there are a few tricks that I’ve used over the years.
Pick a Niche
Given that there are over 300k domains being registered every day, it’s going to be extremely important to pick a focus that you’re interested in. This could be anything from cannabis to pets. The underlying rationale behind picking a niche you are familiar with is that you know what people in the industry will purchase.
Knowing the products or services that potential customers in a niche are searching for is a great competitive advantage. Once you nail one niche and build a nice portfolio of domains in it that will get potentially purchased by industry leaders, you can expand into other niches that you know and enjoy researching.
Picking a valuable domain that will attract a group of business owners in a specific geography is a great strategy. For example, if you wanted to target Tampa, Florida you could buy domains like TampaApartmentRentals.com or TampaCryptoMeetups.com. This provides value to an entire geography of business owners and has a higher probability of getting sold faster. In my experience, this can even apply to different countries, cities, counties, districts, and states.
While these might not have a broad appeal that makes them worth millions of dollars, they are highly relevant and targeted, which makes them sought after and certainly worth a good payday if you collect the right domain.
Check the Price
There are a few powerful tools out there to evaluate the value of domain names, but the most well-known is namebio.com. You can easily enter a keyword and also use their advanced search features to see a list of names similar to your domain, when it sold, and what they actually sold it for.
I’ve seen many first-time sellers both under price and overprice domain names dramatically. For the best traction setup an auction and try to promote it to your connections on LinkedIn or social media.
The most common issue seen on Flippa are overvalued domains. Certainly a positive attribute for domain parking is that it is extremely cheap to keep that domain for years, essentially just a few dollars to keep it registered. Because of this, many greedy domainers will set their prices unreasonably high, expecting millions of dollars when that perfect buyer comes along. Unfortunately, those buyers are few and far between. So, if you don’t want to sit around for years, you might be better off lowering the price to something a bit more reasonable for the quality of the domain.When it comes to pricing your domains, be realistic. We can all dream of that 8 figure, unicorn sale, but ultimately, a 4 or 5 figure sale is better than no sale at all. Click To Tweet
After you’ve found the niche that you want to build a portfolio of domain names around, one that will provide value to businesses in an industry, you can double check popularity with Google Trends and other keyword trackers.
Being able to pinpoint which keywords people in an industry are actively searching for on Google is a powerful place to start while researching domain names to resell. This is especially true if you’re getting started in an industry you really enjoy but haven’t operated in previously. Keyword research tools are like the cheat sheet for flipping domain names.
.COMs Rule Everything Around Me
Despite there being hundreds of options for different alternatives to .com domains, they are still the most active. The reality is people still trust .com more than any other URL when they’re entering in data or payment information. If you do choose to get different alternatives to .com focus on one or two word domains that will rank highly to compete with consumers .com trust.
What NOT To Do
- Do not buy domains that target people based on socio economic level
- Do not buy domains that could lead to a licensing issue or lawsuit
Hands down these are the two that come up the most for big NO-Nos in the domain flipping community.
Overall, a good rule of thumb is to focus on domain names that businesses in a niche will find value in. I highly recommend if you’re a beginner and new to selling domain names, don’t rush into the buy or the sell. Do your research so you can make sure a domain will actually provide value to a business owner in a specific niche. A big mistake many investors make early on is expanding their portfolio too quickly into niches they’re not interested in, but feel will be more profitable. Nail one niche you’re knowledgeable in and then scale into others where research is easy with widely available industry information.
As Reid Hoffman, the founder of LinkedIn says, “Nail it and scale it.”