As the internet continues to expand, so does the number of domain names registered for online businesses. There are 26.3 million generic top-level domains (TLD) currently registered.
Many people have a basic understanding of what a domain name is. Some may have read that it is possible to earn a full-time income from buying and selling domain names with some know-how and luck. Silicon Valley engineer Stu Grossman hit the jackpot in 2016 when he sold his Tesla.com domain name to Tesla Motors for a reported $11 million.
Of course, this is an outlier, and you should not enter this venture expecting to hit these figures for every domain name you add to your registrar. Still, you can earn money selling domain names with the proper knowledge and tools.
This ultimate guide will go through the fundamentals of buying and selling domain names. It will explore what a domain name is before tackling the steps and considerations you will need to take when selling your domain name.
What is a domain name?
A domain name is simply the sequence of words or phrases typed into the search bar within search engines to visit a website. They are an easy alternative to IP addresses that would otherwise have to be used to connect directly to a web page.
The four main domain name types:
- Top-level domain: These are the most common types of domain names. They often end with extensions such as .com, .org, and .net.
- Country code top-level domain: Websites use these types to target users in a specific country and inform domestic users that the information on the website will be pertinent to them. They often end with extensions such as .uk, .de, .au, .co.uk, and .in.
- Sponsored top-level domain: These domain names inform the user that they are visiting a website with a specifically intended community. They often end with extensions such as .edu and .gov.
- Crypto domains: Recently, with the rise of crypto and NFTs, .ETH domains have become extremely popular for domain name speculators for the potential to use them as a wallet address for transferring and receiving crypto.
The harsh truth about selling domain names
Let’s begin with two important things you need to understand and accept (but will likely upset a few readers):
Most of your domain names are probably un-sellable. Before I dive into how you can boost your domain sales, it’s time for a reality check. The number one impediment to what is referred to as “secondary market” domain name sales is the quality – or lack thereof – of the inventory.
In general, the inventory that sells best in today’s world is one-word, two-word, and sometimes three-word English language .com domain names that directly relate to popular business products or services.
If you are holding non-.com inventory (e.g., .net, .org, .biz) or domains that contain invented words, or phrases, be prepared for the low probability that this inventory will not sell in your lifetime.
The cold, hard reality is that secondary market domain names are not very liquid assets. This probably means that most of your inventory is not going to sell. Of course, there will be exceptions to this, but they are, by their very nature, exceptions.
Most end-user buyers don’t know where to look for secondary market domain names. They don’t know how to contact the owners, nor do they have any idea of how to purchase and transfer a domain name. As a result, they become confused and frustrated by the process.
Quite frankly, who can blame them? So the more you can do as a domain speculator to soften the edges here, the greater the likelihood you will sell some of your domains.
Why should I buy or own a domain name?
If you have ever wanted to start an online store or use a website to showcase your creative talents, owning a custom domain name helps improve your credibility and presents you and your business in a professional light. Your domain name is a personal introduction to people who may come across your website via search engines.
Once you have your custom domain name in place, it becomes easier for potential partners to remember. It can also form the basis of standardizing each aspect of your business or website. For example, if you have your first and last names as your domain name, you can use them as part of your email address.
However, some people don’t look to buy domain names for personal use. Instead, they develop and purchase custom domain names that a company may desire in the future. A potential buyer can then approach the domain seller and offer to buy it at an agreed domain name value or fixed price.
If multiple parties are interested, the seller can use domain auction sites to drive the price and sell to the highest bidder, often for far more than the domain name is worth.
Additionally, some people buy cheap domain names as a form of domain investment, also known as domain flipping, and then immediately look to sell the domain name for profit via a domain market.
Often these individuals will own multiple domain names at any one time, and they keep an eye on market trends to determine when to sell.
What is the best way to sell a domain name?
Now that I have beaten you up about the quality of your domains and the relatively inefficient state of the secondary market let’s talk about some best practices that will help you sell your domains.
There are several ways that you can look to sell a domain name. Each method has its advantages and pitfalls, so be sure to do your research to make sure you choose the right option for your particular circumstances.
Image Source: Flippa
1. Domain marketplaces and auction sites
The best way to sell a domain name is via specialist domain name marketplaces or domain listing sites. These marketplaces often partner with dedicated domain registrars so that when listing your domain name, it is seen across various avenues by as many eyes as possible.
At Flippa, we can provide the tools and expertise to sell your domain name successfully. Although we are predominantly an avenue for buying and selling fully-fledged websites and online businesses, our domain market is an active, thriving one. We often attract individuals looking to purchase domain names and turn them into businesses.
However, several other sales options exist if you wish to buy and sell domain names. Each of the following avenues offers something slightly different. Be sure to conduct your due diligence to determine which one may be best for your particular situation.
2. Display a “for sale” message on your domain’s home page
The number one secondary market domain name source is buyers typing the domain name into their Web browser and navigating to the domain to see if it is available. There are a bunch of domain tools out there that can help you manage the sale.
To boost your domain name sales, you first need to ensure that your domains resolve to a page indicating that the domain is for sale. It should provide a choice of ways for the prospective buyer to contact you or purchase the domain right away, whether via email, phone, chat, or whatever.
The goal here is convenience. There are a bunch of easy ways you can accomplish this.
Your domain name registrar may provide you with a free one-page Website tool, which you can use to create a “this domain is for sale” landing page. Alternatively, you can create a single page (perhaps a hidden page hanging off one of your existing websites) that indicates that your domain names are for sale. You can then forward your domain names for sale to that page.
If you feel ambitious, you can link each domain name to its matching “buy it now” purchase page at one marketplace. Another more sophisticated option would be to “park” your domain with one of the leading domain parking companies, such as DomainSponsor or SmartName, and enable their built-in “for sale” message and contact mechanisms.
Whatever you do, ensure that if someone navigates to one of your domain names, they can see your “for sale” message. Otherwise, you will miss out on a ton of sales opportunities.
3. Target a specific buyer for your domain
Alternatively, you may wish to actively search for businesses and individuals who may be interested in purchasing your domain. This method usually involves a commitment to outbound sales and emails, so you’ll need some resilience and patience for this to work.
Try to collate a list of potential businesses that match the keywords in your domain name and may find a use for it. Then use their preferred contact information to make your proposal.
Make sure you keep things simple and professional. Most businesses already have a website presence and will likely not need an additional domain name. However, you only need one to take an interest in a potential sale.
4. Use a domain name broker
Domain brokers are specialists in dealing with the domain sale process. As they generally work on a commission basis, they are selective and interested in only working with domain names with high potential market values and sales prices.
Each broker is slightly different in structure, expectations, and other things, such as exclusivity and commission. Ensure that you are fully up to speed with what to expect before selecting which one might work for you. Some of the more reputable domain brokers include:
- Buckley Media.
- Media Options.
- Starfire Holdings.
5. Sell your domains on Flippa
Flippa is best known as the leading platform for buying and selling websites, the domain name marketplace has snowballed and is now a leading product for selling domain names.
Flippa attracts a different audience than the typical domain name marketplace. Sometimes, a domain name that would not get much attention in crowded and traditional domain name marketplaces will find a seller on Flippa.
This happened to me with one of my domain names, a two-word, technology-oriented .com. I had it listed everywhere for a year or two and even in an auction on GoDaddy a few times, but I could never get this domain name to sell.
Figuring I had nothing to lose and was always game to try new things, I listed it on Flippa. Surprisingly, the domain sold for several thousand dollars, and I made a little profit.
From my observation, the domain names that sell best on Flippa are those that appeal to buyers who will want to develop them into full-blown websites.
If you try to sell a domain name on Flippa, take advantage of the fact that you can include a detailed description of the domain name in your listing, which traditional domain marketplaces don’t offer.
6. Embrace fixed pricing if you want to move your domains
Regarding fixed pricing, this is always a hotly-debated topic in the domain investor community because some people feel that putting a fixed price on a domain means you risk leaving money on the table.
While that may be true, at least you sold the domain name! As I like to remind people:
“He who dies with the most toys (and domains) still dies.”
Most buyers are intimidated by the whole “make offer” thing and want to be able to browse by price and buy if they see something they like and can afford. Frankly, I’d rather have seller’s remorse than going to my grave still holding an unsold domain name, but the decision to go fixed-price or not is all yours.
One thing to remember: If someone contacts you directly about buying one of your fixed-price domain names, you can ask them to make an offer, and you can always quote them a higher amount than your fixed-price. Most buyers are not that sophisticated. It is doubtful that they have seen the list price elsewhere.
7. Optimize the WHOIS record for sales
Add a “for sale” message to your WHOIS (domain ownership record) information. Once again, the goal is to make it blatantly clear to Joe Public that your domain name is for sale.
You can include this messaging in one of several ways. You can append the owner’s (a.k.a. registrant’s) name or company name with “This Domain is For Sale,” e.g., instead of listing the company as “Acme Inc.” you would list it; as “Acme Inc. – This Domain is For Sale.”
Alternatively, you could use a custom email address for your domain registrations that suggests the domain name is for sale, e.g., [email protected][yourcompanyname].com.
8. Don’t hide behind WHOIS privacy
If you are using a WHOIS privacy service, remove it if possible. These services are fantastic if you want to cut down on spam and hide your identity as the owner of a domain.
Still, they are a severe obstacle to sales because most potential buyers don’t know how to contact a domain owner using a WHOIS privacy service. It simply confuses them and is a perceived (if not actual) roadblock.
Make it easier for buyers to contact you. Ask your domain registrar to remove the WHOIS privacy service.
9. Have realistic price expectations
We all hear in the popular media about those rare six and seven-figure domain name sales like sex.com, hotels.com, and beer.com, but folks don’t realize that these deals represent less than 1% of all the transactions.
I’ve seen many first-time sellers, both under-price and overpriced domain names. For the best traction, set up an auction and try to promote it to your connections on LinkedIn or social media.
The most common issue seen on Flippa is overvalued domains. Indeed, a positive attribute of domain parking is that it is incredibly 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.
The typical secondary market .com domain name (usually a two-word name) sells for around $2,000, and the rest of the domains that sell change hands for less than $5,000, so keep that in mind when you price your domains.
You probably aren’t going to retire on the proceeds of your domain name sales, but it might help you pay off your mortgage faster.
There are a few powerful tools to evaluate the value of domain names, but the most well-known is NameBio. You can quickly enter a keyword and use their advanced search features to see a list of names similar to your domain, when it sold, and what they sold it for.
I would encourage you to read the interview with Tim Mayeur, one of the most successful domain sellers on Flippa.
10. Respond promptly to any purchase inquiries you get
Everyone seems to rush to get stuff done, and purchasing domain names is no different. If someone makes an effort to contact you about buying one of your domain names, try to respond to them within 24 hours. If you don’t, they may find another domain name, and you will have lost a sale.
There is nothing more frustrating to a buyer than a non-responsive seller. I have seen domain speculators miss out on potential six-figure deals because they took too long to reply to the buyer — or didn’t reply at all.
11. Use “charm pricing” to increase the likelihood of a sale
There’s a reason many products on store shelves have prices that end in “99” or “98”. This is called “charm pricing” and relates to retail psychology.
You can and should apply this best practice to your domain name pricing. For example, even though a domain name priced at $1,999 is only $1 less than a domain name priced at $2,000, the $1,999 domain will “feel” like a much better deal to many potential buyers.
Like most products with charm pricing, Domains have been statistically proven to sell much faster. I know this may sound crazy, but it works!
What are some tips for buying a domain?
A good rule of thumb is to focus on domain names in which businesses in a niche will find value. If you’re a beginner and new to selling domain names, don’t rush into buying or selling. Do your research to ensure a domain will 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.
That said, here are some tips for buying a domain.
1. Pick a niche
Given that there are over 300k domains registered every day. It will be essential to pick a focus you’re interested in, which 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 tremendous competitive advantage. Once you nail one niche and build an excellent portfolio of domains that will get potentially purchased by industry leaders, you can expand into other niches that you know and enjoy researching.
2. Localized domains
Picking a valuable domain that will attract a group of business owners in 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 the 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, making them sought after and worth a good payday if you collect the right domain.
3. Check keywords and site metrics
After you’ve found the niche that you want to build a portfolio of domain names around that will provide value to businesses in an industry, you can double-check popularity with Google Trends and other keyword trackers.
Keyword research tools are like the cheat sheet for flipping domain names. Pinpointing which keywords people in an industry are actively searching for on Google is a powerful place to start while researching domain names to resell.
Using an SEO tool like Ahrefs, you can find a lot of valuable information, such as:
- Domain rating (DR): A 100-point score of the strength of a domain compared to other domains.
- Backlinks: The total number of backlinks a website has. One thing to point out is that you can also dive deeper to see if a particular domain has any valuable links.
- Referring domains (RD): The unique number of domains linking to a specific website.
- Organic keywords (OK): The total number of keywords a website ranks for.
- Organic traffic (OT): A monthly estimation of a website’s organic traffic from Google search results.
- Traffic value (TV): A monthly estimation of a website’s organic traffic value. If you click on the traffic value dollar symbol, you can also get a breakdown of a website’s most valuable pages and keywords.
4. .COMs rule
Despite 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.
How much do domain names sell for?
Determining how much a domain name will sell for is difficult, as many factors and moving parts affect its final sale price. According to DN Journal, the highest figure received for a domain name in 2022 was an estimated $3.8 million, with an average domain sale price of around $15,000.
How to determine the value of your domain name?
No exact science can pinpoint what a domain’s value is or should be. As with many products in various industries, the value is determined by whatever an individual or group is willing to pay, which can be hard to predict.
However, you can use several factors to reasonably estimate what the value for your domain will end up being.
One of the more concrete rules of securing a high-value domain name is its length. Put, shorter domain names command higher values as they are easier to remember. If a user can recall your domain name quickly, they are far more inclined to type it into a search bar.
Domain names generally have a higher value if it is clear what the target market is and which niches they are attempting to reach. If you are an avid chess player, most of the websites you want to visit will have the keyword ‘chess’ somewhere within the name.
Keywords massively help increase SEO scores, propelling the website up the rankings of search engine listings.
When it comes to valuable domain names, simplicity is best. One-word titles with no hyphens or special characters often command high fees. For example, the domain name ‘voice.com’ reportedly sold for $30 million.
Similarly, the domain extension ‘.com’ is generally the most valuable. Most individuals tend only to remember the central part of the domain name and will assume it uses this extension. If your domain name does not, you risk losing potential website visitors because they can’t recall the correct suffix.
What not to do?
In my experience and talking to hundreds of entrepreneurs in my Instagram DMs and through my YouTube video comment sections, there are two main things you don’t want to do:
- Do not buy domains that target people based on a socioeconomic 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.
What to do?
Use a domain name appraisal tool. Many would-be domain sellers use appraisal tools such as Estibot to accurately determine their domain names’ overall value.
These software programs use algorithms to determine how to price your domain by using the attributes mentioned above and several others, including pronunciation and the number of searches via search engines.
Using these appraisals in conjunction with other strategies is prudent to gauge the value of your domain name. One such strategy is our valuation tool which can assist you with finding the value of your domain name.
How to safely transfer a domain name?
Treat the domain transfer process professionally and carefully if you successfully agree on a sale for your domain. Here the purchaser receives the domain, and you receive your money.
The best way to securely finalize the transfer is through an escrow service. Most domain marketplaces and auction sites include an escrow service as part of their features, but independent ones also exist.
The transfer process using an escrow service is relatively simple. An escrow account will first secure the payment for the domain name and hold it securely. As the seller, the escrow account will instruct you to transfer the domain name to the buyer before receiving payment.
Only once the buyer confirms that they are in full possession and control of the domain name will the escrow account release the funds to you.
Buying and selling domain names, as with most things, is a skill that needs to be nurtured and practiced. This article’s tips and tricks are the fundamentals you need to get started, although it’s not always easy. However, as long as you research thoroughly and invest sensibly, there is no reason why you won’t be able to turn this into a full-time income with time.
At Flippa, we are proud to be the world’s first and foremost online marketplace for online business ventures, including domain names. Our name commands respect, with our years of experience and knowledge helping new and veteran business owners buy and sell their businesses for fantastic prices.
If you have a domain name that you want to sell, contact us today, and let’s get started. Additionally, why not check out this recent article on domain name success stories that we have been able to facilitate.