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Today everything is going digital. Every business and every company, no matter the size of the company or its operations, want to have a website. This new trend has caused domain names to go up in price. When we want to have a domain name for our website, we of course would like something nice and meaningful. But usually, those kinds of names are always taken, and we have to purchase them for high prices. As an example, in 2009 the domain name ‘insure.com’ was sold for $16 million.
"In the future, fortune could well favor those who didn't sell their good domain names too cheaply, or too boldly" - Frank Schilling
Because of this, investing in domain names has become somewhat trendy and a good investment opportunity. If you are interested in domain names, read our guide to learn more.
Investing in domain properties can in some ways be compared to investing in real estate. When investing in a domain name, you essentially get the ownership rights of that domain. Domain names are unique and there can never be two identical domains. This causes domain names to become expensive as people who need a specific domain name for their webpage are ready to pay high prices
With domain name investing our main goal is similar to any ordinary investment we make. We want to be left with a higher return on investment than the investment itself. These domains can generate money in a few ways.
What gives the domain name its value? It is how catchy the name is and how frequently it is searched for. When we invest in a good domain name, that name will, in most cases, generate traffic to the website. Because of this, some investors place advertisements on those websites and generate more than enough money to keep the website up and running and in some cases, the investment pays for itself.
Another way we can generate profit from the domain names is to buy them low and sell them high on the market. There are many different websites that offer users the ability to sell their domains to other investors who want to add them to their portfolios.
This is one of the easiest ways to find a buyer, as compared to other methods, you don’t have to look for buyers, you just place it on sale and wait for someone to purchase it. You can also put them up for auction and sell them that way.
When we own some unique and special domains, usually there are many companies and buyers looking to purchase them. Some investors tend to place selling signs on the website to indicate that the domain name is for sale.
With these selling signs, potential buyers see that the website is for sale and send direct offers to the investors. These kinds of sales usually go for high prices as people who own these domain names know that there is high interest from buyers, and they tend to ask for a lot of money.
There are multiple ways we can approach domain investing. Each strategy is designed for different types of investors.
One strategy is just simply buying domain names when they are cheap and have the potential for their price to go up. And when that price goes up, sell them for profit.
This strategy is considered more short-term and is referred to as domain flipping. It is designed for more experienced investors. When investing in domain names you need to take different factors into consideration. Things like upcoming trends, demand for that kind of domain, and many more. Because of this, newer investors might find it hard to find those kinds of domain names whose prices have a high chance of going up.
As we mentioned before, some people use domain names to put up advertisements on the website to generate some traffic. What these people are doing is another profitable strategy that many investors use.
Have you ever been looking for something on the web and when you visited a website all you saw were just advertisements? What you saw were the domain names of these kinds of investors. This strategy is a bit easier to use than our previously mentioned one. There are countless tools that allow us to view statistics on domain names that will help us decide if the given domain name will be useful for this kind of strategy.
So one of the most famous strategies that investors use is registering domain names themselves. Each domain name needs to be registered in order for someone to own it.
When domain names are not registered, anyone has the ability to register the domain themselves. This process is usually really simple and cheap. There are many domain names that have sold for high prices, and they were registered for $9 or $10 a year. This makes it great as the potential profits astronomically outweigh the cheap yearly investment cost. During this kind of investment, investors are keeping track of interesting domain names whose registrations are running out soon. If the owner does not prolong the registration, that's when investors are rushing to register the domain names themselves.
We mentioned that if you are investing in domain names for parking and placing advertisements, it is easy to determine the value of domain names as it is a pretty straightforward statistic that matters, which is the traffic on the website. But, what about those who don’t invest in them by placing advertisements on them?
When it comes to those kinds of investors and domains they invested in, they are in the same kind of situation as most people who invested in NFTs. They are worth as much as someone is ready to pay for them. But there are some general characteristics of domains that can help you easily determine at least the starting price of a domain name.
Investing in generic domain names is a great investment as their prices always tend to rise. These words usually describe a service or product. Because of this, they are relevant in at least one industry, and they usually sell for high prices, and good profits could be made from them.
These domain names also tend to generate high traffic on their own, which makes them good investment domain names for those that plan on parking their domains.
Trying to invest in domain names that have geographical names can also be a good investment. When you own a domain name that has a similar name to a street, city, region, country, and other landmarks it tends to appreciate in value as time passes.
Those domains are really desirable domain names for those businesses that want to associate themselves with geographical locations. These businesses tend to pay top dollar for those domains, as the desire to be associated with a location means that the business is considerably big and has the means to pay for those names.
Short domain names mostly consist of one-word names or a few letter combinations. These domain names tend to be easily memorable and this causes them to be easily marketable. With easy marketability comes the demand from different brands. Also, when dealing with a few letter domains they are very limited as there are not a huge amount of different 3-4 letter combinations.
When dealing with numeric domain names we need to do a small research before investing in them. Just the random combinations of numbers would not be much desirable if they don’t hold any value.
Because of this, when investing in these kinds of domain names we need to take a look if the combination of numbers that we want to invest in has any meaning and value in different cultures. For example, there are many cultures where the number 8 is considered lucky, this causes domain names with 8 in them to be pricey as there is some meaning behind it and someone is always willing to pay for that value.
Internet and domain names have been around for a very long time, this caused many good domains to be taken in the early days of the internet. These domain names usually hold some sort of historical value.
The domain could have been the domain name of a historic company, it could have gone through interesting owners. Also, we take a look at previous usage of a domain name. For example, if previous owners ran a website with big traffic, those domain names tend to sell for high prices.
Domain name age also affects the price. Domain names that are older tend to be good domain names as they hold huge amounts of information about previous ownership and its desirability. If the domain is old and has only become available now, it indicates that there might be some demand for it.
No, it is not too late to start investing in domain names. You might think that the internet has become more saturated and most of the domain names are taken, but actually recent developments of new TLDs have created opportunities for new domain names to be created.
For example, the TLD “.io” has become really popular recently, which created a huge market for it. This caused prices for them to go up, and investors who invested in them early on saw really huge returns.
Of course, risks come with every kind of investment. When investing in domain names we have to take into account many different factors to be sure that our investment won’t be too risky.
Liquidity is one of the factors that we have to consider. When it comes to investing in stocks and other similar assets, we can usually sell them easily on different platforms in a short period of time. But domain names don’t work that way. Selling them is not a straightforward operation. When we want to sell them we have to place them in the marketplace where they can be sold within minutes or years. This makes them somewhat illiquid and hard to sell.
Another red zone that we might come close to is the legality of the domain name. When we are investing in domain names we are looking for names that are associated with something. But when those domain names come close to the trademarked words it often causes legal problems and expensive lawsuits. An example would be a domain name like “gloogle.com”. Because it is so close to “google.com” there might be some troubles arising from its ownership, especially if you turn the site into a search engine.
Valuation is another deciding element that needs to be taken into account. Stocks, for example, can be valued by the cash flow it generates and the total worth of the company. While determining the value of a domain name is not as straightforward because they hold the value that someone is willing to pay for it. This makes the selling process really complicated.
There are many different places where we can purchase domain names. For example, we can find a seller and directly purchase a domain name from them. But the most popular method is to buy them from marketplaces. There are many domain name marketplaces and here we will present you with a few of them.
Auctions are one of the most popular places to buy domain names, and GoDaddy is the biggest name in the auction marketplace space. Their marketplace is the first place that investors visit in order to look for more desirable domain names.
Annual membership for GoDaddy auctions costs $4.95 and subscribers gain access to any auction that is taking place and is not private.
When we are thinking of purchasing a domain name eBay is clearly not the first name on our list. But in reality, eBay has had a dedicated place for domain name sales for a very long time now. eBay is one of the biggest marketplaces in the world. This means that finding a good selection of domain names should not be hard, as there are millions of users who visit the website daily.
DNForum is the largest forum for domain names. Because of this, it is not surprising that it is one of the best places to look for interesting and investment-worthy domain names. There are countless threads dedicated to selling specific domain names. These threads have facilitated some of the most expensive domain name sales to date.
Another place that we can visit is Sedo.com. This is a multi-functioning website that offers services, such as domain name buying, selling, and parking. You can use their search engine to look for your desired domain name. Sedo gives us lists of domain names where we can either make a direct purchase or negotiate with the seller by making an offer to them.
If you are looking for a domain name that is not available for purchase, you can use Sedo's brokers. These are people who are going to contact the owners of these domain names and hold negotiations over the sale of their domain names on your behalf.
Domain name parking is another great feature of Sedo. We mentioned that you can place ads on your website to earn income from clicks. Well, Sedo does this for us for completely free and all we need to do is to make a parking request.
Flippa is an online marketplace that sells many different digital assets. Alongside domain names, here you can purchase built websites directly, Amazon stores, IOS and Android apps, and other relevant content.
When it comes to domain names, here you can find many different and interesting names that are up for grabs or are being auctioned away. Each domain name is provided with all the statistics which we need to consider when investing in this field. The downside to other similar websites is that you can not get a broker who will look for your desired domain name and negotiate for you.
If you are looking for domain names that are expiring, then this is the website to visit. When visiting expired domain websites you will be shown multiple lists of domain names. These lists contain different domain names with different specifications. Here are some examples of lists that you might see when visiting expired domain sites.
It also has lists of domain names that are up for auction on GoDaddy, and they also categorize them into similar lists.
dan.com, which is owned by GoDaddy, is a domain name marketplace to visit if you are looking for premium domains. Here you will be able to find domain names that you can purchase instantly for the buy-now price. If you don't have capital, dan.com also gives you the option to pay in monthly installments. But not every domain name has an instant buy option available as sellers are only accepting offers and don't have set prices.
dan.com also gives people the opportunity to sell their domain names. If you don't wish to sell it, you can lease or rent it out for a certain period of time. Ownership transfers and support are completely free.
If you are looking for another premium domain name marketplace, BrandBucket is a must-visit marketplace. What makes this platform so good is how user-friendly and well-built it is. You can choose different filters and look for specific style domain names. You can also filter out domain names associated with specific industries such as art, energy, fashion, food, and many others.
One downside it has is that unlike dan.com you have to pay the full price upfront as you are not able to pay through monthly installments. But in general, prices here are reasonable compared to the quality of domain names available for purchase.
Domain flipping is really popular and can be profitable. There are many details that need to be taken into consideration when choosing a domain name that will be good for flipping. This means that this strategy is not good for novice investors who will have a hard time analyzing all those details.
No, you can't purchase domain names forever. Whenever you buy the domain name, you are actually renting it. Domain names are registered for a certain number of years, and once those years pass we either have to buy more years or say goodbye to the domain name.
The most expensive domain name that has ever been sold, is cars.com which was sold for $872 million. This was sold in a private auction, but when it comes to public auctions, a domain name involving a car is also present here, as Carinsurence.com was sold for $49.7 million.