Domain Name Investing 101
Just like stock market investing, domain name investing can be tricky. There are many questions that you have to ask yourself… Buy only brandable names? Current fad type domains? Only .com’s? Break out into newer extensions? Hold or sell? Suffice it to say there is a lot to consider when building your portfolio of domain names or just buying something unique for yourself, business or personal interests.
Many hardcore domain traders have literally 1000’s of domain names in their portfolio. But most traders are casual and own anywhere from 5 to 50 on average. The obvious limitation on domain name trading is the scarcity of names to be had and of course the amount of one’s expendable income at the time we are looking for a hot name. But what are the other factors that come into play when you are looking to beef up your holdings?
Factors to Consider When Looking for Domains to Purchase
- Cost
- Registering quality available domains or expired domains is cost effective which leads to higher re-sell profit.
- Purchasing domains in the aftermarket requires more research but can pay off. It takes big money to make big money in premium domains.
- Marketplace Value
- Brandability
- Good extension (com, net, tv, mobi)
- Easily pronounceable
- Memorability
- Meaning
- Length
- Business related or some profit making ability inherent to name.
- Cool sounding i.e. Brandable, eye catching or generic keyword(s).
- Earn back your investment, aim to sell for at least double what you paid for it.
Thoughts on Aftermarket Domain Sales
Selling domains on the other hand is a lesson in economics. We know that virtually all but the oddest names will increase in value over time. So when to sell, how to sell, and for how much are the questions each domainer has to ask himself/herself. Here are some thoughts:
- Decent quality domain names will increase in value over time so, if at all possible, hold on to them.
- Exposure of your list of domain names is important, you never know when someone may stumble upon one of your names and be willing to pay top dollar for it. Read my review, “Top 6 Places to Sell Your Domains For Free.”
- At the very least get a parking service and setup a customized landing page if you have a fair number of domain names. This will provide a residual income and many times cover the cost of yearly registration. Though be sure to avoid common domain parking mistakes.
- Hire someone to create simple logo designs for your top shelf names. A developed domain such as a blog, forum, service or storefront nearly always commands more money.
- If you are just getting started in domain name trading, stick to what you know. If sports is your passion, trade in that venue of names before expanding out to other niches so that you get a good handle on how this fast paced business works.
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November 4th, 2007 at 7:27 am
nice post mark, really well structured and some valuable points there…
even am writing a series on domain valuation on my blog, and this certainly seems something I can add to it..(no not copy pasting stuff
)
November 5th, 2007 at 2:10 am
This is really helpful for me considering I am such a noob when it comes to domaining, having spent most of my focus on learning SEO.
I think the thing that most hit home was “If you are just getting started in domain name trading, stick to what you know.” I can see where that will help make the learning process a lot easier.
Thanks!
November 5th, 2007 at 11:07 am
Nice post Mark. I have considered purchasing domains for my niche in the past and have probably left alot of money on the table procrastinating. I think I am going to give it a go this time before its too late. Great info. thanks.
November 6th, 2007 at 11:43 pm
hate to break it to ya but .MOBI is NOT a good domain extension.
November 7th, 2007 at 12:47 am
November 7th, 2007 at 12:47 am
Hmm, helpful for noobs. Unfortunately you missed the typos, the cybersquatters, parking qualities,…etc.
November 7th, 2007 at 10:40 am
@6
Jab, do you know any other articles that cover the areas you specified?
November 11th, 2007 at 1:22 am
You spelled my last name wrong but that’s okay
The reason I pick on .MOBI in particular, is not from a marketing standpoint but from a search engine standpoint. The big 3 search engines either don’t display .MOBI’s or put them at the end of their results (like Google).
November 12th, 2007 at 4:10 pm
[…] recently started a series on domaining called Domaining 101. Mark Fulton of DotSauce also posted an article covering domain name investment called Domain Name Investing 101. Both will be invaluable to newer […]
November 20th, 2007 at 6:11 am
I am not a domain trader (which is why I am not that ashamed to admit that I hear for .mobi extension for the first time) but I certainly know the value of a good domain. You have pointed some very good factors in your post but I would like to add a few more.
First, that would be age. As a webmaster I choose the domain names for my sites based on this factor too. One of the first things I do when looking for a domain name for a new website is to check for an old expired domain. I know age is of value to SEs.
Another factor would be type-in traffic. Such domains are already really hard to find at least at a reasonable cost. But if you take the time to search for such a domain and find one, it would turn out to be worth the time.
And one more thing. I’d like to add to the list of good extensions the .eu . No, not because I actually live in Europe :), I would just include in the list of valuable extensions the following: .com, .org, .net, .us, .uk, .eu (.gov and .edu too but that’s a whole different story)
January 24th, 2008 at 9:26 pm
I mean if you can’t have a .com - better leave it.
People do believe in dotcom’s. And you want to sell
something - that is a rule.
April 24th, 2008 at 12:45 pm
It’s so hard to believe that any other extension other then .com is really worth anything.
A domain extension is like its own brand and when every other major brand is pushing the .com domain brand its hard for the consumer to think of anything else when online.