Small Business Idea: Domain Name Investing and Flipping

Online entrepreneurship is all about capitalising on opportunities coming your way. The windows of opportunities are usually passing real fast, bringing pioneers and those who are risk-takers to riches and business success.

One of the most lucrative online business ventures people are taking on – either full-time or part-time – is domain name investing and flipping.

How domain name investing and flipping works?

Domain name investors buy domain names straight from a domain registrar (e.g. GoDaddy.com, Name.com, NameCheap.com,…) or a domain name marketplace (e.g. Sedo.com, Flippa.com,…) and keep some of the quality ones as long as they can or simply sell or throw them away (let them pass the expiry date) for the domain names they think no longer have great potential.

What you keep is your asset – when the opportunities arise, you can sell them to the domain name buyer – usually for a hefty profit. More on this later – read on…

Domain name business startup costs

Your startup cost is your domain name purchase price.

If you register a brand new domain name, your cost would be between $2 and $30, depending on the top-level-domain (TLD) of your domain name. For instance, a dot-info would cost you $2 for the first year, while a dot-tv can cost you $30. Geo domains – those related to a particular geographical location, such as dot-us (USA) and dot-in (India) – usually cost more.

If you buy from a marketplace, your costs can vary greatly depending on the domain name quality and potential. You can acquire a great domain name at $3,000 with a hope to sell it over $10,000 – the sky is the limit, really…

What you should consider in taking on this small business idea is the recurring costs of domain name renewals – typically about $10 per year per domain name, depending on the pricing of a particular domain registrar and the top-level-domain (TLD) extensions (e.g. dot-tv is usually more expensive than dot-com.)

So, if you own 100 domain names in your portfolio, you need to pay about $1,000 per year for renewals. You can reduce this significantly using promo codes usually being offered by the domain name registrars.

How lucrative is domain name business?

To answer the question, you need to know this fact: Did you know that registering a $10 domain name can make you thousands – even millions – of dollars? Well, seeing is believing – check out this article about multimillion-dollar domain business on MSN’s Business on Main.

From the article we can learn that the most expensive domain names of all to date is Business.com, acquired at a whopping $350 million by Dex One Corp in 2007. Another business-niche domain name, Insure.com, was bought for $16 million.

What about IT industry-related domain name? Well, the infamous one would be Internet.com, was acquired at $18 million by QuinStreet in 2009. The most recent one: The acquisition of iCloud.com by Apple Inc. for the launch of their latest cloud-based service, Apple iCloud. The price tag: $4.5 million.

As of for me, my best domain name sales is currently at $1,000 fro a branded one-word dot-com domain name – registered for $7 at Godaddy with a coupon code one year before the sales. So, yes – domain name investing is lucrative, indeed.

How to look for the right domain names?

You can register a domain name with a domain name registrar, such as GoDaddy.com and Name.com. Alternatively, you can also buy domain names from the domain marketplaces, such as GoDaddy Auctions, Name.com’s Premium Domains or Expiring Names, Sedo.com, and many other places.

The key in acquiring a domain name is by valuing it based on the future value. That being said, registering/acquiring a short brandable domain name is always a good way to invest on domain names. For instance, I acquired Vapple.com, LilGirl.com, and many others for their potential.

Also, always look for dot-com domain names, unless you have a strong reason to take other TLDs, such as dot-net, dot-org, dot-tv, etc. Dot-com is valuable as it’s the most popular TLD.

Where to find domain name buyers?

Finding the right domain names is one part of the story; finding the way to sell them is a whole different story.

There are a couple of ways I recommend you:

1. List your domain names on domain name marketplace

You can list yours on specialised domain marketplace (such as Sedo.com,) a general online marketplace (such as Ebay.com,) or a web property marketplace (such as Flippa.com.)

2. Be a go-getter

You can approach the would-be-interested people or businesses and pitch them your domain names.

Some tips in domain name investing

From my short years in domain name investing – part-time – I do have some tips to help you getting started right:

1. Don’t register a domain name that contains trademarked term(s.)

Registering ILikeFacebook.com will likely to get you sued by Facebook for illegal use of trademarked name (and yes, it’s not an empty threat; Facebook does sue sites with “Facebook” in their domain names!)

2. Don’t be a cybersquatter

Cybersquatting or domain squatting is illegal. Domain squatters register a domain name related to a person or brand name with the hope to profit big time from the person or trademark holder. It’s better to stay away from such practice.

3. Don’t worry too much about the keywords-in-domain-name

It’s always a dilemma: Should I choose keyword-rich domain name or the brandable one? To answer this, you need to ask yourself; are you going to consider your domain name as an investment that comes with the site? If you answer yes, I suggest you to go for brandable one. For example, Small-Business-Articles.com is probably good for search engines, but as an investment, it sucks (and oh, I own the not-so-brandable domain name, by the way…)

For more ideas on what kind of domain names that will most probably worth more, read this Multimillion-Dollar Domains Business article.

Ivan Widjaya
Domain name business rocks!

Disclaimer: I receive incentives to share my views on this particular blog post. My blog is a part of an online influencer network for Business on Main.