Domain speculation, commonly referred to as domaining, is a practice that has fascinated me since the first time I heard about it. Domains are valuable because each one is unique. There is only one sales.com and only one hgkit-rghtlo.info, but it does not take a genius to figure out that the former is far more valuable than the latter. Many domains have a real or perceived commercial value, which makes them desirable. The art of domaining involves identifying valuable domains, securing them and reselling either to other domainers or to end users. In a way, this is very similar to what I had been doing on eBay for a long while many years ago. I made about $60,000 selling Transformers and Masters of the Universe toys, doubling my initial investment. I am not even counting a further $40,000 profits that I invested in other opportunities, but eventually lost. I loved doing that because I am an avid toy collector and the thrill of hunting down rarities and turning them into hard cash was very exciting and motivating. It also helped me make it through a very hard time. Eventually I had to quit because my local post office is owned by a company that has a monopoly over postal services. Some years ago, they started charging almost ten times as much as any other European post office for international shipping; this made my business uncompetitive and I was forced to quit. Domaining is great because the concept is basically the same, but there is no shipping involved. I have only recently started moving my first footsteps in this field, and I have realized two things: Some people make domaining sound easier than it really is; others make it sound like it is oversaturated and a waste of one’s time. I think both are wrong. There is money to be made in domaining, but there is an enormous amount of competition, so a good strategy is needed. Going to Namecheap and starting to type in random names to find an appealing domain that is available for registration is a laughable approach. Using Market Samurai to find keyword-rich domains and expecting to sell them for two hundred dollars each after a week or two is a little more pragmatic, but still unrealistic. Without much ado, let me illustrate my strategy. I am sharing this with you without having fully tested it out. I do not know if it will work or not. In pure Money Earning Sites Central style, I will discover this together with my readers.
There are many registrars, auction sites, domain brokers, forums and private parties from whom domains can be purchased, but the kind of domains one can purchase are divided into two categories: freshly-registered domains and used domains. Registering a fresh domain is as simple as going to sites such as Namecheap or GoDaddy, adding the domain to a shopping basket, paying and getting the name you want. I have prepared a tutorial aimed at absolute beginners on how to do this on Namecheap. Used domains can be bought from brokers such as Afternic or Sedo, auctions such as Flippa or GoDaddy, or even from domainers on forums such as the DNforum. You will pay more for a used domain than you would pay for a freshly-registered one. Some domainers will let their babies go for fifty or sixty bucks; others will ask for a few hundreds.
If you are new to this business, just like yours truly, I would suggest dealing only with freshly-registered domains. In the few weeks I have been doing this, I learned that there are enough fish in ICANN’s sea that it is quite possible to score some great deals without having to do much research and without spending a fortune by buying from other domainers. Just as in the toy business, the key to success in domaining is knowing the product. Gold is sold easily while copper may take a lot more effort to sell, and rocks are not sellable at all. Being familiar with the product, or rather being obsessed by that product is the key to assess its value correctly. Thus if another domainer is underselling his domains, an experienced one who knows the subject very well can take advantage of this and buy the domains to resell them himself for much higher profits. Likewise when some are overpricing their domains, the experienced domainer will immediately notice and avoid entering a bad trade. I do not feel that I have enough experience to make these kind of judgments, and there is one thing that my experience as a toy reseller has taught me: no matter how many text books one reads or how skilled one is. Getting to know the product to evaluate it with reasonable certainty requires experience not theory. This is why I decided to stick with freshly-registered domains, for the time being. Registering them costs, at most, ten dollars and the risk involved is minimal.
STEP 2: Assign A Value To The Domain
The value of a freshly registered domain depends mainly on four variables although there are an endless number of factors that can make a seemingly worthless domain sell for a fortune.
1) Top-Level Domains
This is what laymen refer to as a ‘domain extension’. In my Ultimate Web Hosting Guide I go deep into explaining TLDs. These can affect a domain’s value in two ways. The first and more obvious factor to consider is the TLD of the domain that we are about to purchase. The Com TLD is the most valuable and sought-after, although there may be exceptions to this rule. As an example, take the domain hostcabi.net, a site I often use in my tutorials here at The Central. The site’s name is actually ‘Host Cabinet’, so the Net TLD is far more valuable to them than the Com. Normally Net and Org TLDs are the most valuable after Com. Info and Biz are increasing in popularity, but beginners should better focus on the major three extensions. IDNX.com provides a chart of how valuable each extension is compared to Com TLDs. For example, notice that Org and Net TLDs are worth about one-fourth of Com TLDs. The second way in which TLDs effect the value of a domain is by the number of them that has already been registered. If one happens to find a free Com TLD that has Net, Org, Biz, Info, Cc, Us and other extensions taken, then one should consider that to be a very lucky day.
What does the domain name consist of? There are two types of domains that speculators are mainly interested in. Domains that consist of keywords and short domains that mean nothing. Moneyearningsites.net is an example of the first kind; tls.org is an example of the second kind. Regarding the first kind, take note that domains of the type [oneword].com (or .net, or .org) are always considered high value since they are highly commercial except in those instances where the word is a very obscure technical term. [twowords].com (or .net, or .org) are valuable as long, as the two words are profitable keywords. Domains that are longer than two words tend to not be valued as much as shorter ones, even when the keywords making them up are valuable. Many exceptions exist, but it is always best to not make hasty buying decisions when dealing with long-tail domains. The second type of domain is a very short domain consisting of four or less lettes that don’t mean anything. These domains are considered valuable due to the fact that they are extremely rare. The only domains that are worth investing in are two-letter, two-number, three-letter or three-number Com, Net or Org domains. Four-letter Coms are also highly sought after. Take note that other than two-character domains, mixed ones containing both letters and numbers are not considered valuable. Domains containing dashes are usually considered less valuable than those that do not have any.
3) Domain History
Has the domain already been registered? If one buys a domain and does not renew it by paying the annual registration fee, that domain will undergo a lengthy process at the end of which it will become free for registration again. To summarize the rather complicated process, after the domain officially expires, the buyer is allowed a grace period during which he can pay a penalty and take the domain back. If that does not happen, the registrant is authorized to put the domain up for auction. If no one buys the domain, this is picked up by drop-catchers and auctioned again. Drop-catchers are specialized domain brokers that focus on expired domains. If the auction is once more unsuccessful, the domain is put into a kind of limbo for a short period of time during which no one can use it or buy it, and, finally, it is made available for registration again from domain registrars. Domains that have been used in the past are more valuable than ones that are freshly registered.
Are there any links or records of end-user usage? What is the Domains Authority? Domains that have been used for Web sites, as opposed to ones that have been bought exclusively for speculation purposes, are considered more valuable especially if there are links pointing to them and the domain has a high Pagerank or authority. A new Web site is easier to rank if the domain it uses is trusted by search engines. Aged domains may also be used for SEO purposes.
Has the domain already been sold? Have similar domains been sold in the past? Past sales can influence the value of a domain especially if they can be thoroughly documented. Even if the domain itself has never been sold, the sale of similar domains can influence its value. By ‘similar‘ domains I mean other TLDs, e.g. a Net TLD has been sold for a considerable amount, and I am after the Org TLD.
4) End-User Possibilities
Branding–Brandable domains such as astrya.com, starz.com and similar ones can be valuable depending on whether there may or may not be end-users interested in them. Playing with brands is not recommended for new domainers. It can be a very tricky business.
Trends–Domains involving seasonal trends, special events or popular news can be valuable too. Examples are halloween2013.com or worldcup2014.com. Like brands, these domains are tricky to evaluate and flip.
Geo-Domains–These are localized domains that will appeal only to a specific group of people. Examples are, NewYorkLawyer.com, DentistsMichigan.org, OptometristsParis.fr. Besides being of interest to the actual end-users, these domains may also appeal to domainers who employ cold-calling techniques.
Other than using common sense and the above facts to evaluate domains specific tools also exist. The most trusted of these is unquestionably Estibot. While this can give a rough idea of the value of a domain, it is important to understand that the estimates are not absolute. Sometimes a domain that is valued as a worthless one may have a characteristic, which makes it valuable to end users or other domainers. Also, do not expect to sell a domain for high dollar just because Estibot values it at a high price. I have one domain that Estibot valued at $360 and I am trying to sell it for $70. No one jumped on it yet. If Estibot values a domain more than $500, there is a good chance to make a profit on it, but always take it as an indication, and use your own judgment for better results. As I said at the beginning of this article, gaining this kind of experience takes time.