Challenges Facing Entrants to Buying and Selling Domain Names
While the major players will always hold considerable advantage, new entrants to the industry at its bottom end stand to benefit from economies of scale whilst remaining relatively unchallenged by any significant barriers in relation to buying and selling domain names. Nevertheless, increasing levels of competition within the industry itself poses a degree of risk to such potential entrants.
Selling Domain Names: What is Your Domain Name Really Worth?
Website URLs are big business in the USA where sales are estimated at over $3 billion the previous year with an annual growth rate of 2.9% over the last six years. These figures are poised to increase exponentially over the next four years due to ICANN’s decision to extend the number of available suffixes to registered domain names.
Unfortunately, as with most things concerning money and financial gain, the value of domain names are at the mercy of fluctuations in market trends and the buying power of consumers. Always keep in mind that a domain name’s value is always, ‘whatever price a person is prepared to pay’.
Increasing Your Odds in Obtaining a Valuable Portfolio
Purchasing a domain name in today’s economy is a relatively process though finding one that will yield a reasonable return on investment is another matter altogether. There are many factors contributing to the value placed on one domain name over other, however the most significant factors you’ll need to be on the lookout for are:
- Keywords and search engine optimization
- How memorable or unique the domain name is
- The suffix after the URL (I.e. .com .gov .org)
Often the best approach to sourcing potentially valuable domains and building up your portfolio quickly is by simply purchasing those that are already search engine optimized via auction sites. This strategy of buying up pre-purchased domain names is typically beneficial in two main ways:
- Research: Any domain that has been bought and sold numerous times prior to your purchase will most likely have been researched well in advance by others for SEO optimization.
- Attributes: Expired domain names do not lose all of their SEO rankings. It often takes little effort on your part to get them back up to being fully operational and just as functional as they were for the previous owner.
Ideally you’ll want to pay close attention to domain names with an active history of being traded on the market. Most will likely have remaining active backlinks to the original page if the site was well maintained, a higher than average search engine ranking and more immediate SEO gratification requiring minimal effort.
To further increase you odds of trading domain names successfully, you’ll want to make the most use out of keyword research tools and making informed decisions regarding the potential value of the domains you purchase. Pay close attention trending topics across the internet and anticipate demand wherever possible and don’t be discouraged if it takes some time to get right. Before you know it, you’ll have established yourself firmly in the marketplace.
Tips When Selling Your Domain Portfolio
Once you have built up a valuable portfolio of domain names, you’ll then be looking towards off-loading some of these in order to turn a profit. While it is easier to acquire domains in the first place, find the right buyer to ensure that you see the highest return is sometimes a much more difficult part of the equation.
The best and way to source new buyers is to search related forums and by listing your portfolio on online auction sites. Qualified buyers are usually other qualified domain name traders in the same line of work and most spot a potentially lucrative deal they will be prepared to pay a little more than they otherwise would. Know your bottom line and price you portfolio accordingly – this should take some of the stress and headaches away from negotiating a deal.
Can You Trade Off Affiliate Naming Rights?
Domain names that sound similar to established brands in a particular niche are generally perceived buy the buying community as being more valuable. While trademarks are in place to protect copyright holders, variations on a theme can result in additional benefits and added value.
The quickest selling domains are often those that relate to particular niche markets and you may find success by appealing directly to members of forums interested in related subjects. Going back to the earlier discussion about how forums can be useful sales platforms, to take advantage of these high-traffic sites all you have to do is sign up to the forum thread and post appropriate content that relates to the topic at hand and include a link to your site in the signature of your post.
Auction sites: Selling Higher Volumes for Higher Prices
On the opposite side of the spectrum, auction sites tend to be much more competitive in nature and you may have to price your portfolio accordingly if you are to sell in this environment.
Many of the domain names for sale here will have an attached website and therefore justify higher prices and that’s certainly also and available option. Just make sure that the market you step into here isn’t oversaturated with high-ranking SEO optimized domains driving up unsustainable prices – there is not point holding onto domains that could fetch hundreds or thousands of dollars if you have to wait six months for sales to convert.
However, there have been a few notable instances over the last few years involving domain squatting. Typically, a domain name agent would buy up potentially lucrative domain names and then sit on them for years only to sell them for hundreds of thousands of dollars to big multinational corporations. There is nothing wrong with this approach and if you find a few of your domain names are not selling right now, it’s entirely possible that this situation could occur months or years down the track.
The Role Investing Plays in Profit
Buying and selling domain names is a little bit like playing the stock market. You need to be aware of the market around you as well as the trends that affect the laws of supply and demand. Any investment you make however large of small ideally, will result in a positive return on investment. If you’ve made the decision to enter the industry and try your hand at flipping domain names, the best advice would be to wholeheartedly embrace the process and the lifestyle that goes along with it.
If you follow the basic guidelines outlined in this article, there is a good chance you’ll be able to build and then sell a highly profitable domain name portfolio.
