It’s obvious today that the internet is an excellent place to make money. But did you know that some people are turning a profit by buying and selling domain names? Becoming a domainer could be a revenue generator for willing investors. In this article, we will discuss what a domainer is and why an entrepreneur should consider starting this type of business.
In 2014, a domainer received a $1.2 million payout for the domain name, mm.com. The same year, power.com sold for $1.26 million. Another domain, ticket.com, was worth $1.5 million in 2009. In 2010, dating.com raked in $1.75 million. So, yes, there’s money to be made.
The .com boom is pretty much a bust at this point. But ICANN, The Internet Corporation for Assigned Names and Numbers, says the amount of domain names is set to skyrocket in coming years, adding “how this market will compare to the .com boom remains to be seen.”
Are you intrigued? Keep reading. You’ll learn:
- What a domainer is
- How domainers make a profit
- What being a domainer involves
What a Domainer Is
A domainer is someone who registers a domain name in the hopes of making a profit by selling that domain name at a higher price. The domainer reviews the many domains for sale, tries to buy the ones they are interested in for the lowest price, and then strikes a deal with another buyer.
Domain names are in high demand right now. So, a domain name investment has a lot of potential. Still, it’s a speculation game. You’re also trying to turn a profit in an increasingly competitive market. More and more regular domainers and professional domain brokers are trying to be the first to buy premium and high-value domains.
It used to be that every business website wanted to be a .com. So the domainer who bought donuts.com or dentists.com could count on someone wanting that internet address for their business. It’s harder now to buy up simple nouns describing a product or service at a .com address. But this also means someone looking to build a small business website needs to get more creative. So domainers are investing in the new web extensions, such as .co, .me, or .biz.
How Domainers Make a Profit
The mm.com example above is mind-boggling. You can bet the domainer didn’t pay a fraction of that price to buy the domain name in the first place.
To successfully make money selling domain names, you need to:
- Anticipate what domains are going to be in demand in the future.
- Build a portfolio of domain names.
- Take a creative approach to domain naming.
- Understand the different domain name markets—either primary (new domain names never before traded) or secondary (where domainers earn extra income by selling unique, creative, popular, and innovative domain names). In a secondary market, previously generic domain names may become a hotly contested and sought-after asset.
- Identify niche markets or demand streams.
- Learn how to value domain names.
- Know when to let a domain name expire and take the loss.
- Think about target markets before you make your purchases.
When you’re looking to sell the domain names, you’ll take one of three approaches to clinch the deal. You might set a firm price, invite people to make an offer, or offer up the name in a domain auction. A domain auction is perfect for domainers who find themselves holding on to a high-demand domain name. The auction is likely to drive up prices.
There are two strategies to make money domaining. You can sell domain names that you have purchased at a premium for profit. Or you can earn ad revenue from domain parking.
Domain parkers put advertisements on the web domain to generate revenue while that address is otherwise inactive. It doesn’t require an operational business website and lets the domainer earn some income while waiting for the right buyer or sales approach.
What Being a Domainer Involves
Being a domainer involves a serious investment. Liquidity can be a problem if you have difficulty finding a buyer and end up sitting on some of your domain name purchases for months, even years.
It also takes time, like any successful enterprise. Domain investors need to stay on top of market changes and trends. The better you understand the market, the more likely you will anticipate in-demand domain names and effectively appraise the value of available domain names.
You’re also going to need to research your domain name possibilities before pulling the trigger on a purchase. You don’t want to run into legal troubles by choosing domain names that are too close for comfort to a business with deep pockets. Risking trademark infringement could lead to a lawsuit that sees you forfeiting the domain name for free (after paying legal fees!).
Being organized is also critical. After all, domain name registration has an expiration date—and the term will vary across domain registrars. You need to keep track of your domain name investments to take action in a timely fashion. Otherwise, you risk someone else swooping in to make a profit off of your expired domain investments.
It helps that communities of domainers exist online. There’s even a domain industry news magazine, DN Journal, which provides weekly updates on top domain sales. Want to gauge today’s domain name valuations? DN Journal says, “it currently takes a minimum of $50,000 to qualify for the YTD Top 100.” The number #1 spot in November 2020 was the $900,000 brokered sale of bullish.com.
Domain investing isn’t for everyone. However, it can be an exciting way for an entrepreneur to build a business and make a profit. Seasoned domainers will tell you it takes time, resilience, and adaptability. You also need to have realistic expectations. There will be a learning curve, and if you want this to replace your day job, you’ll need to commit to it like a career.