Is Buying Domain Names Profitable?
This is in response to a question a fellow Moz community member once asked in Q&A, and we thought that it deserved its own article. Buying up expired domains, or purchasing keyword-driven domains is becoming more popular amongst the internet "get rich quick" crowd. The big question is: Can you make a profit by buying and selling domain names? If you get the right one, sure. If you plan on repeating the process over and over, probably not.
Something wise my father once told me "Something is only worth how much someone is willing to pay for it." This small seemingly unimportant statement has guided me in many selling and purchasing decisions in my life. Sometimes, it makes the reality all too apparent. So, is buying a domain with the intention of selling it a good idea? Let's break down the details, and talk to some people that actively pursue this method. Yeah, we know a guy.
1. Labor-wise, it doesn't add up
In the grey hat SEO world, the thought is that you can take a domain that is keyword driven, do a quick optimization to get the site ranking, and sell it off at a profit. It could, and does happen daily. How much time is invested in optimizing a site to get to page one, vs how much the site will sell for? (remember that quote at the beginning of this article?). Let's put it into simple math:
According to Sedo.com, the average cost of a purchased .com domain is around $2100-2300. Depending on how much your time is worth, you may have to take a hit on labor cost to get the domain where it needs to be in order to entice potential buyers. Here is some theoretical math for you number crunchers:
- Optimize keyword-driven site to rank in Google: approx 30 hours @ $50 hour labor cost (using low $50 rate for sake of example) = $1500
- Time cold-calling and email blasting potential buyers in industry niche to purchase said domain: approx 8 hours = $400
- According to the data provided by Sedo.com, likely cost for selling said site: approx $2300 max ($1000-1500 most likely)
- Gained vs Invested = $2300-1900= $400 profit.
I'm not against making money in any way, but $400 doesn't really seem worth the effort and coffee expense invested (I like the good stuff). This is a very basic example used to put the costs in perspective. Most SEO providers charge more than $50 per hour, and you get what you pay for. The above example of a final labor estimate is probably much higher, or if the domain is already ranking high and the owner wants to sell, so is the initial purchase price. Since this is often repeated many times over for multiple domains, it could get time consuming, and expensive.
2. You might get someone's dirty laundry
It's ranking high today! What could be the problem? NO. JUST STOP. Unless you know the entire history of a domain, you may be setting yourself up for failure before you begin. SEOs (and business owners) use a variety of tactics to get a site ranking high in search results. For some of these methods, we'll just call them "questionable". These methods could include everything from buying links, overuse of directory submissions (non-industry related), duplicate listings, poor quality backlinks, and guest blog comments.
With a domain of this type, it could be very easy to get it to rank quickly, before the powers that be see the domain for what it is, and put it on the blacklist. While that study is being done, you could end up with a domain that has a lot of problems coming down the pipeline that you are completely unaware of.
3. It undermines your quality and reputation
If you know how to get websites to page one, why are you not marketing that fact to potential clients and consumers or would-be domain purchasers? Trying to get a keyword driven domain to rank high and sell it off for a profit isn't a good investment, either time wise or for the long-term success of your company. Instead, use sites that you have already ranked high as an example of how awesome you are and sign them up for a monthly fee, rather than trying to sell them a "make money now" domain.
- Demonstrate SEO prowess to potential client using existing sites as proof of results
- Sign up client for basic SEO services at $600-1000 (depending upon site and competition) per month
- Invest 30-40 hours in making the client's site soar in results
- Client is happy. Refers friends and other business owners your way
- You get: More clients, better reputation, month recurring income, and gain a positive reputation for being a quality SEO provider.
4. It's not sustainable income
Remember that guy we said we knew? in the second paragraph? Well, we talked to him to find out if all the bling and glamor behind selling domains was true. This is what he said:
- US: "Is buying domains with the intent of selling them a sustainable model?"
- HIM: "Honestly, it depends. Overall, I'd have to say no, because you never know what you are going to get in return. One week I might make $900 off one domain, but the next week I'm stuck with five nobody wants. However if you are a great salesman, you can make it work."
- US: "What type of domains do you see being the most sought after?"
- HIM: "Mainly small-medium sized local businesses looking for a way to increase their ranking. Most already have a branded domain in place, and have heard that using a keyword domain can help. Or they have seen a competitor ranking using that method. The problem I face is that they don't have a lot of money to spend, so I get lowballed on the asking price. There have been a few that make a ton of profit vs what I purchased it for, but that boils down to luck: what is for sale, when I find it, things like that."
- US: "When do you think it makes the most sense to buy or sell a domain?"
- HIM: "When someone is selling the company, and have a high ranking domain already in place. Those companies stand to make the most money by selling to their competitors, who always seem to be willing to pay. (laughs)"
Selling a domain negates the fact that you can make additional money from this client, unless you start the process over again, with another domain. You could use the domains position as proof of your SEO-prowess, but once it's already ranking and optimized, what other services can you entice them with?
5. Waiting on and finding buyers can be a pain in the arse
We did a search for GoDaddy and Sedo domain experiences, and many of them came back as negative. In one such example, Online Domain stated that "GoDaddy is destroying domain sales." The author speaks about having to wait up to 80 days to get his domain sold, the whole time being questioned on his asking price.
But wait, there's more. So you are looking to sell a premium listing that is not keyword-driven? Be ready to take a hit. On all premium domain sales, GoDaddy takes a 30% commission fee. This process happens before they remit the payment. Yikes. When you are already operating on a slim margin, 30% can be what makes or breaks the bank for that sale.
Conclusion:
While buying up a ton of domains seems like a great way to make some extra money, the real world results show that it is very hard to make that process profitable. As with any industry, you will have those "golden moments" when someone you read about made it into a million dollar a year business, all while sitting in the comfort of his own home. That could be true, but he probably consumed a lot of alcohol and lost a lot of hair doing it.
I have an interesting twist on how I have done it in the past. I will buy a domain and use it as a development domain for blog posts and things of that nature. Then over time it will gain DA and PR. Then I will sell it off and buy another development domain and start the process over. Not quite the process you mentioned, but it works. People will link to the development site to show things off as well sometimes, so that helps.
What type of ROI have you experienced using this method? Do you have any examples?
probably one of the most difficult parts of buying a domain name is figuring out if it has a penalty or as you said "someone elses dirty laundry"
sure you can use Open Site Explorer to check for bad links and such, but there is no guarantee that the domain doesn't hold some kind of other content-based penalty etc.
and yes, penalties can be removed, but in my experience it is one of the most labor intensive and tedious processes you can do as an SEO.
"and yes, penalties can be removed, but in my experience it is one of the most labor intensive and tedious processes you can do as an SEO." - just not worth it IMO if you get an expired domain that performs even worse than a fresh one. Been there, done that, not worth it at all. :)
Not worth? Get rid of penalty and do the job... besides name matters.
Reality Article !!!. Domainers need to wake up
Domain buying just seems like one of those things where I'm a day late and a dollar short.
I think your analysis is true of many golden veins on the internet. You gotta be in the right place at the right time and sow your success with a proven method. If you get greedy or step out of the lane you're likely to take a loss or get hit by a semi carrying rocket fuel.
No sane person will sell a domain that is profitable, so in my opinion buying domains isn't a very intelligent thing to do.
Profitable to their business, no. Profiable to sell vs what they paid for it, yes.
We keep forgetting that most companies will buy a domain because of the actual name and not the rankings.. If they want it, they will pay
Very true. Would be nice to be an early bird agency, with a lot of good domains. Even then, it's not a guarantee you will find a buyer.
Depends, I had a lot success selling it. Today you have tools that can automatize your selling process.
Firstly David nice article - I see it as thought provoking...
BUT.... Cyber squatting... :-( There is nothing more annoying than those SEDO holding pages.
Personally I hate people that buy a domain just to sit on it and try and sell it for a profit.... saying that if someone takes the time to build a site on a domain that is genuinely interesting to people and is not just a spam site/spam content and then goes on to want to sell it I am not as bothered.
I suspect a lot of people will argue with me but we are all entitled to our own opinions!
There are a ton of companies that just buy a domain to sell, and I agree it is frustrating. With many of our internal projects, we come up with clever domain choices, only to find out that the domain is taken AND with no website built for it! Only bought or registered just to resell.
Yeah been there done that got the T-shirt - always thinking of ideas and finding the domain has a cyber-squatter on it (is that the correct term these days?)
Trying to explain to new clients why they can't have the domain they want when there is no website on it gets tiring...
Domains are real estate. You should be educating your clients on the value of a good domain name and adding brokerage to your list of skills.
If you're clients brand doesn't have an existing trademark then they are new to the party and a domain should be seen as an investment not a hurdle.
If domains are real estate, then the same rules of real estate should apply. In real estate, taxes are based on the value of the property. So, a person asking $10,000 for a domain shouldn't be paying the standard $15-30 renewal fee as a person asking $200. The renewal fee should be based on the domain's value. Domainers want to claim it's like real estate without applying the most fundamental rules of real estate.
Nice Blog, thanks for the good info.
You are welcome, thanks for reading! ;)
I would say, you can buy domain name, polish it with cheap theme and basic SEO from developing countries. Use freelancers to do this for you and then bang on. List it on Flippa or manually mail to potential buyers. You can get a lot more if you are bang on target.
Good pointers.. I would say that if you could make the money you are illustration just by spending such 30 hours per domain, then its a good business. Being an SEO, is not easy to just book a new client every other week to work on their SEO.. Atleast not in my country.
It would be great to see an article as to how to promote the sell of a domain!
Thanks!
30 hours was just an estimate, based upon the domain already being in pretty good shape, and not having any penalities. For some domains, this labor required could be much higher.
We are thinking of writing such an article. After we got done with the interview, there was an in-depth conversation with the domain seller about how he actually goes about selling domains.
Thanks for commenting! Glad you enjoyed the article ;)
Its not that hard to promote and sell domain, when you have tools like flippa.com and domainero.com. I had a lot success with selling domains thanks to their support.
It's not that bad to buy a good domain name. Actually, it's extremely important for a website . Well, you won't earn too much if you want to sell your website after buying the domain, but who says to sell it? You can keep it and make it better.
Good advice. I liken it to flipping houses. Sure, there might be money, but is that what you want to be doing 20 years from now? Doesn't seem like much of a future.
Flippers can add value to a home and neighborhood and thus deserve to be compensated. I'm not exactly sure what value domainers are adding. If they were selling domains with a website built around it, free seo services for a few months, fresh and unique content, then that would be a different story.
I OWNED DOMPERIGNON.ORG, incredible, but true. Lost it, back in the days when internet in India was not a readily accessible utility. And I was a casual domainer. You had to go to a cybercafe. Did that late in the day, towards the expiry of the domain. No chance of renewal. The domain is now with the owners of Dom Perignon and is redirected to domperignon.com!
Nice article! The first domain name I ever purchased at auction ($30 back in '07) is still by far the most valuable in my portfolio. It was a lucky break and has paid for my occasional domaining ever since :).
That being said, many things have changed over the years. The days of MFA and quick flips are mostly gone. My advice to those new to domaining and wanting to give it a try is to take it slow, do your research, and if you do purchase a domain with the hope of turning a healthy profit - put some real time into it and build something useful. That way it's easier to monetize and easier to sell.
Good post re: showing profit per hour or "sweat equity" involved in this practice. Also, if the domain names REALLY mattered that much, people wouldn't be so willing to sell. There's plenty of keyword rich variations of anything you want readily available. I for one will be happy when/if this practice ceases.
Yes! Selling domain is an emerging trade and no wonder if it can develop into an exchange. www.DomainX.org has been initiated with this view. There are some good ideas in the comments regarding which names to buy and how to grow their value. However one must not forget that it also involves a recurring cost (annual renewal) and keeping many of them might become difficult if you are not really selling at least a few to cover it. Enjoy free listing at DomainX.org.
Interesting post and I agree with most what you said.
However, I'd argue that most people in the business really struggle as they don't understand what makes a good domain name and what's a bad domain name. While I do not work in this field full-time, I can say that I can make a living of it, but it's probably because I don't ask for absurd prices (e.g. randomword247.com domain name for $8000 is just unrealistic and won't happen) and therefore can sell domains easier.
I do specialise in short to very short premium domain names and web2.0 domain names, as well as brand domain names. Have a look here: www.brandern.com
Looking forward to your feedback.
Thank you
Mark
Depends! I had bigger success than I expected with flippa.com and domainero.com. You have to find tools to automatize your sales process.
offcourse buying and selling the doamin name is profitable all you need to do is that you need to go with the right domain name likewise u need to purchase the valuable domain names only on which we can build our business.
get some tips and tricks to how to purchase and sell domain names,
https://www.gofortricks.com/domain-name-buy-and-sell/
With So many new TLDs coming I see that buying a domain would be not a profitable thing if you have only one domain from the set. If you are really looking to make money from this business buying a set of domain with similar name that could be a strategy for those who want to be rockstar in this business.
When I first started online, I'd register domains that I thought I could develop and sell at a later time. After learning my way around the cloud, I realized many of the domains I'd registered are pretty much useless, or so I thought, and I let them expire. Come to find out several of these domains have been picked up by parking sites and are being offered for sale for thousands of dollars! Now I'm not saying they're actually selling for the asking price, but I learned my lesson. I never allow a domain name to expire. I add content to it, backlinks, some AdSense and try to sell it for something.
I remember the glory days of the Internet where people did make a ton of money buying domain names. Until I came across this post I actually didn't even realize that people actually still thought they could.make.a.lot of money by doing this. I have some domains that people would be interested in buying and I get contacted about them but mostly it is for people wanting to purchase them for like $1200. And for that price I would rather just hang on to the domain name. I also get contacted by a lot of people offering to sell me complimentary domain names at what I would call ridiculous premiums. The knew google is all about branding. I would consider paying for a domain name that has a great brand attached to it but I could care less about most keyword rich domain names. Of course there are always exceptions.
Just for discussion, has anyone picked up any good domains lately, either for yourself or for a client?
I have some pot related ones I've purchased recently that deal with the manufacturing of hemp like hempmfr.com, hempmoulding.com, hemp-textiles.com, hempecofuel.com etc. Some of the older domains I've been sitting on are ones like internetpot.com, califunk.com, cafunk.com, caedibles.com, 1tokewonder.com, govherb.com, grasspeddlers.com, pot-megastore.com, usgov420.com etc. Another interesting recent on I've purchased is Dogparkdates.com and dogpark-dating.com. Do any of these seem valuable in your eyes?
I have purchased a lot of good domains. It's not that hard today, because you have great tools that can help you with it.
Search forbes500, look on their revenues from past years, search if they have country tld, look on their plans for future and buy it. Then create a website of their competition but not about "they're better than You" etc but like comparison. And wait.
Is this ethical? No, but why do we buy domain names? For money, right?
I was looking for a article on this , thank you David for this great article
"consumed a lot of alcohol and lost a lot of hair", interesting but true, most who start business of their own should go through this process. the difference is they might smoke cigarettes!
Hi guys, just a thought, you do not need to build traffic to the domain yourself, you can always buy expired domains, best to subscribe to a paid service like dropping.com (so you are the first to know) or a free one, expireddomains.net and in this way, you can get old domains that have traffic. You could use these domains for parking, getting advertising income or even to sell. I have noticed, that domains that were not hot in the past, can still be hot now, just use Google Trends to type in the keyword, and you will see its future projections.
Lastly, selling domains can still be profitable (though rare), if you get the right one, check out these guys who recently sold domains on Go Daddy Premium Listing[1][2], they sold workreferral.com and linkcoupons.com.
Also, Sedo.com, makes millions a week selling domains,even in the past week[3]! If you want to sell here, I would probably use a paid category or featured listings, one of my category listings, got 44 views in just 1 week but still waiting for a sale this month, hopefully. I would not really on this as a business, unless you add web development to it, and also, be sure to check that you are making a good profit, say within 6 months!
[1]-https://www.dotsauce.com/godaddys-recommended-pricing-for-premium-domain-listings-and-my-first-sale/
[2]-https://earlyretirementdiary.com/my-first-domain-sale-from-godaddy-premium-listing/
[3]-onlinedomain.com/2014/07/06/news/sedo-sells-614-domains-for-2-3-million-mm-com-1-2m-bmh-com-20k-euro-eat-club-20k/
The other point with the TLD's its not so much of a land grab to get that perfect domain name there are more options for people to look into getting.
Personally I've dabbled in this... what a lot of the larger folks do is buy massive amounts with intent to sell down the longtail... not aiming for 1 news-making sale but lots of $50-$100 sales. If you can scale that, it's appealing. But those folks have custom built tools and premium access.
The reality is you need to spend time on the forums, build relationships and do a lot of outbound marketing, soliciting potential clients to buy the domains you've got. It's feasible, but not altogether stimulating/interesting imho.
True. If you are setup for these type of sales, and have the audience, it could work. Lots of outbound marketing, lots of hit or miss.
Yeah, this is what NA Media did a long time ago and it's seemed to work for them. But they were early in the game so that kind of real estate grab probably couldn't be replicated now.
If I am reading it correctly you've not only made yourself $400 profit but you've also paid yourself for 38 hours work.
Good point. Is the amount of work that went into getting a successful sale worth a $400 profit? Keep in mind, this is providing speculative numbers for the sake of debate. The real world hours invested in gaining position or page rank, and time a agency would sit on a domain before a sale would be much higher. We interviewed a few agencies that practiced this, not only those that supported our theory.
The next question is: Is this a sustainable way of earning income? The points addressed were to showcase how it can be "profitable" in the short term or perhaps on a one time basis, but harder to justify spending labor hours on a continual basis.
available on the market NA Media did in the past and it's did actually work for these folks. But they were early while in the game so that types of real estate get hold of probably couldn't often be replicated now.
Many important factors must be considered when we talk about domain flipping because it's a big industry. Market trends, seasonality, type of TLDs, and quantity and quality of domains... Who you target? Re-sellers or end users... The appraising is right? Domains must be affordable, not overpriced.
I sold over 600 domains within the last 2 years mostly to flippa and namejet re-sellers at dot50.com, also on major auction sites and many successful domainers are constantly returning for more quality domains.
[Link removed by editor.]
I am currently thinking of buying the .london domains... is this possibly a profitable idea? my idea was to purchase it while in the london priority period and then sell it asap on sedo or anywhere else... any thoughts on this Please?
Hi
I was looking in the community for something different and found this article... The subject is interesting so I decided to go through it. I fully agree with the conclusion, specially the not sustaineble income part.
In today's SEO (2015) the answer would be a big no! With changes to the google algorithm and the constant updates panda, penguin, what's next...., much of the "keyword url" power is now gone. While there was a day when it made sense to buy a good named .com and expect instant indexing, not so anymore unless the site is very strong coming in ,which in that case you'll drop a minimum $50k. If you are willing to drop that kind of money and the site has a high domain authority, it might make sense as long as it matches whatever product or service that you're trying to sell. Just my opinion...
How does domain pricing work ?
For example, the domain:
www.asapel.com
I need your advise on something. I own https://www.DBL07.co/ focusing on website design. I just bought a domain https://scwebmaster.com/
It's 12years old with 28k links according to aherf and previous owner is giving me everything, old clients and web domain.
So the question is should I:
a. 301 from https://scwebmaster.com/ to http:www.DBL07.co
b change everything onpage at https://scwebmaster.com/ that say scwebmaster to DBL07 and build fresher site there that points to my site
c. do a 301 from dbl07.co to scwebmaster and build new site there
D. none of the above, I should ___________________________
I would create a post based around this in the Q&A section. You would most likely get a lot of good responses.
Buying a website is a risky job especially if the investment is big. My first experience was a big fail. So after some time spent on Flippa I found out about a site called Safe Site Buying which I heard that was created by super sellers from flippa and got a coupon code "flippa50" which was supposed to give me a huge 50% discount. This deal looked pretty good to me so I tried it. They provided me with a full report, 20 pages long and with their own subjective opinion. They were very helpful. When you want to spend more than $2-3000 on a website this service is a must if you ask me.
it can be profitable,i'm selling domains and i can tell you that all providers loose money selling domains,we compesate it with hosting plans but if you look just domain selling where providers buying domain for 7$-10$ and selling it for 0.99$-5$ ...well like say we compesate this with web hosting plans and other services,also on when some one renew domain but since even renewal is done mostly using cupons...than giving free domain with web hosting is best solutions.Well like i say it can be profitable if you want work with domain,buying domains for 0.99$ and than work with it and you can earn nice money.
Compensating it with hosting seems like a good idea. The only concern I would have is do you really make enough money to make up for all the hassle?
nice blog many thanks for share this idea.
No problem, glad you liked it!
Great Post with great information.You described it beautifully that buying domain names are profitable or not.
Thank you for the kind words ;)
Great post, thanks for your time!
I have been buying domains since the early 2000's and infact own quite the arsenal of exact match domains. The days of publishing an exact match and snatching a highly competitive ranking position without the content or reputation to back it have pretty much come and gone!
Yet that does not mean that a geo targeted exact match is not going to give you an edge over certain competators, in fact I have developed most of these domains with basic websites to rack up domain age and some sort of reputation.
By doing so many years ago the exact match domain combined with proper content and on-page optimization I was able to end up locking down a landslide of organic traffic which resulted in me renting out many of these domains to competitors that wanted the traffic that I was already receiving.
Try domainero.com, you will be much happier!
yeh bro, its profitable if you are buying a right domain name
like https://graphicdesigno.com/