Investing in Domains
Since I started creating websites at a young age, I always tried to have good domain names for my projects. I also sold a few — that’s why I want to cover this topic today.
A good domain name can be worth quite a bit. Some Domains were sold for multiple millions.
But unfortunately, Investing in Domains isn’t quite so easy as you think. I bought at least 45 different domain names and selling them is really hard.
Why it is hard
You have to pay monthly for your domain name. So owning a domain has a certain fix cost.
How much you pay depends on the ending of your domain. Because the Top-level domain (TLD), which is the last part of your domain name, is normally operated by a company. This company can decide how much a registration costs.
But that’s not the only cost. Normally, you don’t buy your domain directly from the TLD operator. You buy them from a registry, which itself is a customer of the TLD operator. This registry also has costs and wants to make a profit, so they obviously ask for a higher price than they pay the operator.
(BTW: Operating such a TLD is also not such a great business — I wrote a blog post about that too)
Until now, I only sold two domains. During a period of more than a decade domain ownership.
So I think it is self explaining that I don’t buy domain names for selling, but because I need them for my own project ideas and my company. In total, owing the domains has cost me more than I earned from them.
There are multiple ways to sell a domain. I had multiple offers from people who contacted me directly. That means they found e.g. my Twitter handle or my email address and send me a message asking if I would be willing to sell the domain to them. Some of them even wanted to buy whole projects from me.
The other way of selling domains is using specialized Websites like sedo.com, dan.com, Domain Forums, Facebook Groups or even the registries themselves (Namecheap offers customers also to sell their domains on the Namecheap marketplace for example)
I did both ways and unfortunately even if you use a marketplace which promotes your domain name it’s very hard because not every customer is interested in all domains — they search for a specific domain fitting their business, and you have to have the luck of encountering the customer who actually needs your domain name for his business.
Is it worth it?
For most of the people: No!
The cost of having a domain name is in most cases more expensive than the potential profit.
Some companies have specialized in reselling domain names (Tucows Inc. is one of the most popular examples). But most of these specialists also try to earn money with Advertisements on the domain names and with Economies of Scale.
They usually get a ton of domain names way cheaper than normal customers and also have way more data about which domain names have a higher chance to be bought.
So this is a hard market, and the average John Doe should only buy a domain name for this own usage.