Flipping Domain Names is Rewarding but Tricky Business

By Ryan Round

Flipping domain names or websites has become one of the “urban legend” centers among the many methods of making money online. Nearly everyone involved in Internet Marketing has been told at least one story about businesses or political campaigns paying $100,000 for a brandable domain to “keep it off the market” or to use it themselves. The truth is that there is a nice and in some cases, lucrative revenue stream in the various methods of buy and selling domain names or a Website.

Probably the purest form of flipping domain names, is the purchase of a specific domain name as an investment. This is referred to as “Domaining” and it involves buying and holding a domain name because of a perception about future value. This often involves a short, targeted domain in the .com category. Who hasn”t wished that they had been the first to see the value of a domain like hotels.com or flowers.com?

The reported sale of Chinese.com in 2007 for more than $1 million, is no urban legend. It is one of the successes at the heart of the GeoDomaining niche where domains specific to an identifiable geographic location, nation or culture, are bought and sold.

Domaining is a very tricky business. It is important to keep in mind that in domaining, the value rests solely on the domain name itself. The investor has no intent to develop the domain name so there are no statistics about rank, traffic or revenue, as there may be when flipping a Website. At the heart of the investment strategy is how the domain name is monetized or has a value assigned to it.

As a result of this need to determine the value of the domain names that a “domainer” has pulled into their “portfolio,” an entire business niche for “domain appraisal” has sprung up. Put this term into a search engine, with the quotes, and the search will provide pages and pages of search results. Some of the sites will provide a few free appraisals before a fee is required but, depending on the domain, appraisal fees can range from around $15 to as much as $100 or more.

It should also be noted, for those interested in getting a domain appraised, that the service may need to be viewed as more of an art than a science. Think about home appraisals which are based on the home being compared to homes which recently sold in the area around the home. Domain appraisal is an attempt to compare the domain to ones that have sold within the business, niche, or category that might cover the domain.

An article at sitepoint.com reports that a researcher submitted the same domain to a number of domain appraisal services. The domain name was associated with a term used in the business of stock market trading. When completed, the several appraisals provided a range of values that ran from $200 to $160,000! This example serves to illustrate the speculative nature of flipping domain names and why it can be so very tricky to determine the value of your portfolio.

About The Author

Ryan also runs a site called Monthly Content where internet marketers are provided with all the PLR content, MRR content, Articles and Internet Marketing Training that they need to be successful.