The Buying and Selling of Web Sites and Domain Names
There is a whole new revenue stream on the internet, one never thought possible a few years ago. Domain names and web sites are being bought and sold, or developed into full blown sites, with the "sole intent" of selling them. It's almost like real estate in the dirt world. Whoever thought that this would be, and could be, a sustainable business model? Lets look at two different ways, people like you are making money, buying and selling domains.
1) Domain name flipping and holding
Using our real estate model, this would be the equivalent of just buying the land without any improvements on it. Here's what happens. Using one of the online services listed later in this article, you ferret out good unregistered names, or buy them from a service that tracks names that used to be registered, but no longer are. Using these resources it has become easy to find good domain names - for a small price - and then using an online brokerage or auction, to sell the name for a higher price. This "flipping" of property is seen all the time in the dirt world with real estate.
You don't have to start big. I was surprised to read about a couple of local college kids that flip domains as a hobby. They use one of the domain finders and register the domains for just $35.00 each, and then immediately list them for sale for $300 - $500 with an online brokerage. They're not into it for the big money or the long haul, they just want (I heard party money) to spend a couple of hours a month finding good domain names and make back a couple of $1000 or so every month.
If you are into it for more of a long haul, and you've acquired a very good domain name, you may consider holding on to it for a while. Domain names are just like real estate, in the sense that the value usually goes up, and like real estate... they're not "making any more of it". There is a finite amount of .coms available. Sure there are lots of .nets and .orgs available, but consider those to be more "lake side vacation properties". The .com will always be the "big city" or "downtown" real estate of the internet.
So if you do find, or own, a great domain name, just park it, or hang on to it for a couple of years. Depending on how good the name is, you might be able to sell it for $20,000 to $100,000 later on. Not bad for a $35.00 a year investment.
If you have a little money in the bank from playing the domain flipping game for a while, consider buying a prime domain name from auction house or broker. If it's a good name, consider having it appraised by several of the sources listed later in this newsletter, that way, you'll get a better understanding of its value. Remember, we've all heard those stories about people who bought "business" or "beer" or "garden" type .coms for a moderate amount of money (of course people said they were crazy at the time), and later ended up selling the domain names and web sites for millions of dollars.
2) Develop the domain names into web sites with traffic
In this model you buy the domain name and develop it to the point where it is capturing traffic and then sell it for a much higher price than you could with just the domain name alone. Comparing this to real estate, it would be the equivalent of developing the land and putting up a house or building. For this example let's consider the domain name to be already registered. Now, you could do all the work yourself, but if you're busy like me and have 10 or 20 domains you want developed, you might be better off hiring talented university students, to do the work for you.
You'll need a graphic designer, to provide the look and feel of the site, icons, logos, graphics, scans, artwork and a user interface. You'll also need a writer to do the research into each topic, provide the copy for the web sites and provide links to industry leaders in each topic. Last of all comes an SEO or search engine optimizer to assemble the pages, using material provided from the writer and designer, into a search engine friendly 5 - 8 page web site.
Here's the nasty part of the plan. We link to 9 out of 10 of the largest industry leaders on whatever topic the web site is about. We then announce the site to the directories and search engines. We let the site "mature" in the search engines gathering links and traffic. We then turn around and offer the web site for sale to the "largest" industry leader on the topic. My guess is they'll either buy it for the traffic, or buy it to kill it, and get rid of all that traffic going to their top 9 competitors. Sneaky huh?
Chances are you'll spend about $600 to $2500 to get a site like this off the ground. But you should be able to sell it for $15,000 to $75,000 depending on the subject and amount of traffic. Not bad for employing a couple of college students. Just be sure to have them sign a "work for hire agreement" in the US or a "copyright and intellectual property assignment agreement" in Canada. This way, there is no question as to who owns the copyright in the work (design, writing, html code). And you have proof that you have the right to sell the work in its entirety, to a third party buyer later on.
Three precautions about registering domain names
1) I would be careful about searching for a domain and not registering it. If you search a domain and do not register it, there is a good chance that it will end up on a list of names searched but not registered, still available for sale. There are also hundreds if not thousands of people around the world looking for domain names at the exact same moment in time you are. The good names are sure to be snapped up the minute they are available. So be sure that, when you are seriously ready to sit down and search for some domain names, that you have your credit card in hand, and are READY to register the ones you want right away.
2) Do not register with anyone that requires a waiting period of several days, an hour, minutes, or even seconds! Do not take this risk with any valuable domain name. Make sure that the place you register or buy your domain name from has "REAL TIME" domain name registration, and it gives you your registration keys immediately. The last thing in the world that you need, is to have your precious domain sitting in a cue somewhere waiting to be processed, where dozens of sets of eyes could be tempted to take it for their own.
This has happened to me, and I know of two other people that have had it happen to them. The domain I was trying to register was sitting in a confirmation queue somewhere. I received an email the next day stating that the name was reserved. The entity that registered the name was none other than the registrar company itself, that I was trying to register the name through.... coincidence?
3) Read the fine print very very VERY carefully. Be wary of "cheap" places to register your domains. They are either losing money to get your name on their mailing list or will end up making money from you in "other" ways. Some require you to pay a fee if you ever want to "activate" the domain for hosting, sale or transfer. Some require additional hidden fees for your "registration keys" (it's almost impossible to transfer your domain name to a different name server or a new hosting company without the keys). Some registration companies want to charge for both activation and the keys. So I caution you very strongly, read the fine print before registering your domain names with anyone. It may not turn out to be as good a bargain as it first appeared.
What should be in a domain name
Some say a domain should be short. Others say it should be a common word or phrase. Many say it should be a household item or single word that describes an entire category. Some people use the phone book to find categories, others use dictionaries of business or investment terms. Some would like something unique, or a "made up" word that can be branded. Me? I prefer keywords or phrases, that people are actually looking for.
Several of the auction services listed below, have rules and guidelines for determining what a domain "should be" worth. They've tried to imply all sorts of rules and will only allow people to apply "value" to domain names based on their sets of rules.
Let's just get rid of all this hooey and get to the real scoop on domains. What really does matter? That's simple, it's the words or phrases that people are "actually" typing into, and searching for, with the search engines. With me so far? Let's do a reality check on the logic of this.
Here we go, back to the prospecting tool at goto.com, click on the link below, and when you get there, click on the first link on the page, "Search Term Suggestion List".http://inventory.overture.com/d/searchinventory/suggestion/ - NOTE: this link is not always available
You can go ahead and check out any of the examples below.
Example #1: Want to register something brandable, short and unique?
spoogie.com - 0 searches
That's right, someone registered this nonsense word or slang. But look at this, zero searches. Even though it would make a cute name for a search engine, they have a lot of "dirt world" and internet advertising to do, if they ever want this word to get branded and take off big time. Try this method of registering a domain with "zero" traffic and you have a long uphill battle ahead of you.
Example #2: Some people prefer to register clusters of domains such as everything "one stop":
one stop shopping 12
one stop auto 20
one stop pharmacy 0
one stop insurance 0
Although, these "one stop" clusters can be valuable if you register a bunch that someone is drooling to buy, they can be expensive to register. They also require significant branding both on and offline. Someone with deep pockets, will need to have the marketing clout and the fulfillment, for all these categories to "make them fly" as a united banner.
Example #3: Following the logic of short is better, look at some of these short phrases and how many times they were searched last month at goto.com:
Clearly, only the phrase "garden" was a winner, the rest of the domains don't really measure up to what you might think they should. Even a two letter domain like "oh" got only 224 searches. Why? Because no one is searching for many of these "short, common, household" phrases or things.
Example #4: Let's look at some popular search phrases, some short, some long:
human resource management 1673
how to write a bibliography 811
baseball card prices 721
baseball card price guide 651
prescription drug information 638
term life insurance quotes 495
really funny jokes 401
wedding anniversary gifts 399
how to make candles 360
I've registered all these domains and will be selling them off in the near future. The point I'm trying to get across. It may be a short domain, it may be a long one. What is important is that it is a "search phrase" or "keyword phrase" that people are "actually" searching for. This is the sole deciding factor, it may be short or long, just make sure people are looking for it! Use the goto.com link above to find them.
What is your web site worth
To put these numbers in proper perspective, you need to multiply them by a factor of 30. Using Alexa searches as a baseline, we are able to determine that if a search is done 100 times on any given month at goto.com, that it is being searched for in the top ten search engine 3000 times. So take any goto.com search number you find and multiply it by 30, to find out how many times this actual search phrase is being typed in, and searched for, in the top ten search engines, every month!
Plus, the average dollar per visitor value on the internet right now is around a $1.25. That means, every visitor to a site is potentially worth $1.25 (to find your $ per visitor value, take gross sales and divide it by the number of unique visitors to your site).
Here's how I determine the value of a site. For example, PrescriptionDrugInformation.com receives 638 searches per month on goto.com. I multiply this number by 30 and then again by 12 to find the total searches on the top ten search engines over the course of a year. I get 229,680 people looking for the exact phrase "prescription drug information". Multiply this by the average dollar per visitor value of $1.25 and you get $287,100 in potential revenue in one year. Your domain name or web site should not be sold for less than this number.
Another example is cellwest.com, a live site that gets 540,000 unique visits per year. Multiply this by $1.25 and you get $675,000. That is what the business is worth to sell it outright. If this number seems big, let's look at it from the buyers perspective.
The selling price assumes only the first time customer, the first year. We must take into account the "lifetime value of the business" on the internet, say 3 years, and the "lifetime value of the customer", based on experience that number is between 5 to 6. (Once a customer has purchased from you and are satisfied, they are 38 times more likely to purchase from you again.)
So, for the purchaser of the cellwest.com example, buying the business for $675,000, we multiply this by 3 years for the lifetime of the business, and again by factor of 5 for repeat customers. The true revenue generating potential of cellwest.com in the next three years is $10,250,000, over 10 million dollars.
Of course, your mileage may vary. A lot of it depends on you, and your relationship with every single one of your customers. How you treat them, how often you contact them, how you upsell them and what they say about you. Bottom line, you'll get back, what you give. Give a lot, expect nothing in return, and be very gracious for what you receive, everything else will look after itself.
But don't take my word as gospel, there are also several sources listed below that will appraise your domain name for you. Some are free, some are paid, some are expert "opinions", other times it's the general public that rates you. My advice is to use my formula above and three other appraisal sources to find an average value for your site. Or just do what ever makes you happy, if you want to sell it, sell! Make some money, have fun, there will always be more opportunities tomorrow!
Places to search for and register domains
The "suggest-a-name search" link will search for domain names based on the keywords you give it. The "deleted domain search" is my favorite, it shows domains that were registered at one point in time, and for some reason or another, are now available for registration.
Advanced domain name hunting, where you can enter three words related to your business interests. You can choose a .net or .com with or without hyphens. After searching on your keywords, the service also suggests many alternatives. The best names in the hunt results are on the secondary market and are sold at a premium above original registration fees. They say "Buy Now" instead of "Register Now" .
Since many of the best domain names are already taken, trying to find a good name can be trial-and-error. Use the "browse our list of available names" to find good available names. You can also try the funky domain name generator located at the link entitled "Search for names containing specific strings". Enter some keywords and wait while the generator comes up with all sorts of cool domain names.
Domainator helps you find a domain or company name. It also searches for trademarks, shows unavailable domains, dictionary meanings of the keywords and translates them into different languages. A great tool, but not yet long domain name compatible, it's limited to a 26 character maximum.
n a m e b o y
A fun and funky domain name generator. Give it two keywords and it will find available domains, registered domains and domains that are for sale from a couple of different services.
Private sources to buy domains
Over 1,000 premium domain names for sale covering a wide range of topics. They offer domain names for a cash sale, joint venture partnership, revenue sharing, equity or combinations thereof. They also offer fee based consulting services to assist people in their search for a good domain name.
Without a doubt, one of the best domain hunting tools available today. Here's where ordinary people can get extraordinary domain names. Here's a tip. Each and every week, thousands of people have their valuable .com names repossessed because of non-payment of their domain registration fee. If their registration authority, doesn't receive payment by a certain date, they repossess the domain name and return it to the pool of available names. Once this happens, ANYONE can claim the domain name for themselves! For a very small fee, receive a weekly report of all the UNCLAIMED domains, that have just been returned to "the pool".
Places to buy, sell and auction domain names
When it comes to selling or auctioning off a domain name, I think it would be best to stick with sites that have the largest number of visitors. The more visitors, the more exposure your domain name will have, and it increases the odds that your name will get sold. On the other side of the coin, some of the less visited destinations are commission free or offer personal services such as assisted brokering and escrow.
Please Note: The term Alexa visits shows the total number of Alexa visitors that site received in the last six months. Although far from being the total number of visitors a site has received, it does show a "relative" popularity for each site. (Alexa is a free browser companion that follows you around while you surf the next. It shows the total number of Alexa visitors, info about the web site, who the site belongs to, related sites, an encyclopedia and links to other resources. You can get it here: http://www.alexa.com).
Alexa visits: 25,815
Since 1996, they have been the Internet's #1 domain name marketplace. They have almost a half million names listed for sale. As well as being able to buy and sell domain names here, they also offer complete domain name services including contract, escrow, and appraisal.
Alexa visits: 21,829
A popular domain name exchange serving brokers, individuals and corporations. It provides news, market trends, community appraisal boards, auctions, management tools and more. A great place to buy and sell domain names.
Alexa visits: 3,893
Here you can search for a domain by using keywords or categories that best describe the type of domain you are looking for. Each domain is stored along with several keywords that best describe its nature. You can also search for "just new arrivals" in the last two or three days. Best of all, you can list your domains for sale by joining for free.
Alexa visits: 1,503
If you have a domain name to sell, you can list it here. It's just $65 to list your domain name for sale on GreatDomainNames.com for an entire year. There are no further commissions.
Alexa visits: 1032
Your reliable domain name partner. They want to help you all the way from developing a concept, choosing the right name and brand, registering trademarks, and choosing the right partners. They have a multilingual, international staff glad to help you.
Alexa visits: 1002
They want to sell your domain names for you. It costs nothing to list your domain names for sale and they claim to have the absolute lowest commission rates in the industry. Be sure to check out their premium domain name showcase.
Alexa visits: 143
They promise to help you efficiently market your domain names, and register new ones.
Alexa visits: 48
They claim to have the largest choice of "category killer" domains on the internet. "A little bit of everything and a lot of great names."
Check or register trademarks and patents
US Patent and Trademark Office
Trademark Electronic Application System
Alexa visits: 24,943
The United States Patent and Trademark Office (USPTO). TEAS is the Trademark Electronic Application System. You'll find step-by-step instructions for completing a trademark or service mark application form properly. It allows you to fill out an application form and check it for completeness over the internet. Using e-TEAS you can then submit the application directly to the USPTO over the internet. The filing fee is $325.00 per class of goods and/or services.
Check who is the registered owner of a domain
Alexa visits: 4,178
The only way to get an absolutely accurate domain report is to lookup the domain in the shared domain registry, locate which registrar has reserved the name, visit and query that registrar's database for the correct information. BetterWhois.com does this for you instantly.
Domain name news coverage
Internet Domain Registrars
Alexa visits: 2,701
All the recent domain name news. A good source for what the .com is going on.
Yahoo.com full coverage tech domains
Alexa visits: 161,448
News stories, related web sites, opinions, magazine articles, editorials and more. If it's domain related and in the news, you'll find it here.
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