How to Make Money Trading Domains?

Domain trading is the buying and selling of domain names and it is a business that has been going on for many years. It promises a high yield on investment but can be very risky. You can turn $10.00 into $450 or more within a short time and you may buy a domain name without ever selling it. It is an interesting terrain to navigate. If you want make money with this business, you need to get as much information as possible, as the industry is changing all the time, so that you will be able to succeed.

One of the benefits of this business is that you only need to register or buy a domain name and not necessarily develop it or pull traffic to it. You don't even need to put any content. Just own the domain - that's all. You may be wondering where and how to buy domains. You have three options to choose from and you can use them all. The first option is to register through registrars, and this is referred to as the primary market. Top registrars include GoDaddy, NameCheap, iPage, 1and1, Dynadot and so on. The price for registration varies from one registrar to another and there may be additional products added by each registrar.

The second option is to buy an already registered name, and this is referred to as the secondary market. Examples of secondary markets are Smart Choice Domains, Sedo, GoDaddy, Flippa, Afternic, just to mention a few. Pricing at the secondary market is a bit on the high side and this is determined by so many factors like the age, category, number or words, valuation of the names and so many other factors. However, it is important for you to note that a domain is renewable every year and you must factor this into your plan when making purchase and sale decisions.

The third option is to buy expired or auction domains, from sites like ebay, Godaddy auctions, Sedo auctions, these sites can be a great resource to pick up some great domains, just be cautious with auctions and don’t let the thrill of winning over come the value of the domain. I have ended up with several domains this way, and not by being the highest bidder, some newer bidders end up bidding much higher than the value only to win, but they rarely complete the sale, so the seller goes to the 2^nd bidder, me.

Furthermore, choosing the right domain name is very crucial to your success in this business. You don't just go ahead to buy a name you can think of. It doesn't work like that. It's not gambling, and you need to be able to identify marketable names. You can visit news sites like TheDomains, Domaining, DomainInvesting and so on, to know the latest trend in the market. It is not easy to predict a name that will sell but if you get familiar with information about the industry, you will be better positioned to make the right decision. Typically, the best names are short, easy to remember, easy to spell, easy to pronounce and so on.

Bonus: Writing a Domain Sales Letter to the End User - 4 Tips to Do it Right!

I know there is a quiet misunderstanding in the way a domain sales letter should be written when writing a sales letter to the potential end user. I have seen a lot of newbies in the domain forums asking the same question: "How should I write my sales letter, so I get response and manage to make a sale?"

The answer is simple, but not as simple as you think it should be. You must take some time to think what your expectations are with that specific domain name that you want to sell, and by that, I mean what is the price you will accept for that domain.

Some points you need to remember:

1. Be realistic - do not let your greed/ego take control, if a domain is worth $500 to the end user, do not expect he will pay $2,000 for it, most of time he/she will not.

2. Do not be ridicules - I remember when I was new to domains, I thought that my stupid domain was worth $1,000,000, and as soon as I started reading about domains, I realized that they are only worth what someone is willing to pay today, not the potential of tomorrow.

3. When you write your domain sales letter, come up with a pricing strategy beforehand, I suggest you set a minimum price, a meet in the middle price, and your hopes and dreams price. I do this before listing a domain for sale, and sometimes I list at my minimum price, but I always look at offers.

4. Write each letter for the specific end user; do your research on each potential buyer so you know what you are talking about. I mean, learn the niche of that buyer well before trying to sell the domain to them.

Bonus Tip: You can’t be afraid to lose a sale, sometimes two parties cannot agree on a price, an example of this is I received an offer for one of my domains PuppyPride.com, the buyer offered me $350.00, which would have been a great profit, I had only owned it for less than a year, but I thought is was worth closer to $800.00, so I countered at $500.00, they did not except my offer, today the domain name is worth $3,590.00.