How to (Really) Make Money with Domain Names

When I started writing this, my first sentence was “The time for making easy money with domain names has passed.“  It didn’t take me long to realize, though, that there never really has been any easy money in domains.

  • Think it was easy to invest $70 each for domains back in the mid-90s when no one could really be sure at all that the Internet was going to be as life-changing as it has proven to be?
  • Think it was easy to figure out the drop system so you could snatch up expiring domains before anyone else?
  • Think it was easy to work like a dog and max out your credit cards once domain names were a proven commodity?

I don’t think anyone who’s gotten rich off domain names would tell you that it was ever easy.  The landscape has changed immensely, but what makes it hard now is just different than what made it hard 10+ years ago.

I can tell you what I know now beyond a shadow of a doubt, though: if you want a low-risk, high-return way to make money with domains today, forget buying and holding.  Buy a handful a good generic domains and start developing them right now.

Forget Buying and Holding

Rick Schwartz BiddingI love Rick Schwartz‘s model: Find top-tier generics at a good price and hold them for a few years until someone wants to pay you big bucks for them.  That’s how you make several hundred thousand dollars at a time.

Unless you have significant wad of cash lying around, though, you’re relegated to trying to turn $260 into $8,000.  Success stories like that are great, but ask yourself:

  1. For every successful domain investment that you make, how many failures would you have?
  2. How many deals like this would you have to do to keep food on the table and clothes on your kids?
  3. Think you could keep it up consistently?
  4. When you’re done buying and selling, what sort of equity would you have to show for it?

To me, domain buying and selling is like day-trading: Yeah, you hear about some stellar returns, but the risks are just as high (or higher).   For every Frank Schilling or Kevin Ham, there are tons more people who lost their shirts (and more) trying to do the same thing.

The Big, Safe Money is in Development

If you want to make big, safe money with domains today — without laying out big money like Rick — here’s what you want to do:

  1. Find some good generic domain names that:
    1. You can get for a good price.
    2. Are in topic areas that you’re passionate about
  2. Focus your efforts on building those out and driving more and more defensible traffic to them.

Your only risk is the money you use to buy the domains –which you totally control — and the time you spend building them out.  That’s it.  What you end up with in return, though, are very valuable assets that any number of people will be interested in — not just other domain speculators.

That’s because most domain buyers today “are not sellers and even more do not develop.”  Because of that, developing a good domain means that not only will it still be interesting to a domainer somewhere down the road, it will also be interesting to a much wider range of people who are looking for established businesses and have no interest in playing the domain market.

Anytime you can take an asset from one market and turn it into one with much wider appeal, the value increases by default: more buyers = more demand = higher price.

When You Come to a Fork in the Road, Take It

Like I said, I still really like Rick’s model, and I agree with Andy that Warren Buffet would recommend investing in premium generics.  It’s just that I don’t know many people who have Buffet-type money.

So if you find yourself wanting to get into the domain business without cashing out your 401(k), just take the other path.  It’s a low-risk, high-payoff strategy that has worked out great not only for me, but for many others as well.

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Comments

  • [...] AskShane.Org: I don’t think anyone who’s gotten rich off domain names would tell you that it was ever easy. [...]


     

  • Peter @ Domainer's Gazette

    January 29, 2008
    at 7:38 pm

    couldn’t agree more.. domain development *is the only way to go*..

    I was simply bored with trivia.mobi, and prefered to cash out and use the $ to buy more develop’able names..

    I would, though, slightly edit your point b from above:

    Are in topic areas that you’re passionate about

    to

    Are in topic areas that you’re passionate about (and contain competitive cpc terms)

    -peter


     

  • seokool

    January 30, 2008
    at 9:02 am

    yaa……..domain development is more worthy than domain trade


     
  • [...] when I came across AskShane.org’s post excerpt entitled, “How to Really Make Money with Domain Names,” via Sahar Sarid [...]


     

  • Naomi Dunford

    February 9, 2008
    at 11:43 pm

    “For every successful domain investment that you make, how many failures would you have?”

    I think that’s the point people are missing. Yes, there’s a 3000% ROI, but what’s not getting mentioned is that your investment is not the $260 but all the other $260s that you can’t turn around for a profit.

    Cool article, and good point.


     

  • Shane

    February 14, 2008
    at 4:29 pm

    @Peter: I knew you’d be one to agree with me, and you couldn’t be more right — it definitely has to be a topic area where people with money are, or you’re setting yourself up for an uphill climb from the very beginning.

    @Naomi: Thanks for the kind words. I do think having a model you can replicate is key.


     

  • Simonne

    February 21, 2008
    at 3:57 pm

    You are right, developing is worth all the money. I wouldn’t pay too much on a high PR domain, but I would do it for a domain which ranks well for my desired terms.


     
  • [...] How to Really Make Money with Domain Names – I found two good posts in my comments this week. This one comes from Shane from AskShane.org. I’ve never had much success making money with domain names (something I dabbed with a few years back) and in this post Shane explains the proper way to do it. [...]


     

  • Gazit Review

    February 26, 2008
    at 6:47 am

    Most people follow the advice of top pros. These pros know their “advice” won’t work for most people. It helps them stay on top y making people line up like sheep.It’s best to be inventive and create your own methods. Some money bloggers teach concepts rather than methods. A method is useless, but an understood concept is very useful!


     

  • T will

    March 3, 2008
    at 9:03 pm

    I think the key is that it isn’t easy. Any easy $$ opportunity is fleeting.


     

  • slsatchel

    March 24, 2008
    at 1:23 am

    I make more from affiliate marketing than i do from adsense. And all my sites are moderately popular. But i chose a site around a specific niche for affiliate marketing which works a treat, i suggest the others do so aswell.


     

  • Aakash

    March 30, 2008
    at 3:02 am

    I remember I sold a domain at $700 once. Other than that, there hasn’t been any good success. What I sometimes do is make a page offering a free gift in the related niche and put that domain on sale on domain auction services.


     

  • KG Lew

    April 8, 2008
    at 2:13 am

    Making money with domain names isn’t too difficult… you can easily buy a domain for less than $10 , build a small website with a decent amount of traffic… which would require no extra invesment and then sell it someone for a few hundred dollars… post your sale offer in forums and for sure you will find a buyer.


     
  • [...] I wanted to revisit a topic I first wrote about almost three months ago, How to (Really) Make Money with Domain Names. [...]


     

  • BlogSavvy

    August 18, 2008
    at 10:39 am

    I’ve employed this strategy, but I haven’t found any success, maybe I pick names that aren’t popular, or I could possibly employ the idea about development. Possibly.


     
  • [...] in January, Sahar didn’t agree with my advice in How to (Really) Make Money with Domain Names and wrote in response on his own blog: [T]here is gold in development, however, if you think it is [...]


     

  • Namer.ca

    October 9, 2008
    at 8:19 am

    great advice,

    i’ve learned so far that domaining provides a valuable and essential lessons, in domains, naming, marketing etc., that will save you attention capital down the line, but people won’t see its value until you develop it.


     

  • Joe Davison

    November 2, 2008
    at 7:21 pm

    Shane,

    This is a great article.

    I especially liked the point in the comments about having a model you can replicate.

    Joe Davison


     
  • [...] — is to diversify away from a single revenue source.   For domainers, that means starting to build out sites under their domains or partnering with someone who can.  For website owners, that means expanding beyond [...]


     
  • [...] of the reasons behind developing versus parking, have a look at Shane Pike’s article How To Really Make Money with Domain Names at [...]


     
  • [...] If you would like to learn more about monetizing your domains, visit AskShane.org and read, How to Really Make Money with Domain Names. [...]


     

  • bigdaddydomain

    March 17, 2009
    at 3:05 am

    Just like what i’m doing rite now. Bought some cheap but qualified domain, try to develop it on free hosting like blogger, and hoping that someday someone will make a big fat cash offer to me for the domain.


     
  • [...] How to (Really) Make Money with Domain Names: Finding a good domain name is half the battle.? Once you’re done with that, there are some good strategies you can use to make money with them.? One key is defensible traffic. [...]


     

  • Nuno

    December 18, 2010
    at 11:11 am

    Making money without working is possible only when:

    * there’s a mania going on (like tulip, Internet)
    * you’re so lucky

    The only 999.998 ways to make money imply working hard/manage risk.


     

  • Shane

    December 18, 2010
    at 11:14 am

    Well said, Nuno!


     

  • BamaWinner

    May 20, 2011
    at 11:51 am

    I have been in the domain business for several years as a hobby. I thought I was really doing well in the late 90′s when I had a second phone line to receive calls/faxes for domain sales. I was able to sell several to various individuals/businesses and made a little money- but again it was nothing past a hobby. I had over 200 names at one point- when you do the math it can be costly for fees. But I loved doing it- especially when Afternic had the best chat forum to discuss domain names/news!


     

  • Magson Fernandes

    September 4, 2011
    at 1:08 pm

    Is buying domain name and then parking the domain name good for student to make money for pocket expenses?

    I have a domain name http://www.comingsoonlive.com which does not generate any income for me. What should i do? Sell It ?


     

  • Shane

    September 15, 2011
    at 4:52 pm

    As I understand it, parking revenue is way down. It would most likely take you a few years to make your money back and start generating income over and above the cost of the name.

    As for the domain you own, regrettably I don’t think you’re going to make much selling it. You might be able to make $100 or $200 though.


     

  • karen

    September 21, 2011
    at 2:28 pm

    Okay. I am new to this and need help to get started. I have a domain name and topic (of course). So to make money from the page must I try to sell advertisers space for them to advertise their product? If so do I go to google for that? How do you get paid?
    my domain is http://www.womanhealthylife.com
    thanks for any help…


     

  • Shane

    September 22, 2011
    at 9:36 am

    There are a host of instructional articles on this site and a complete guide at Retire In Five Years.

    The short answer, though, is don’t worry about revenue until you’re actually getting good traffic to the site. There are any number of ways to make money, but none of them work if no one is visiting your site.