Anyone paying even casual attention to the world of tech can’t have failed to notice some big-money domain acquisitions of late. AI companion Friend’s million-dollar purchase of Friend.com led a spate of CEOs to reveal the story of their own investments. Ultra-premium domains like Friend.com and Public.com are all the rage for ambitious startups.

Okay, you’d have to have been pretty on it in 1995 to take ownership of friend.com, but maybe these high-profile domain sales have got you wondering how to sell domains for profit.

Domain names can be bought by anyone. All it takes is a few dollars and a visit to your favorite domain registrar and you could be the proud owner of a new domain and potentially valuable asset. However, it takes time to master domain investing and find the right domains to buy and sell.

Whether you’re looking for a side hustle or a diversified investment portfolio, buying and selling domain names could make sense. As the percentage of business conducted online grows — it’s forecast to reach almost 30% by 2025 — domain names remain an important asset for brands and business leaders.

So let’s find out how to buy and sell domain names for profit.

Is it Profitable to Buy and Sell Domains?

Yes, it’s absolutely still possible to make a profit buying and selling domain names. Domain names are the real estate of the internet and are a valuable asset for online businesses. Just like real-world real estate makes a great investment, domain names will never go out of fashion — so long as you make strategic purchases based on the domain’s objective value.

The domain name industry remains strong this year and is growing every year. Over the last five years, the industry grew at a rate of 4.6% per year, and the rate of growth is accelerating: in 2023 alone it grew 6.3%. Last year $9.5 billion in sales was made from domain names in the United States.

Domain investing isn’t a get-rich-quick scheme: it takes time and energy to understand the domain market. You’ll have to identify undervalued domains and market them effectively. However, when done right, it’s realistic to turn a profit from buying and selling domain names.

Is it legal to sell domain names for profit?

Buying and selling domain names for profit is perfectly legal: domain names are a digital asset, and like any other asset they can be sold for a profit.

What is not legal is infringing on trademark laws, and in some cases, domain squatting can fall outside the law, if you intend to profit from imitating another brand’s trademark.

The World Intellectual Property Organization (WIPO) places ‘bad faith’ domain registration at the heart of any domain squatting dispute. You can’t intend to profit from the similarity with an existing brand, so owning Nikee.sports could place you in dangerous territory, especially if you place a giant swoosh on the homepage.

Nikee.com and Nikee.org, though, are inherently valuable 5-letter domain names. So long as you aren’t associating the domains with any global sports brands in your marketing, there’s nothing illegal about buying, owning and selling these domains for profit.

Two Strategies for Domain Investing

Phew, with the law off our backs, we can get on with learning how to sell domain names for profit. There are two main strategies for profiting off domain names.

1. Domain flipping

Domain flipping is a short-term strategy where the aim is to sell domains quickly after acquisition. Like flipping houses, where the investor acquires cheap property and sells quickly, domain flipping is all about finding domains that are undervalued. The usual target market for domain flipping is other domain investors who think they can realise a greater value by marketing the domain elsewhere.

2. Buy-and-hold

The buy-and-hold strategy takes a long-term view. This approach attempts to extract the maximum value out of strong domain names by waiting for the perfect buyer — and sometimes includes additional marketing and value-adding exercises.

Let’s take an example. You might find budgetbakery.com on an auction site, and pay $500 for it. Most domain investors will recognize that the keywords, alliteration, and .com extension make this a valuable domain: you could quickly sell it for $1000 to another domain investor, making $500 in the process. Not bad.

But what if you hung on to budgetbakery.com, built a landing page explaining to all potential bakery businesses that it’s a great, memorable brand name, and even launched an email marketing campaign to promote it to existing bakeries? It might take a couple of years before the right buyer comes along, but the domain could sell for $5000 — nine times the profit of the quick sale.

Most domain investors balance both strategies, keeping a small portfolio of valuable names in reserve and waiting for the right buyer. Meanwhile, they flip brandable domains for a quick profit to keep some cash flow and reinvest in their business.

How to Buy and Sell Domain Names for a Profit

Buying and selling domain names is easy — but buying and selling domain names for profit requires time, research and effort. First, let’s take a quick look at the process before we dive into strategies to find success in domain investing.

Step 1: Acquiring Domain Names

There are a number of ways to acquire domain names, but before you do, you must learn how to assess the value of a domain. As with any investing strategy, you must buy undervalued assets, or add value to the asset. We’ll dive into valuing domain names later, but for now, here’s where you can purchase potentially valuable domains.

• Unregistered domains: The cheapest way to buy domain names is to find unregistered domains. These are available through domain registrars for an annual registration fee, usually between $10 and $60, depending on the extension. Most valuable domains have been registered already, but by paying attention to emerging trends you might find available domains.

• Expired domains: Expired domains are domains where the previous owner allowed their registration to lapse. They’re usually auctioned off by domain registrars and present some of the best opportunities to get strong domains at less than a market price.

• Domain auctions: Domain auctions are public sales for either expired domains or registered domains.

• Domain marketplaces: Domain marketplaces like Atom.com are platforms for domain sellers. You’ll find a curated selection of strong, brandable names that might be tough to flip for profit but could become part of your buy-and-hold portfolio.

• Private acquisitions: Lastly, you can buy domain names directly from other sellers. These deals are negotiated privately or through domain brokers and could be a source of high-value domains.

Step 2: Managing Domain Names

It’s important to understand that there are some long-term costs associated with owning domain names. These include registration fees, in the range of $10 – $60 annually and web hosting fees if you have a landing page at your domain.

Renewing your domain registration annually is vital, otherwise, it will expire for the domains you’ve owned and invested in. If this happens, you’ll lose control of the domain.

Choose a reputable domain registrar to manage your registrations and keep your contact details up to date.

Step 3: Marketing and Improving Domain Names

Whether you’re flipping domains or marketing your long-term investments, some degree of marketing will help you sell domains for the best price.

• Landing pages: Consider building sleek landing pages that outline the value of your domain to brands or other investors. You can maximize the value of your domain by marketing it to a particular industry with an eye-catching logo and appealing sales copy.

• Email marketing: Email lists of potential buyers, such as all the veterinarians in the Bay Area if you’ve just found oaklandvets.com at a bargain price.

• SEO: Domains with strong SEO from traffic and backlinks may be worth more to investors and brands alike. Building the SEO authority of your domains takes work, but if you plan on owning a domain for the medium or long term, it could be worth investing in.

Step 4: Selling Domain Names

Now for the actual profit part: where you sell your domain names for more than you bought them (and more than you’ve invested in them, whether that’s SEO, marketing or just registration and hosting costs). There are several ways to sell domains, and what you choose depends on your selling strategy.

• Domain auctions: Domain auctions are a great place for flipping domains because they almost guarantee a sale. However, the sale price will be uncertain and dependent on who’s bidding.

• Domain marketplaces: Domain marketplaces allow you to set a price for your domain. Atom.com’s domain marketplace comes with loads of premium perks, including offering payment plans to entice buyers, ready-made landing pages and supported escrow services to ensure you get paid.

• Through brokerage: Selling privately or through domain brokerage allows you to negotiate a high price for your elite domains. In general, private sales will only take place for ultra-premium domains, like short .coms.

Step 5: Reinvest

You’ve profited, what next? Well, now it’s time to go back to step one, implement what you’ve learned along the way and reinvest in some new valuable domains. And when you’re profiting from domain investing, don’t forget to pay your taxes!

Valuing Domain Names

Domain investing strategies and the practical platforms for buying and selling domains are important. But when you’re learning how to sell domain names for profit, there’s one essential skill: spotting a valuable domain name.

• Domain length: Shorter domains are more popular online, as demonstrated by traffic to the top websites. The average length among the top 10,000 sites is 8 characters, but among the top 100, it’s six. Not all your domains have to be this short — premium domains can be up to 13 characters long but must be made up of brandable words and suffixes.

• Domain extension: If you’re considering domain investing, it’s vital to understand the domain extension ecosystem. There are over 1600 extensions, including .beer, .pizza, and .fashion. However, most extensions are worth very little as they’re trusted by neither consumers nor brands. .com, .org, .net, .co, .ai and .io are more reputable. Tracking new trends among domain extensions is essential to help you find undervalued domains or up-and-coming TLDs.

• Brandability: For end-users, a large part of the value of domains comes from how new companies and startups can use them to build powerful, memorable brands. For longer domains made up of two English words, keyword synergy is important: do the words combine to build a strong visual image for customers?

• Industry relevance: If a domain has high relevance to particular industries, this could increase its value. Fashion, tech and healthcare are all thriving industries where relevant domain names take on a higher value than in less competitive industries.

• Alignment with trends: Both brand naming trends, such as ending in -ly and -ify (think Grammarly or Spotify) and domain name trends (such as the surge in .io names for tech companies) are important to track and can contribute to a domain’s value.

• SEO history: Lastly, a strong history of traffic and backlinks can make a domain more valuable. Online SEO tools like SemRush can paint a picture of a domain’s strength before you invest.

Understanding domain value is key to making a profit from buying and selling domains, and don’t underestimate the time and effort you need to invest to learn about this world. However, there are some great online tools to help you out.

Our domain appraisal tool uses AI to analyse multiple data points, arriving at an accurate estimate of domain value. Give it a try.

What are the Benefits of Domain Investing?

Domain investing is a popular side hustle for a few reasons.

• It’s easy to get started. Anyone can buy and own a domain in just a few minutes.

• You can see high rates of return. A domain registered for $10 could be worth thousands to the right brand. You won’t get a 100X rate of return selling property.
  
  
• Low outgoings and maintenance costs. Unlike real estate investment, maintenance for your domains could be as little as an annual registration fee.

• Passive income through ads hosted on your domains. You can generate passive income by hosting ads on the domains you own, making money anytime a visitor clicks on one of these ads. This is called cash parking and you can even outsource it to a company that takes a percentage of your profits. However, you do lose the opportunity to have a credible sales page hosted on your domain which could hurt selling opportunities.

What are the Risks of Domain Investing?

It’s easy to get started in domain investing, and there’s scope for enormous profits. But, and there’s always a but, any investing strategy entails risks.

• Market fluctuations. While the domain market is consistently growing, and projected to continue to do so, your individual domains may be vulnerable to market fluctuations. For example, investments in .ai domains may not pay out if an AI tech bubble were to burst.

• Overvaluing domains. If you consistently overestimate the value of domains you purchase, you’ll lose money. Do thorough research to ensure you understand domain value and the current market before investing.

• Legal considerations. Despite your best intentions, aggressive trademark protection from well-known brands could place your domains at risk if they’re similar to existing names.

Wrapping Up

Domain investing is a great side hustle, and can even grow into a full-time job as you expand your portfolio. But start slow, and understand the domain name ecosystem and current trends in top-level domains before making any big investments.

Remember, any investment strategy poses risks. You can mitigate these risks with thorough research so that you understand market trends and can estimate the true value of a domain name. Flipping domains short-term can generate a cash flow that protects your long-term assets from market fluctuations.

So now you know how to buy and sell domain names for profit. Why not head over to Atom’s Domain Marketplace to explore the kind of memorable, brandable domains that are up for sale.