What is digital real estate? In the online world, a piece of digital real estate is known as a “domain name”. A domain name is essentially your “street address” on the internet where your customers can find you. Digital Real Estate is a very attractive income lever that requires very little time to set up and get started. Once you are open for business, this income lever can earn for you over time, long into the future. Below are step by step instructions on how to build a business in digital real estate and how to make money from domain names.
So, How Do You Make Money From Domain Names?
From a high level view, you buy low and sell high. Just as in all retail businesses, a successful retail business is built on acquiring inventory at a low cost, and then reselling that inventory at an appropriate profit margin. Domain name reselling is an online retail business with a very low overhead – that keeps your costs to a minimum. Annual carry costs are minimal (less than $9.00 per year), for domain names and as a digital asset, domain names require virtually no maintenance.
As a “digital” form of real estate, domain names can make money similarly to how actual real estate creates a return for investors.
You can buy, hold and resell later after the domain name has increased in value.
You can rent advertising space on your domain name (known as “parking”) to earn money the same way billboards are erected on actual real estate.
You can lease a domain name to a user for a monthly fee, exactly like how you would lease an apartment, retail store front or land.
You can make improvements to the property to add value.
There are several approaches to starting a domain reselling business and building a business in digital real estate. They range from very simple and easy to set up an run (using your domain registrar’s infrastructure only) all the way to complex (building and hosting your own domain name resale platform). I use both approaches for my domain name resale businesses, but for this article I am focusing on the quickest, easiest and least expensive way to get started making money from domain names.
What do I need to open a domain name resale business?
To get started, you first need to sign up with a domain name registrar. Certain registrars have robust domain name reseller platforms that help you market your domain names including:
Discounted Bulk Domain Name Purchasing
Monetized Domain Name Parking
Depending on the level of service your registrar offers, you can buy, monetize and market your domain names from a single platform. Basically, you just need to purchase the domain name, choose a selling price and list it on premium listing or domain auction. This is the simplest way to get started building a business in digital real estate. You can open this business in less than 10 minutes.
Using this method, you are leveraging the platform of your domain name registrar, using their marketing, payment processing and online infrastructure. Your only costs are your domain names. You can set up your business for just the cost of 1 domain name – less than $9.00!
I use GoDaddy as my domain registrar as well as for their cash parking and other domain services. Signing up is free and they have a great domain management system, a discount domain club where I can purchase my domains at a discount (I currently have over 300 domains in my portfolio), cash parking, premium domain name listings, a domain auction platform and a complete reseller platform.
Step By Step Instructions on Listing a Domain Name for Sale on GoDaddy Premium Domain Name Sales.
Here is a walk through of the actual process at GoDaddy:
STEP 1 – Sign Up for a Free Account at GoDaddy:
Signing up for GoDaddy is very simple. Simply click this sign-up link and sign up for your free account (this link will get you 30% off your first purchases).
STEP 2 – Purchase a Domain Name to Resell:
Find a domain name you would like to add to your digital real estate portfolio. This should be a domain name that you can brand, that is also short, memorable, pronounceable and ends with .com. You can easily search for available domain names with GoDaddy's domain name search engine here.
GoDaddy also has a domain name auction area where you can pick up great domain names. Here is what the domain auctions results area shows when searching:
Part of the research that goes into acquiring domain names for your portfolio is to get an appraisal of the domain before purchase. In this example, I used the GoDaddy Domain Name Appraisals tool to analyze a domain name’s value.
I found a domain name Visqui.com with an appraised domain value of $1,152 that I could buy immediately for $8.29. The domain only has 6 letters, is pronounceable and ends with .com, all of which add value to the domain name.
Part of building a business in digital real estate (or any business for that matter) is learning how to acquire inventory at a minimal cost (in this example $8.29) that has a much higher resale value ($1,152 estimated value in this example). With a valuation tool that analyzes previous sales as well as gives tips on what can increase a domain name's value, you have a great starting place on how to price your inventory. It sounds simple, but this understanding of the spread between inventory cost and ultimate resale value is key in how to make money from domain names.
STEP 3 – List the Domain Name for Sale:
Listing a domain for sale in GoDaddy is easy. I go through the process listing the domain name aluwa.com for sale below:
Use the GoDaddy domain appraisal tool to value your domain name. It will give you an estimate of the value based on sales of similar domain names as well as other elements that can increase the value of your domain name.
Choose the price you want to list the domain name. It can either be the estimated value from the appraisal tool (what I used in this instance) or a custom amount. It is good practice to use several different domain name estimators to arrive at a good listing value. You also need to take into account if you have added value to the domain name through branding, logo design or other creative value-add.
Choose the account you would like to be paid into for the domain sale.
If you don’t have a payee account set up yet, click add account and set one up.
Click the “List for Sale” Button
You are all done and open for business!
What do My Customers See When They are Searching for a Domain?
When someone is searching for a domain name via the GoDaddy domain name search engine, they will see the GoDaddy premium domain name marketing page (example below):
You get a “buy it now button” on the page as well as a buying assistance call in number (handled completely by GoDaddy) for interested domain name purchasers. Another great value-add to help you close the sale is the “Why It is Great” area, which details the benefits of your domain (in this instance, having a .com extension and having less than 15 characters is a huge benefit).
If your potential buyer clicks “buy it now“, GoDaddy handles all of the elements of the sale, from collecting the sale amount as well as transferring the domain name to the new owner.
What am I paying to Use My Registrar’s Infrastructure?
GoDaddy charges a scaling commission rate for premium domain name sales that scales down the higher the sale price. Here is a screenshot from the GoDaddy website detailing the commission charges:
The great thing about this commission schedule is that you have no upfront charges to list the domain name for sale. You only pay upon success sale of the domain name.
GoDaddy pays to market the domain name on their website as well as can push marketing out to hundreds of other aftermarket domain sales platforms. (You need to sign up for this and we will go through the process in another post). GoDaddy also handles all payment and customer service related issues.
More Tips for Building a Business in Digital Real Estate
Digital Real Estate is a great income lever and an easy online business to get started. In later articles, I will go through expanding your domain marketing reach with additional tips on how to make money from domain names.
These additional articles include monetizing parked domain names, reselling your domain names through multiple channels online, building your digital real estate brand, and building out your own domain reselling platform.