There are plenty of guides, ebooks and courses out there on domain investing for newcomers, I wrote a piece here that has seen a lot of traffic since it was written, to give a quick synopsis for the TL;DR crowd who does not and will not read a long lengthy course.
Namepros member Dave wrote a very good, straight to the point post that all those coming into domaining should read:
I see so many posts from newcomers asking how to make money from domains so I thought I’d write you all a little guide on the different possible types of investment in domaining. Consider carefully how you want to invest before spending your hard earned money. In my opinion the best investment strategy is dividing your investments across all different possible types.
This guide is catered to the 99% of typical domain investing. Getting into that top 1% means you need to learn to do all the following correctly in the first place.
PLEASE NOTE that all the following is not to be considered as definitive investment advice. Please use this as only a guide to help better learn and understand more about domain investing. Afterwards do your own research further before spending money.
The following guide is also only for .com domains.
Firstly we have the brandable type of domain. These are usually conjoined keywords / phrases or keywords that match well together like a colour + animal. They can also be known business niche keywords combined with an adjective, noun or verb.
Examples of brandable type domains:
- Intellizone.com (combines intelligent + zone)
- Hempwave.com (business niche + word)
- VrHome.com (business niche + word)
Brandable domains are one of the more difficult but lucrative types of domains to invest in. They are lucrative because they can typically be acquired for lesser amount than other types whilst yielding huge ROI. Most brandable type domains don’t usually have an existing end user, you’ll most likely be investing in these with the hope of a startup naming their company, product or service with the matching name.
- Lower acquisition cost than other types
- Still plenty to be hand registered
- Has potential for the most ROI
- Very low chance of being able to outbound
- Can take a long time to sell
- Low percentage sell through rate
Brandables are typically the domain of choice for those starting out with a small amount of capital. For example if you’re only starting domain investing with $100 capital then it’s either this or GEOs as your choice of investment.
You want to typically try and acquire brandable domains for 50x less than what you’d expect to sell it for. This is because sell through rate is typically 1-2%. The sweet spot for most brandables is the low 4 figure range. Of course there are 5 figure+ brandable sales but they are less common. The higher valued domains typically have a better sell through rate so you have more leeway on acquisition cost.
Tiered acquistion cost of brandables:
- $1000-3000 sale price: Acquire for between reg fee – $50 at 2% expected sell through rate (50x cost)
- $3000-5000 sale price: Acquire for between reg fee – $250 max at 5% expected sell through rate (20x cost)
- $5000-10000 sale price: Acquire for between reg fee – $750 max at 7.5% expected sell through rate.
Take a look at brandable marketplaces like Brandpa or SquadHelp to get a feel of what makes a good brandable.
Next up we have the GEO type of domains. These are a service or offering targeted at a particular city, town, state or country.
Examples of GEO domains:
GEO domain values are based on primarily the following factors:
- How many companies are offering said service in the geographical region
- Search volume for the keywords
- Advertising competition for the keywords
GEOs can be a great investment if you know a particular business niche really well, or if you know the competitors within said niche.
- Relatively high sell through rate compared to brandables, typically looking at 10-15% depending on keywords and location
- Best type for outbound by far, so it’s a great choice if you see yourself as a salesman
- Easier to identify what makes for a good GEO domain compared to other types, they’re typically very intuitive
- One of the lowest ROI of all types, the majority of GEO domains typically only sell for $xxx
- More time consuming to invest in, requires plenty of research to identify good niches / markets to target
As mentioned most GEO domains typically go for $xxx with the sweet spot usually around low to mid $xxx. This means you’ll only want to acquire for between reg fee – $99 at most. Yet again of course there are more premium GEO domains but this guide is targeting the 99% as I stated.
The value of GEO domains increases along with search volume. Consider the following search volume to sales price list as an example only:
- Search volume between 100-499: $100 – $299 sales price.
- Search volume between 500-999: $300-799 sales price
- 1000+ search volume: $800-$xxxx+
GEOs are again a good choice for those just starting out with less capital. Take a look at deleted .com domains or closeout auctions to try and find some gems.
Next up we have keyword domains. These type of domains are what people search for. Their value is primarily based on the keywords search volume online. GEOs, generics and category killer domains are actually highly specific subsets of keyword domains. The difference between general keyword domains and those specific types is that they are typically more targeted searches within a particular niche.
Examples of keyword domains:
- CBDOil.com (CBD but specifically CBD oil)
- HotelsNearMe.com (not just hotels but hotels near me)
If you choose to invest in keyword domains you typically want to only buy keyword domains that have medium to high competition in advertising and above 1000 in search volume.
These are domains whereby the keywords are the exact match for an entire niche of product, offering or service.
Examples of category killer domains:.
Category killer domains are some of the most valuable. You either have to be incredibly lucky to register them ahead of a niche blowing up or you will require a lot of capital to invest in this type of domain.
Domain investing is NOT a get rich quick scheme. It takes time, effort and realistic pricing if you want to have any hopes of making a successful return on investment.
The numbers and figures I’ve used in this guide are based upon my personal experience with the various types of domains. When I started out in domaining I wasted money on nonsense domains for a long while before I turned a profit, so with this guide I can only hope to help others not do the same. Since those awful beginnings I’ve only ever been in profit from domaining, which to me is a success as I’m sure many will agree.
Please only take you what I’ve written here as a guide and reference to help in your own investment choices.
Well done, Dave currently has conference.io for sale and I wanted to provide a link here as a thank you for the well written post.