Domaining is the business of buying domain names and selling them to someone who values them more. It sounds simple, and the mechanics are. The hard part is patience and discipline.
- You don’t own a domain outright. You rent it yearly, so every name has a holding cost.
- Most profit comes from end users, the businesses that will actually use the name.
- Most names in a typical portfolio never sell. Plan for that from day one.
How domain ownership works
When you register a domain, you’re leasing it for one or more years through a registrar, such as Namecheap, Porkbun, or Dynadot. The registrar works with the registry, the organization that runs the extension. Verisign runs .com, for example.
As long as you renew, the name is yours to use or sell. Miss the renewal and the name eventually expires, goes through grace and redemption periods, and is released for anyone to register. That cycle is where drop catching comes from.
Where investors get names
- Hand registration. Registering an available name at the standard fee. Cheapest, but the good ones are hard to find.
- Expired auctions and backorders. Names that previous owners let lapse, often with existing links and history.
- The aftermarket. Buying from other investors on marketplaces such as Atom, Afternic, and Sedo, or through private deals.
Who buys domains
There are two kinds of buyers, and they pay very differently.
Other investors buy at wholesale prices, because they need room to profit when they resell. Selling to investors is fast but thin.
End users are businesses and individuals who will build on the name. A startup naming its company, a local business upgrading from a hyphenated domain, or a publisher launching a new site. End users pay retail prices because the name is worth more to them than to anyone else.
Almost all serious domaining profit comes from end-user sales. That’s why the question to ask before every purchase is “which business would want this, and why?”
The math nobody likes
A domain portfolio behaves more like venture capital than real estate. A small share of names sells each year, and those sales have to cover the renewal fees on everything else. That share is called the sell-through rate.
Here is a simple, hypothetical example. You hold 200 names at about $11 each per year, so your holding cost is roughly $2,200 annually. If 2 percent sell each year, that’s four sales. To break even, those four sales need to average $550. To make a real profit, they need to average much more. Low-quality names can’t do that, which is why quality beats quantity.
How names get sold
- List on marketplaces. Put names on platforms with buy-now prices or offer forms, and use networks that let buyers purchase from inside their registrar. Our listing checklist covers the details.
- Use a landing page. When someone types your domain, they should see that it’s for sale and how to buy it.
- Reach out. Contact businesses that could use the name. This is called outbound, and it takes care to avoid spamming. See the upgrade play.
- Close safely. Use the marketplace’s checkout or an escrow service such as Escrow.com.
A starter plan
- Set a yearly budget that includes renewals, not only purchases.
- Start with 10 to 20 carefully chosen names instead of hundreds of guesses.
- Write down the likely buyer for every name before you buy it.
- Check trademarks before every purchase.
- Review the whole portfolio before renewal season each year.
Learn the vocabulary in our glossary, then run your first ideas through the NAR Score to see how they stack up.