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Should You Flip Domain Names for a Profit in 2021?

Should You Flip Domain Names for a Profit in 2021

Flipping domain names for a profit is what many perceive as an easy way to make money, especially in 2021, when e-commerce shopping is at an all-time high, everyone uses the internet, and the idea of being able to make money remotely seems more and more appealing to people. But is it worth it? Should you do it? All of these questions and more are going to be answered.

What is Flipping?

Let’s start simple and answer the question of what flipping is. Flipping in general, and when it comes to a domain is when you buy something at a lower cost, and then immediately re-sell that same thing at a higher cost. This is different from buying and selling in the traditional sense in that when you’re flipping you have no intention of using the product. From the beginning, your plan is to immediately sell the same thing you bought, for as much profit as you can possibly get.

So how do you do this for domains? Check out this how-to guide I wrote on how you can start flipping domains for a profit. It is fairly easy, and almost anyone with a credit card can do it. But when doing it, here are some things to consider:

Things to Consider

Domain Quality

Domain quality is the largest factor that will affect how likely you are to be able to flip a domain. If you manage to find a domain that is very desirable (coffee.com, food.org), or something similar these are like a gold mine. You will almost certainly be able to sell these domains for a ton of profit. But because of that, and because everyone knows that, you most likely won’t find them. Instead, you’ll most likely be settling for a very targeted URL, or what is called a “premium domain”.

What is a Targeted Domain?

A targeted domain is a domain you purchase with the intention to flip to a very specific person, company or industry. They may have a non-desirable or confusing URL currently and a better, or more well-suited domain will come up for sale. If you manage to buy it before they do you may be able to sell them the better domain at a premium. For this, to work best you would best to look at medium to large companies, preferably in the tech space. These companies are most likely going to both see the value in the better domain, as well as have the budget to pay the premium for it.

What is a “Premium Domain”?

A premium domain is a domain name that is considered better than others. This may be something obvious, like coffee.com. But could also be something less obvious, like someone’s name, or a popular search term. Typically these types of domains are easy to spot as they will be marked on registrars. However, because they are considered “better quality” they will also be more expensive to purchase. While a typical domain from Google Domains costs $17 CAD, a premium domain, if you can buy it outright could cost anywhere from $40 – $5000, depending on the quality.

For example, if you search for a domain name containing the word “store” you will come across almost the entire list being labelled “Premium”.

Premium Domain Names for Store

This is because the word “store”, and other related words are highly desirable, and so demand a premium. So while you may have an easier time selling these domains, you will also have to demand a lot higher price to cover the large upfront cost to get them.

Domain Name Extension

A domain extension in a website address is everything to the right of the dot. So in the domain name spendingright.com, the .com is to domain name extension. These are sometimes also referred to as TLDs (Top-Level Domains), and they play a big role in the desirability of a domain name. Originally there was only a handful of TLDs (.com, .org, .edu, .net, etc.), but in 2013 gTLDs were introduced. These are called Generic Top-Level Domains and include the endings like .store, .training, and over 1,500 other options for every single domain available.

Finding the right TLD is key to finding a good domain to flip. The wrong TLD that no one wants and your domain is guaranteed to sell. A good TLD that people want? Or a TLD that can be targeted to a company? Might be gold.

Timeline

How long you are willing to sit on the domain without it selling can play a part in the type of domain you will target for flipping. If you are willing to sit on it for a while and chance that it may not sell you’ll likely go for a non-specific premium domain and hope that it is desirable enough that people will want to buy it. If you don’t want to wait long you’ll go for the targeted approach. By going for the targeted approach you’ll be able to approach the company or individual right away compared to waiting to see if anyone notices.

You may also be able to shorten your timeline on a premium domain sale by advertising and marketing it. However, this will drive up the cost and make it harder for you to get a profit. So consider for yourself what your timeline is and purchase accordingly.

Floating Costs

Owning a domain is not a one-time expense. If you aren’t able to sell the domain within a year you will have to pay to keep it. This means paying a renewal fee every single year. Whether you sell the domain or not. That is a hard choice to make, especially for a premium domain. As you can see for certain domains, not only will it cost you almost $8,000 initially to purchase a domain; but every single year you hold it will cost an ADDITIONAL $8,000. If at the end of your term you’re unable to sell it, that is all lost money.

Premium Pricing is a Yearly Expense

Potential Profit

The last thing to consider for which domain to purchase is potential profit. It may seem like a great idea to swing for the fences and get the most expensive, sought-after domain you can find. But you may find a lot less profit selling an $8,000 domain for $10,000 than targeting a specific company and selling them a $17 domain for $2,500. Of course, you’re also much less likely to find a setup that allows this, but it is important to consider.

Problems You’ll Encounter

So far it has seemed like flipping domains is a walk in the park. Just find a domain that would work, or pick a company and buy one. A little bit of leg work, a lot of profit. But that couldn’t be further from the truth. When flipping domains you will encounter a number of problems, a lot of which make it almost impossible to even start. Here are some of the ones you’re going to come across:

People Would Rather Just Have a Different Domain Extension

Since 2013 when gTLDs were introduced it has become even harder to flip domain names. Not only do you have to match the exact site name someone is looking for, but also the TLD. Frequently, if you purchase a domain name that you targeted for one individual, they may just say no and buy the same domain name with a different TLD. For example, say I didn’t own spendingright.com and you offered to sell it to me for $2,500. Rather than saying yes and paying you, I may just say no and instead buy spending.right or spendingright.ca, or anything in-between. This large amount of endings to a domain can make it hard to pinpoint exactly what the individual wants.

Bots. More Bots. All the Bots.

It’s the internet in the 21st century. Bots are everywhere. And when you flip domain names for a profit is no exception. There are bots all over the internet that constantly scour what they consider ideal domain names and buy them up faster than any human could. They are also able to research faster, buy faster, and buy more than any human. This means if you are competing with a bot for the domain you want, you will lose. And bots are everywhere. So be prepared to lose all of the “ideal” options to a computer.

Domain Expirations

When domains expire or quit being paid for they are often re-sold. This is done through a process of back-ordering and is mostly done by bots. So if I quit paying for spendingright.com and it expires it will get re-sold. Because I have owned this domain for several years, it has several backlinks and isn’t completely worthless it will likely be bought. Bots do this because they see that obviously, the domain was valuable to me, so it will likely be valuable to someone else. And most of the time this is true. So while you can get lucky and find an expired domain that slipped through the cracks, know that if it is expired, or expiring, it will probably not be available.

Trolls

Last is the category of person/bot that I like to refer to as trolls. These are the people who see a less popular TLD was bought and scoop up the other ones. For example, I used to help run a non-profit and it had a website of company.org. Because we were a non-profit the .org felt right, compared to .com or .ca. Within hours of us buying the .org a bot had purchased both the .com and .net versions of the domain name. This is done so that if we eventually grow to the point where we want to own multiple TLDs we have to pay them for it. And while it may sound, and is, extremely predatory, it happens. A lot.

Trolls may also buy a slight typo of a domain name and either redirect it somewhere … not business appropriate .. or they will hold it ransom. This is similar to the reasoning before. As a company grows and becomes more popular they usually start to buy alternate TLDs a well as slight typos of their name, to try and redirect as many incorrect links to their site as possible. Because of this, it will be hard to find targeted domains for a lot of large companies.

Things to Keep in Mind

So now you’ve learned about the downsides that come when you want to flip domain names for a profit, but you still want to try. What do you need to know? Well, here are some things to keep in mind if you plan to flip domain names:

Don’t Be a Troll

I mentioned trolls above as part of the bad parts of flipping domains and that is for a reason. It may seem like a great idea to follow their lead. It is smart, effective, you’ll likely sell more domains. And while that is true you will also burn every bridge you come across. Nothing upsets a company more than having a typo of their website redirecting to something they don’t want. Sure, they will pay you to buy the domain and stop the redirect, but they will also hate you. The art of doing business is the repeat customer. Repeat customers are essential and are something you definitely want to have. Not only are they 54% more likely to buy from you, but when they do they’re likely going to spend 50% more (source). So by upsetting customers before they have even bought from you once you’re only hurting yourself.

ccTLDs

One last thing you will want to keep in mind is ccTLDs or Country Code Top-Level Domains. These are country-specific domain endings. Think .ca, .us, .mx. These domain endings have very specific rules about who can own them, purchase them and use them. Typically it is reserved for citizens of that country (Canada for .ca, the United States for .us and Mexico for .mx, etc.). So if you purchase and try and sell a domain with these TLDs remember two things.

First, YOU have to be a citizen of that country in order to purchase that domain. If you do wrongfully purchase it it is possible it will be taken away from you, and then you’re out that money. Second, make sure your CUSTOMER is a citizen of that country so that they have the right to use it. If they aren’t a citizen they also have the possibility of getting it taken away, and likely coming after you for the money you lost.

So while these domains can be a good way to get great domain names with a recognizable TLD make sure it will work. If you are a Canadian selling to a Canadian company, feel free to grab a .ca. But if you’re a Canadian selling to a US company, maybe avoid it. It will save you and your customer a ton of headaches.

Is it Worth it to Flip Domain Names for a Profit?

Finally, after discussing the pros and cons and everything you’ll need to consider to flip domain names for a profit, we get to the big question. Is it worth it to flip domain names for a profit?

In short, no.

While some people will exceed all expectations and be able to make a substantial living flipping domains most people won’t. The reality of the situation is that domain flipping is so dominated by massive corporations using bots but that any domain you do manage to buy would not be worth it. It either would not be of a high enough quality to warrant someone buying or it simply won’t sell. So if you do try and flip domains, be prepared for them to sit for months, if not years on end without selling. All of that time you will be paying upkeep, renewal fees, and possibly marketing costs. So save yourself the time, save yourself the money and don’t try to flip domain names for a profit. It just isn’t worth it.

Disagree?

Feel free to let me know in the comments below! Tell me of the time you were able to flip a domain, or if you know a way I didn’t cover.

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