Once you’ve purchased a domain name, how do you make money with it?
Summary:
- Buy –> wait for value to increase –> Resell
- Monetize (show ads) the traffic, while you wait for the value to go up.
The easiest way to understand how to make money with domain names is to think about most people make money with real estate. Let’s say you are going to open up a retail bakery store. Are you more likely to pay more for a 500 square foot retail space in a heavy foot-traffic part of town or for the same 500 square foot space in abandoned warehouse district?
You’ll probably pay more for the real estate with lots of potential customers walking by every day. The value is based on the traffic and the business potential of the location. You’ve heard the real estate motto – location, location, location.
The same is true on the Internet. While location is the same for all (that’s the beauty of the system) the name of your domain matters. The value of the domain is tied to:
- The existing traffic of the domain name — how many people a day visit your domain address.
- The potential future traffic of the domain name — the growth potential of your domain name. With content development and promotion, could the daily traffic be increased dramatically?
Are more people looking for digital cameras likely to type “digitalcamera.com”, or something else like “grape-popsicle.com”? There is an easier path to develop “digitalcamera.com” into a digital camera site. That’s why it’s owning domain names like “digitalcamera.com” or “poker.com” can be a good investment — there are lots of people (traffic) looking for those things.
So, how do you make money? Let’s go back to our real estate example. You make money in real estate by selling your property to someone else that thinks they can a.) hold the property over time and sell it for more than they bought it from you; b.) develop and improve the property and sell it for more than the purchase price and the cost of the improvements, or c.) lease your property to build a business on.
Once you’ve invested in a piece of domain name real estate, for example “greenduckeggs.com”, you can:
- Buy and Wait (least amount of work) — buy the domain name and wait to see if someone contacts you to purchase it. You may have figured out the green duck eggs are going to be the “next big thing” for restaurants and that someone will want to purchase it to capitalize on that interest.
- Buy and Park(slightly more work, but you can make money while you wait) — buy the domain name and “park it” with a domain parking company that will help you monetize the traffic coming to the domain every day. If green duck eggs become very popular, people may type “greenduckeggs.com” into their browser looking for information. Domain parking companies will provide a web page for your domain and will attempt to show relevant ads for potential green duck egg buyers/enthusiasts when they arrive. These domain parking companies will then split the revenue from these ads with you.
- Buy and Develop(more work, but returns could be substantial) — buy the domain name and develop a website for it. By developing the site with valuable content, you may increase the number of people that come daily, and hence the value.
The decision on how to enhance the value of your domain name is really up to you. Some people simply have a “knack” for picking a name that may interest other domain buyers. Other people pick a name and are willing to put in the time and energy necessary to draw traffic to the web site.