Are you on the hunt for a simple business model that doesn’t require a lot of advanced knowledge or large up-front investments? If so, then domain flipping might be exactly what you’re looking for.
Domain flipping is a relatively simple and approachable process that involves buying and selling domain names for profit.
It’s a great way to capitalize on the high demand for domains. For example, at the end of the fourth quarter of 2022, there were nearly 10 million new domain name registrations for .com and .net alone.
Whether you’re looking to diversify your online business, gain a new stream of income, build a full-time career or start a side hustle, you might benefit from learning more about domain flipping.
But before you dive in headfirst, it’s essential that you understand what domain flipping actually is, its benefits and risks and how it works to determine if it’s right for you.
What is domain flipping?
Flipping a domain is like flipping a house. You find a new or expired domain name with profit potential, purchase it and then sell it at a higher price.
Domain flipping is also a bit like owning stocks. You “invest” in a domain hoping it will grow in value and appeal to a buyer at some point in the near (or far) future.
You can earn money with this practice by selecting high-value domains and approaching the process strategically. But let’s discuss the nature and value of domain names before outlining how that process works.
Understanding domain names and their value
A domain name is a bit like a website’s address. More specifically, it’s the segment of the URL you enter into your browser to access a website.
It’s made up of two essential components: the second-level domain and the top-level domain (TLD).
Domain names work by serving as a representation of a website’s internet protocol (IP) address, one that’s shorter, more human-friendly and easier to remember.
The value of domain names
Buying and selling domains is certainly profitable, but the value of domain names varies greatly. While some cost just a few dollars, others can cost up to tens — or even hundreds — of millions of dollars.
For example, InterNetX’s Global Domain Report 2023 estimates that carinsurance.com was worth $40,093,609 at the end of 2022.
Okay, but just knowing that some domains are valuable doesn’t help you very much. You’re probably wondering, “Which domains are worth a lot of money?” and “How do you know if a domain is worth flipping?”
What exactly makes a domain valuable?
The value of a domain is based on several factors, many of which are related to the characteristics of the domain itself.
Generally, valuable domain names have high traffic rates, relevant high-volume and niche keywords and search engine optimization (SEO) authority. Additionally, short domains (single-word URLs), brandable domains and older domains are usually more valuable.
The value of domains is also affected by the everchanging markets they exist in. A domain that wasn’t particularly valuable yesterday could suddenly be worth a large amount of money today.
For example, a domain with the phrase “COVID” in it may have been considered low-value prior to 2020. But during the height of the COVID-19 pandemic, odds are that the domain’s value would have exploded. And it’s not unlikely that it would continue to hold more value today than it did in 2019.
While the actual value of a domain isn’t always sky-high, the potential value of domains is undeniable. And that potential value is the reason domain flipping exists.
Now that you’re familiar with what domains are and how they are valued, let’s dive into how to flip them.
How domain flipping works
Domain flipping works by finding high-quality domains, estimating their potential value, buying them and reselling them for a profit.
Let’s break that process down into its individual steps. We also encourage you to read our recent post, How To Flip Domains: A Step-By-Step Guide, for a more comprehensive overview:
1. Find a domain name
Before you start searching for domains, you need to do your research to discover which domain types are trending, which keywords users are searching for, which domains are selling quickly and what the overarching industry trends are.
A simple Google search offers tons of useful information about the strategies other domain flippers use, the general state of the domain flipping market and notable industry changes that might affect domain value.
Once you’ve done some due diligence, you should keep your findings in mind as you conduct your domain name search.
2. Determine the value of your domain
It also helps to browse domain marketplaces to see how competitors are pricing similar domains. You can refer back to the NameBio and dotWhat.co tools to discover prices of recently-sold domains.
3. Register your domain name
Once you’ve evaluated a domain, you can register it with a domain registration provider like Bluehost.
There are a variety of good domain registrars out there, but they aren’t all created equally. You should select a provider based on the following criteria:
- Reliability: Provides what they say they will.
- Transparency: Presents all pricing upfront and communicates it clearly.
- Attentiveness: Comes with 24/7 customer support.
- Reputation: Offers a top-notch user experience and high-quality domains.
- Security: Provides domain privacy protection and data security.
4. Find buyers for your domain
Congratulations — you’ve bought your first domain. Now you’ll need to look for potential buyers who value your domain highly.
Tried-and-true methods for getting great leads include doing a competitive analysis, undertaking more keyword research to gauge who is searching for related terms and using strategic marketing to attract a particular type of prospective buyer or target audience.
Get creative with how you reach customers while flipping domain names and adapt your customer-acquisition strategies to shifting global contexts.
You might also opt for strategies like social media marketing, domain parking or email marketing.
Regardless of which methods you select, you should always highlight the benefits a domain can provide your target audience.
5. Sell your domain
Finally, you’ll sell your domain via a marketplace like Flippa or through a domain broker — a professional who facilitates the sale.
If you want to sell domains quickly, you could list them as “priced to sell.” But if your priority is high profits, it’s better to be patient and list them as part of an ongoing domain auction.
Alternatively, you can choose the “make-an-offer” approach and see what buyers are willing to pay.
Many domain flippers use a mix of these approaches, so the optimal strategy depends on your priorities. If a certain selling method doesn’t work well, you can always try another one next time.
6. Transfer your domain
Once you sell your domain, you can transfer it through a security-oriented program like Escrow.com. These escrow services mitigate the threat of scams by ensuring buyers receive their domain and sellers receive payment in full.
Benefits and risks of domain flipping
Now that you know how this process works, it’s time to go over the key benefits — as well as the potential risks — associated with domain flipping.
Benefits of domain flipping
Low startup costs
While you’ll enjoy higher profits with larger investments, you can start domain flipping with just a few dollars. So compared to many other business models, this practice is accessible for beginners with just a bit of extra cash.
No technical knowledge requirements
You don’t need to understand hosting, coding or website management to start flipping domains. All you’ll need to do is research trends and contexts, then promote your domains to find customers.
With domain flipping, you can start small and grow when you’re ready. It’s easy to begin by purchasing and reselling just a few low-cost domains, and then expanding your business or side hustle as needed.
Potential for high profits
Some domains sell for tens, or even hundreds, of millions of dollars. And while your domains will likely sell for a more reasonable rate, if you buy, sell and market strategically, over the long run you could end up making a tidy profit.
Manageable effort requirements
Although domain flipping isn’t actually passive income, it’s relatively easy. It takes time, energy and conscious effort, but the level of commitment is reasonable and manageable for most people.
Low financial risk
Due to the low startup costs, domain flipping also presents a low level of financial risk. You won’t need to take out a loan or make a huge investment that might not pan out in order to reach success.
Although the financial risks are relatively low, domain flipping isn’t foolproof. Let’s discuss a few of the risks associated with this business practice.
Risks of domain flipping
Copyright or trademark infringement
Due to the massive number of businesses and brands existing today, it’s easier than you might think to violate copyright or trademark laws. Err on the side of caution when choosing domain names to avoid getting slapped with a cybersquatting charge.
Subjective and shifting valuations
Just like the stock market, the domain names market is constantly changing. And just like the price of any item, the price buyers will pay for a domain depends on how much value they see in it. This instability can cause your domains to drop in value unexpectedly.
If a domain is deemed “scammy,” it can get blacklisted. And a blacklisted domain may not appear in search engine results, lowering its value.
Despite these risks, there are plenty of reasons why you should consider flipping domains.
Why should you consider domain flipping?
Domain flipping is a legitimate, legal and profitable business model that’s relatively simple and feasible — even as an industry newcomer.
The beauty of this practice, in addition to the benefits listed above, is its high degree of flexibility.
You can start with a larger investment and develop an entire domain-flipping business to completely support your lifestyle. Conversely, you can flip just a few domains each month as a small supplement to your income. Or, you could opt to build a small operation and scale it over time.
So although it isn’t without risk or challenge, you should certainly consider domain flipping. But it’s important to note that you’ll need to be skilled at researching and willing to be patient in order to make money flipping domains.
If you’re looking to make a quick buck without much effort and can’t regularly dive into keyword and market research, domain flipping may not be right for you.
That’s because although domain flipping is relatively easy, it requires you to work consistently: monitoring evolving keyword and industry trends while taking your time to find the right buyers.
Actionable tips for flipping domains
Here are some useful strategies domain flippers use to make money online and achieve success:
Try domain drop-catching
Domain drop-catching is the practice of buying domains right after they expire. To “drop catch” domains, you buy expired domains (also known as dropped domains) and register them again.
This popular domain-flipping strategy has high profit potential, as domains with a long (and high-quality) history oftentimes have a higher value.
Select domains with common TLDs or trending TLDs
Common TLDs are recognizable TLDs like .com, .org or .net. These URL endings are always in demand, so selecting domains in this category makes reselling easier.
More specifically, data gathered by Statista found that, as of mid-2023, .com is the most popular domain name worldwide, accounting for a little less than 50% of all global TLDs.
If you want to make sure your domain names will appeal to a broad audience, choosing ones that end with .com is a solid strategy.
Nontraditional TLDs can also be profitable, but their value is more subject to change. They come in a variety of categories, including country-code TLDs (ccTLDs) like .in or .au and cityTLDs like .hamburg or .vegas.
The same goes for trending new TLDs. The InterNetX Global Domain Report 2023 points to popular new general TLDs (gTLDs) like .online and .xyz as profitable options, especially in Asia where they make up a significant number of newly registered TLDs.
Get inspired with a domain name generator
You can use a domain name generator while brainstorming to help you come up with good ideas.
Tools like this can help you develop short, memorable and keyword-optimized domain names that you may not have thought of otherwise.
Evaluate each domain’s authority carefully
Determining domain authority helps you gauge profit potential and overall value while further reducing the risk of buying a domain that’s blacklisted, bad for SEO or low in authority for a variety of other reasons.
Moz’s free Domain Authority Checker is a valuable resource when determining a domain’s authority.
Final thoughts: What is domain flipping? A guide with actionable tips
Domain flipping is a straightforward business opportunity that offers a range of benefits, such as flexibility and low barriers to entry.
If you’re willing to invest the necessary time and energy researching and appraising great domain names that customers will value, then you’re likely to have success with domain flipping.
But finding profitable domain names is only half the battle. You also have to sell them. And what better way to do that than with a professional and high-performing business website?
What is domain flipping: FAQs
Yes, it’s certainly legal to flip domain names, and this business practice is completely legitimate. You should, however, exercise caution if you sell or register domain names similar to trademarks or copyrighted phrases in order to avoid the risk of cybersquatting charges.
Yes, it is. While the margins depend on the amount of money and effort you put in, constantly changing market trends and the selling method you choose, it’s still a decidedly profitable business model, especially if you approach it strategically.
You can find profitable domains by searching domain registration services or marketplaces for options that have some or all of the following characteristics: a single-word structure, a history, high authority, high traffic rates and relevant or niche keywords.
Many domains sell for between $10-20 per year. Some sell for just a few dollars while others go for thousands or even millions. So the answer is: It completely depends on a range of factors related to the domain itself as well as the industry contexts surrounding it.