Domain Trading – Turning £100 into £10,000+ a true story

Domain Trading

Domain Trading is one of the most lucrative forms of online income, and has very small maintenance costs attached to it. At present a .uk domain name costs in the region of £6-8 (depending on your chosen registrar) to keep registered for 2 years once you own the domain name.

I have been passively involved in domain trading for a number of years, but have become more actively involved in the last 2-3 years.

I am always being asked about domain trading, what it entails, the appeal of it etc , so I thought I would post a ‘real world’ example of a particular pair of names I bought and sold recently and the domain trading story that surrounds them.

On August 17th 2010 I purchased the domain names and for £50 each from Acorn Domains. I could see both names had instant appeal from numerous angles (which is a trait you inherit from being involved in the domain trading industry over time) so I knew they were good investments. One of my initial ‘tick boxes’ I always ask myself when buying a name is – ‘Do I think I can sell that for double in 12 months or less’ – if the answer is yes, then it usually sways me to buy a particular name I am interested in.

With this particular pair of names, I knew I wasn’t going to develop them, so I just added them to my Sedo account so people could easily get in contact about the domain names, and then I could forgot about them.

On December 7th 2010 I was emailed by a fellow domain trader asking how much I was looking for, and after some negotiating we agreed a part exchange deal for £1500 and the following 5 domain names:

Not a bad trade for a name which cost me £50 less than 4 months earlier.  I have not done anything with those 5 names since acquiring them and yet again I have received offers ranging from £50 to £1,200 on each of them except which hasn’t received any offers or interest so far.

Fast forward to May 2011 – May 25th 2011 to be precise. I receive an opening offer on Sedo for of $500 – again not a bad offer considering what I paid for the name, but again I knew it was worth more than that so I countered $6,000, to which the interested party countered again with $1,500 (approx £950 at the time) along with the comment ‘This is my final offer’. I thought about it overnight and decided not to accept and to counter back $4,500 with the comment ‘This is my final offer’ – to which the seller cancelled and broke off negotiations.  Sigh.

August 2nd 2011 – I receive an opening offer for on Sedo for $2,000. Now this is the type of opening offer that gets my attention. I counter back $15,000 (hoping to meet somewhere in the $7,000 – $10,000 region) and the next day, the interested party counters $5,000. I had a good feeling that this person is very interested and quite serious about buying the name, so I then counter back $12,000. A couple of hours later I receive a counter offer of $8,000 along with the comment ‘This is my final offer’. Now I admit I did think about countering back $10,000 ‘This is my final offer’ but I then thought about risk vs. reward – why try and push another $2,000 at the risk of losing the $8,000? I think the majority of domain traders would have countered back in this situation, but when I considered the fact I paid £50 for this name and I had received an offer which was just shy of £5,000 and was 100x what I paid for the name less than 12 months prior to this, I would be a fool to push my luck, so I accepted the offer. I waited in anticipation for the Escrow payment to arrive with Sedo, as I have been waiting up to 2 weeks for payment on previous names I have sold on Sedo. It arrived within 2 hours of agreeing the sale. Amazing!

The sale was published officially on Dnjournal (the most comprehensive website for reported domain name sales from around the world) and reached number 6 of that weeks ‘Country Code Top 20 Sales’

So from August 17th 2010 – August 3rd 2011 I had turned £100 into £1500 + £5000 + those 5 names I listed above, which I wouldn’t sell for less than £1,000 each so that makes a grand total of £11,500 minimum from a £100 investment over a 12 month period and this is with no input or effort, just some vision and some intuition.

Again this goes to show you can make very good money from a very little start up cost, just using some initiative and waiting for the right names to come up and then reinvesting and scaling it up.

I have said it so many times before, and see so many people continue to make the same mistake all the time. There are 4 main parts to succeed in domain trading at this level.

  1. Reinvesting – Always reinvest the majority of the money you make from domain trading, into more domain names. I see too many people sell a domain name for a few K and then spend it all on pointless things and then have nothing to show for it apart from a few hangovers and a nice designer watch worth nothing, and then having to start all over again.
  2. Investment spreading – I never stick to one ‘type’ of domain or niche. I sometimes reinvest the some of the profits from domain trading into an earning website which requires no input but earns some level of passive income every month. This obviously contributes to the overall income from domain trading, albeit in a different capacity.
  3. Scaling up – When you have more money to play with, then I would advise to buy better quality names for even bigger ROI’s.
  4. Research – Make sure you invest in names which actually have commercial value and the bigger the better. Niche names are good also and can get good results, but it is far better to have a name with 100’s of potential buyers as opposed to just a handful. A quick Google search for the keywords will give you some indication of how popular the domain name could be.

As a direct result of this recent sale, I have spent approx £2,000 of the money made from this bit of domain trading on 2 smallish websites (both with generic domain names) which are currently making approx £150-200 a month between them. This should be able to be improved hugely with a little bit of tweaking, as the traffic they are getting is not being monetised well at all.

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