Ideas don’t need to be complex to have value. I present below some simple principles about domain investing that resonated with me. I urge all readers to add their own principles in the discussion section in order to expand the list.
Acquire Domain Names With Many Potential Users
It is easy to get distracted by cute, or highly specialized, names that might just appeal to a very few potential purchasers. Always ask yourself how many legitimate purchasers might desire this name. A good way to help you evaluate that is to see how many existing companies are using similar names already. Just check active listings in the OpenCorporates database. Determining how many similar domain names are developed is another way.
Imagine Yourself As The CEO
Just because a name is related to many different companies, does not necessarily mean it is likely to sell. The domain name must also be of high quality. A useful idea is to imagine yourself as the CEO of a company considering purchase of the name. Would you base the future of your company on this name? Is it good enough?
Is This The Best Use Of My Money?
Perhaps the most important goal for a domain investor should be improving portfolio quality over time. One way to help achieve that is to make the best possible use of each dollar. Whether considering a hand-registration, domain renewal, closeout purchase, auction bid, or other acquisition, ask yourself if there is a better way I could spend this money.
Why Should I NOT Acquire This Name?
It is easy to see the positive features of a name we like to such a degree that we overlook a negative trait. Play the critics role, and try to list reasons why this is not a good acquisition.
Have An Accountability Partner
It is easier to avoid errors when you don’t do domaining alone. Whether you have a business partner, or count on a friend in the industry, a spouse or other family member, or someone else, try to get a second opinion before major decisions. I think it can be helpful even if your accountability partner does not have specific background in domain names. I covered this topic in Don’t Do It Alone.
You Do Not Need Any Particular Domain Name
You will never own every good domain name in a sector or niche. By realizing that, you can avoid over-paying for domain names, or acquiring too many names in a niche. If bidding in an auction, determine the maximum you will pay and don’t go beyond that.
Only Acquire Top-Quarter Names
If domain portfolio quality is improved year by year, then domain names will be easier to sell. A simple idea I heard someone say is to only acquire domain names that would rank in the top-quarter of your existing portfolio. If you do that consistently, your portfolio has to improve in quality.
What Are Your Best Names?
I find it challenging, but useful, to periodically ask myself what are the best 10 or 20 names in my portfolio. That helps me focus on quality. Also, these are your best names and therefore deserve extra effort in improving their chance for sale through effective listing in the right places. Perhaps it is also useful to ask which are the worst 20 names in the portfolio, and why.
What Is The Competition For This Domain Name?
While in some senses a domain name stands on its own, the price and sales probability depends, to some degree at least, on competitor names available to a client. Therefore it is important to ask at acquisition time what are the competitor names. These may include the same term in other extensions, or similar terms in the same extension. Dofo can help you see which of these competitor names are currently listed for sale at the marketplaces, and at what prices. DotDB is a useful tool to see what is registered, and also what longer names contain the term.
Have An Imaginary Boss
Writing down the case for some action almost always clarifies thinking and decreases the chance that you have overlooked critical information. I have not tried this personally yet, but I wonder whether it would be helpful to have an imaginary boss, who required a one page maximum point-form case prior to any decision. For example, if you are considering an acquisition, it might include comparator sales, competitor names for sale, size of the sector market, etc. This list of 18 questions from Hand Registering Domain Names could form a basis, as it is applicable to any kind of domain name acquisition.
Take Breaks
Domain investing can be addictive. One way to control the addiction is to periodically take a break from new acquisitions. Don’t even look at the auctions or check out hand registration possibilities. I have done this several times, and come back refreshed each time. I covered the topic of Taking A Break in a 2019 NamePros Blog article.
Balance Buying And Selling Activities
Many investors enjoy the acquisition side of finding great names at good prices more than the work of listing and selling. However, being alert to the need to balance the effort you put into both the buy and sell sides will help you be more successful. I summarized ideas on this topic in Balance Buying And Selling.
How Much Can You Afford To Lose?
Domain investing is not easy, fast or assured. Before you invest anything, ask yourself how much you can afford to lose, and don’t invest more than that until you have sales to generate funds for new investments.
Have A Plan
I have heard various people say that it is important to have a business plan, review it periodically, and treat domain investing as a business, even if you are simply in it as a hobby or side-gig. The idea of a portfolio prospectus may be one way to make sure your actions are following a plan.
Sell Or Not? Could I Do Something Better With This Money?
When faced with an offer that you feel is negotiated as high as possible, a helpful perspective is to ask yourself the following: Could I do something better with that money? If you feel keeping this name in the portfolio has more value than what else you might acquire with the funds today, then keep the domain name. However, if you could use the funds to get more or better names, then accept the offer and move on.
What Is The Wholesale Price? What Would You Pay For The Domain Name?
When you sell wholesale to other domain investors you are trading off the potential to get much more in the future through a retail sale, versus the certainty of a sale now at wholesale pricing. So what is a reasonable wholesale price? A useful guide is to ask yourself if you were the buyer, what would you be willing to pay for the domain name.
Is This Domain Name Right For Me?
Not all good domain names are a good fit for all domain name investors. It is worthwhile to ask not only is this a good domain name, but is it well-suited to your strengths and interests. This idea was mentioned in What Are Your Domain Name Superpowers?
Is This The Right Opportunity?
Domaining is difficult because the best opportunities to invest are prior to a sector or niche being well established. It is always good to ask yourself whether this is the right time to invest in a sector, or if that opportunity has already passed. This topic was covered in the article Catching Trains And Avoiding Train Wrecks.
Am I A Better Domainer This Year?
In anything, striving to steadily improve is a reasonable goal. That applies to domain investing. At least once a year, ask yourself whether your portfolio is stronger than it was a year ago, and also whether your skills and knowledge as a domain investor have improved. I covered this topic in more depth in Becoming A Better Domain Name Investor.
So, what important simple principles and ideas would you add? Please share with us in the comments section.
This is my 100th NamePros Blog article. I wanted to thank everyone for your interactions with the articles, your good ideas and insights, well-worded counter arguments, and your supportive comments and ‘likes’ or ‘thanks’. NamePros is a truly incredible online community, and I have learned so much from everyone, some of which I tried to summarize in this article. I am very appreciative to NamePros for the opportunity to write for the NamePros Blog. I am sure that the discipline of researching and writing the article each week has made me personally a better investor. Hopefully you have found some of the articles helpful in your growth as an investor too.
Acquire Domain Names With Many Potential Users
It is easy to get distracted by cute, or highly specialized, names that might just appeal to a very few potential purchasers. Always ask yourself how many legitimate purchasers might desire this name. A good way to help you evaluate that is to see how many existing companies are using similar names already. Just check active listings in the OpenCorporates database. Determining how many similar domain names are developed is another way.
Imagine Yourself As The CEO
Just because a name is related to many different companies, does not necessarily mean it is likely to sell. The domain name must also be of high quality. A useful idea is to imagine yourself as the CEO of a company considering purchase of the name. Would you base the future of your company on this name? Is it good enough?
Is This The Best Use Of My Money?
Perhaps the most important goal for a domain investor should be improving portfolio quality over time. One way to help achieve that is to make the best possible use of each dollar. Whether considering a hand-registration, domain renewal, closeout purchase, auction bid, or other acquisition, ask yourself if there is a better way I could spend this money.
Why Should I NOT Acquire This Name?
It is easy to see the positive features of a name we like to such a degree that we overlook a negative trait. Play the critics role, and try to list reasons why this is not a good acquisition.
Have An Accountability Partner
It is easier to avoid errors when you don’t do domaining alone. Whether you have a business partner, or count on a friend in the industry, a spouse or other family member, or someone else, try to get a second opinion before major decisions. I think it can be helpful even if your accountability partner does not have specific background in domain names. I covered this topic in Don’t Do It Alone.
You Do Not Need Any Particular Domain Name
You will never own every good domain name in a sector or niche. By realizing that, you can avoid over-paying for domain names, or acquiring too many names in a niche. If bidding in an auction, determine the maximum you will pay and don’t go beyond that.
Only Acquire Top-Quarter Names
If domain portfolio quality is improved year by year, then domain names will be easier to sell. A simple idea I heard someone say is to only acquire domain names that would rank in the top-quarter of your existing portfolio. If you do that consistently, your portfolio has to improve in quality.
What Are Your Best Names?
I find it challenging, but useful, to periodically ask myself what are the best 10 or 20 names in my portfolio. That helps me focus on quality. Also, these are your best names and therefore deserve extra effort in improving their chance for sale through effective listing in the right places. Perhaps it is also useful to ask which are the worst 20 names in the portfolio, and why.
What Is The Competition For This Domain Name?
While in some senses a domain name stands on its own, the price and sales probability depends, to some degree at least, on competitor names available to a client. Therefore it is important to ask at acquisition time what are the competitor names. These may include the same term in other extensions, or similar terms in the same extension. Dofo can help you see which of these competitor names are currently listed for sale at the marketplaces, and at what prices. DotDB is a useful tool to see what is registered, and also what longer names contain the term.
Have An Imaginary Boss
Writing down the case for some action almost always clarifies thinking and decreases the chance that you have overlooked critical information. I have not tried this personally yet, but I wonder whether it would be helpful to have an imaginary boss, who required a one page maximum point-form case prior to any decision. For example, if you are considering an acquisition, it might include comparator sales, competitor names for sale, size of the sector market, etc. This list of 18 questions from Hand Registering Domain Names could form a basis, as it is applicable to any kind of domain name acquisition.
Take Breaks
Domain investing can be addictive. One way to control the addiction is to periodically take a break from new acquisitions. Don’t even look at the auctions or check out hand registration possibilities. I have done this several times, and come back refreshed each time. I covered the topic of Taking A Break in a 2019 NamePros Blog article.
Balance Buying And Selling Activities
Many investors enjoy the acquisition side of finding great names at good prices more than the work of listing and selling. However, being alert to the need to balance the effort you put into both the buy and sell sides will help you be more successful. I summarized ideas on this topic in Balance Buying And Selling.
How Much Can You Afford To Lose?
Domain investing is not easy, fast or assured. Before you invest anything, ask yourself how much you can afford to lose, and don’t invest more than that until you have sales to generate funds for new investments.
Have A Plan
I have heard various people say that it is important to have a business plan, review it periodically, and treat domain investing as a business, even if you are simply in it as a hobby or side-gig. The idea of a portfolio prospectus may be one way to make sure your actions are following a plan.
Sell Or Not? Could I Do Something Better With This Money?
When faced with an offer that you feel is negotiated as high as possible, a helpful perspective is to ask yourself the following: Could I do something better with that money? If you feel keeping this name in the portfolio has more value than what else you might acquire with the funds today, then keep the domain name. However, if you could use the funds to get more or better names, then accept the offer and move on.
What Is The Wholesale Price? What Would You Pay For The Domain Name?
When you sell wholesale to other domain investors you are trading off the potential to get much more in the future through a retail sale, versus the certainty of a sale now at wholesale pricing. So what is a reasonable wholesale price? A useful guide is to ask yourself if you were the buyer, what would you be willing to pay for the domain name.
Is This Domain Name Right For Me?
Not all good domain names are a good fit for all domain name investors. It is worthwhile to ask not only is this a good domain name, but is it well-suited to your strengths and interests. This idea was mentioned in What Are Your Domain Name Superpowers?
Is This The Right Opportunity?
Domaining is difficult because the best opportunities to invest are prior to a sector or niche being well established. It is always good to ask yourself whether this is the right time to invest in a sector, or if that opportunity has already passed. This topic was covered in the article Catching Trains And Avoiding Train Wrecks.
Am I A Better Domainer This Year?
In anything, striving to steadily improve is a reasonable goal. That applies to domain investing. At least once a year, ask yourself whether your portfolio is stronger than it was a year ago, and also whether your skills and knowledge as a domain investor have improved. I covered this topic in more depth in Becoming A Better Domain Name Investor.
So, what important simple principles and ideas would you add? Please share with us in the comments section.
This is my 100th NamePros Blog article. I wanted to thank everyone for your interactions with the articles, your good ideas and insights, well-worded counter arguments, and your supportive comments and ‘likes’ or ‘thanks’. NamePros is a truly incredible online community, and I have learned so much from everyone, some of which I tried to summarize in this article. I am very appreciative to NamePros for the opportunity to write for the NamePros Blog. I am sure that the discipline of researching and writing the article each week has made me personally a better investor. Hopefully you have found some of the articles helpful in your growth as an investor too.
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