Are you a Domain Collector or a Domain Investor?

My company motto is – “Stop Collecting. Start Investing!” and for a good reason! When I first started-out in the Domaining industry back in 2007 I realized quickly that I was buying domains that were great collectors items – domains that someday I might develop – but made terrible investments. I quickly learned that the art of knowing which domains to keep and which to drop was an essential part of ensuring you are creating an investment portfolio rather than a collection of domains!

So why do so many Domainers become Collectors?

I have found a lot of times this comes down to a lack of understanding what domains can generate revenue either through sales or monetization. Every week I am sent thousands of domains for my brokerage service so I get a good view into what domains people consider to be investments. Now I’m not saying that there is a strict formula you can use to determine if your domain is valuable…but there are some great ways to determine if your domain makes a good investment.

The problem is – most new Domainers get to a post like this after they’ve already gone-out and registered a few hundred domains that they are certain will make them a millionaire. I hear from many people who read my blog and are ready to throw in the towel! They usually say something along the lines of, “there is no way to make money in this industry. I spent a few thousand dollars on domains and I haven’t made a penny!”

Here is a major issue. When someone gets started in Domaining they oftentimes think that whatever money they put-in they will get back ten-fold. While this happens every day…it takes making wise investments to generate solid returns. The same is true in the stock market and the real estate market…but with Domaining people expect instantaneous results.

So how do you know if you’re an Investor or a Collector?

This is very easy to determine! Take all of the domains you own and calculate-out your yearly registration fees. Now look at how much revenue your domains produce. Now are you making money or losing money?

If you are losing money then at the moment you are just collecting domains. You might have some domains that make a good investment but overall you are collecting. If you are making money then you are investing as an investment is something that pays you!

Now you probably want to know – how can you become a Domain Investor?

To invest in domains you need to start making some money. Domainers make money in two ways – selling domain names, developing and monetizing domains. It doesn’t matter which strategy you pick – the idea is still the same – build a profitable business!

If you are going to be selling domains you need to understand the basics of domain value. You can use a service like Valuate to get a rough estimate of your domain’s value. You’ll want to also use a tool like the Google Adwords Keyword Tool to determine how many exact month searches there are for your keywords as well as the CPC your keywords command.

If you are going to be developing and monetizing domains then you need to understand how PPC and Affiliate advertising programs work as well as some SEO basics so you can build-up organic traffic. Having domain names with keywords that exactly match popular search queries could mean some nice consistent traffic and revenue.

This post really could be turned-into an entire book as there is a LOT to cover within this topic. That being said – the concept is simple – are you a Domain Collector or a Domain Investor? Ask yourself this question and if you are just collecting – don’t panic – just get proactive and start investing!

{ 10 comments… add one }

  • Mojito Recipe March 15, 2010, 6:57 pm

    Don’t forget to add in the cost of server accounts!

    Reply
  • Geek Domainer March 15, 2010, 8:28 pm

    Great post and it is indeed so true. I come across so many people who are new to this industry – randomly picking up domain names , wasting a ton of money and complaining that this industry is saturated.

    In my humble opinion, I think the major factor before purchasing domain names is to a fix strategy of monetizing them. Understand and learn how to generate money off domain name via parking, affiliate marketing, development or end user sale. Once you know your way around this industry, then take the first steps – purchase not more than 10 domains names after research and try applying your monetization strategy on them.

    If you don’t land up making money, then there is something wrong in either the monetization model or the domain name itself. Iterate and improvise your strategy.

    Invest slowly and carefully and you would see good returns.

    Cheers,
    GeekDomainer.com

    Reply
  • Daniel Dryzek March 15, 2010, 10:04 pm

    Once upon a time I was a collector, now I am an investor 😉 I guess a lot of domainers were to some moment collectors and then some of us realized that having a bunch of domains is not enough and we need to earn money. Because as in any other business, in domaining you need your revenue to be higher than costs 🙂

    Reply
  • Aaron Bennett March 15, 2010, 10:26 pm

    It’s very easy to fall into that trap, especially when you are moonlighting as a domainer and have a secure income. Entirely too easy to look at your portfolio and sigh “I have so many ideas, this will be great!” for years while the reg fees recur when you are not scrambling for cash. The motivator for me was my first sale and the news of a new life preparing to enter the world! Nothing like hearing you only have 7 more months of freedom to motivate you, lol!

    Nowadays, new domainers have such amazing resources available to them; the community is active and generous. I, for one, have learned a ton from you and the many guys/gals who share the lessons they’ve learned the hard way (as well as those learned the easy way, through success!).

    I feel fortunate that between domain sales and other domain-related income, I’ve broken even in my first year with a minimal amount of focus. The wife considers this a success as she had serious doubts (and worried that I would be hemorrhaging money), but I’ll not feel comfortable until the domains are earning a profit (not counting sales). Thanks for the reminder as well as your steady stream of rich information.

    Reply
  • TechFilipino March 16, 2010, 4:03 pm

    I’m guilty of being a Domain collector, but am starting to learn to become a domain investor. It’s really tough to make this transition as I’m a web developer like you, but I’m getting close to the improvements.

    Reply
    • Felipe March 25, 2018, 3:24 pm

      Hello. Sports domain?

      Reply
  • Travis March 17, 2010, 2:38 am

    Yes I think all of us in the domain industry has been through this process of learning the difference between a collector and investor. I think it just takes time and experience to really learn the difference. It’s very easy to get caught up on names that sound good but really never amount to much. Being careful about what you buy is key in my opinion.

    Reply
    • Morgan March 17, 2010, 12:34 pm

      Thanks for the comment @Travis – absolutely true – it all starts with careful buying and doing your homework BEFORE you buy a domain 🙂

      Reply
  • Gokhan November 28, 2014, 9:20 pm

    I have 31 domains with new gTLD’s. You might be very interested with some of them. I’m selling them all out. This business is just not for me. Really low price, trust me. Contact me via ozencgokhan@gmail.com

    Reply
  • Dilip Doshi September 6, 2015, 8:54 am

    Hi, I have some interesting domain names for sale. Kindly contact me on doshidilip@hotmail.com if any one likes to get names.

    Reply

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