Establishing an online business can be a lucrative endeavor. On the other hand, buying the right domain name can also be quite profitable. Further reading: 5 Tech Marketing Strategies for Selling a New Product Online.
In fact, a number of people have found success in doing both. Of course, starting and maintaining a profitable business is undoubtedly more difficult, but the chances of finding success are higher. When it comes to buying and selling a domain, one needs to not only be wise but also to get lucky.
If you would like to see which of these two is a more profitable opportunity for you, keep reading.
How to buy a profitable domain name
Before getting a domain name that provides value, you should know a few things.
There are stories about domain names selling for little to nothing and also about those that generated thousands of dollars. What makes one domain name worthless and the other one expensive?
Take a look at some factors that affect the price:
- Length. A short domain name is more difficult to find than a longer one but also better since it is easier to type in a web browser.
- Keywords. A domain that has a popular keyword in it is a more valuable domain name than the one that has no keywords. This increases the price one can get for that domain name. It is especially true if the keyword is popular in your chosen industry.
- Brandability. A domain that is easily branded logically gets a higher selling price. It is a short name that is easy to remember and type into a browser. It is concise and catchy too. When coming up with a domain name, you too should try to figure out one that is unique, descriptive, and memorable.
- Extension. The choice of your domain extension can also be a factor when it comes to value. The extension is important, as it can affect your SEO performances.
How can you sell a domain name?
How to sell a domain name and make a good profit? Well, before you put it on a marketplace, you should consider the steps listed below.
Appraisal
The first step should be an appraisal. In other words, you should determine the value of your domain name. This can be done by a professional but you can do it too.
However, doing it yourself is a bit difficult. Some people check out sales prices on similar domains and start there. Try to find a keyword-based search engine that deals with domains to find info on the lowest, highest, and average prices.
Set the price
Once you get an idea of a fair market value for your domain, you should start working on a pricing strategy. Even though most domain names sell in the three to four-figure range, if you happen to have a premium domain name, you can often price it higher.
It would be wise to set an asking and a ‘Buy Now’ price immediately. Creating a sense that potential buyers could lose a good opportunity to get a great domain name at any time does wonders since the buying market is often quite dynamic and fast.
Choose an avenue to sell your domain
Many sellers post on more than one domain listing website. They also use person-to-person sales. But for a start, you could take a look at NameCheap and Afternic. These are already established and they have worked well for many sellers so far.
Escrow service
If you want everything to go smoothly and safely, hire an escrow service. You should do this especially if you manage to get a good price. No amount of money is insignificant, but if you end up selling a domain for a lot of money, definitely consider using an escrow.
Selling an online business (website)
Many people still see the process of selling a business as a sad decision. However, this can sometimes be a reason for celebration.
Just think of it this way. You have managed to construct an organization so good that it can sustain itself and make enough money for you and your employees. And if someone is willing to pay good money for it, you can rest assured that you have set the standard high in your industry.
So, let’s go through this process together to help you sell your business more easily.
Determining the worth of your online business
It often happens that owners can’t see the gap between what they think their business is worth and what the market is willing to pay for it.
Well, to close in on that gap, consider the following factors when determining the price:
- Yearly profits
- Sales
- Business growth trends
- Scalability
- Processes and systems within the business
- Business growth trends
- Customer acquisition success
When investors consider buying a business, they most certainly look into these factors. Additionally, they will consider how much money other similar businesses were sold for in the past.
What do premium buyers want?
Simply put, investors want a good return-on-investment and a low risk.
Businesses that offer lower risk fetch higher premiums on the open market. Risky businesses with lower profit margins fall lower on the pecking order. This is precisely why they are more difficult to sell.
To attract premium buyers, focus on the following.
- Diversifying traffic sources and displaying stable growth
- Providing a long history of detailed traffic status
- Generating a high portion of repeat visitors
- Positioning your branding well in the market
- Showing growth potential after the business is sold
Where can you sell your online business?
In general, where you sell your website depends heavily on how much the website is worth and how much profit it generates.
- Auction it off. There are auctioning platforms for websites where buyers can place bids and fight for your website.
- Marketplaces. Specialized marketplaces are platforms that allow business owners to post listings similar to classified ads. One prominent marketplace that sells websites is BizBuySell. This platform best suits smaller businesses. Note that these businesses usually sell for up to $100,000.
- Brokerage. It is also possible to leave this whole process to a professional website broker. Brokers help with finding investors, they do all the negotiation, they structure the deal and finalize the sale. Of course, they come at a price, but if you want this to be handled professionally and don’t want to do it yourself, hiring a broker might be the right solution for you.
- Banks. Investment banks usually get involved when there are larger deals (around $20 million and higher). They usually seek businesses that make over $5 million per year in profit.
Final thoughts
Assess your situation, check out the market, and see if you can get what you are looking for at the moment. If the moment isn’t right, maybe it would be best to hold on for some time. Markets change and no industry is immune to new trends.
So, no matter whether you’re selling a domain or an online business, position yourself the best you can. That is the only way to get a good price and be satisfied with the transaction.