Ask anyone who spends at least a decent portion of their time online and they can tell you a few domain names for their most frequently visited websites. Ask anyone who runs a business online, or does marketing for one, and they will tell you that one of the key factors to having a successful website is having a domain name that is catchy, memorable, and/or easy to type. This is why some companies will pay large amounts of money to own certain domains, and how people have taken advantage of that by flipping internet “real estate” in the form of domain names.

Domain names: Explanation and importance

In simplest terms, a domain name is a website’s base address on the internet. Google.com, Netflix.com, Npr.org, etc… These are domain names of some very popular websites. While the domain name may be followed by all kinds of things that point you to a specific portion of a website, that domain name is usually constant as long as you are on that same site.

When a domain name is simple and relevant to the company, people are able to remember it easier, thus leading to them visiting it more and telling others about it. It also makes the website easier to find in search engines. Having a domain name like “newgameunderproduction.com” will gain a lot more traffic from interested internet denizens than “randomgibberish491xp.net.”

Buying and flipping online

In the physical world, the most common way people buy and flip properties is by finding a home that is selling for cheap, buying it, fixing it up and selling it for (hopefully) more than the cost they put into it. Flipping domain names online is a little simpler (no remodeling required), but also much more strategic and information based. Anyone can buy a domain name, and as long as you don’t do much with it they are usually quite cheap to purchase and maintain ownership of.

However, you can’t simply buy a domain name that is a bunch of random letters and/or numbers and hope some company will come along and buy it off of you. Why would they? A good domain name needs to be relevant to a company, product, movie, video game, etc. So the only domain names worth trying to buy and flip are those that might be relevant to things that don’t already have a website, which usually means things which don’t exist yet or are only in the early planning stages! This means that people who try to make money by flipping domain names are betting on the future, not too different from what professional stock traders do, only in a different format and market.

Domain name strategizing

So, if only interesting and relevant domain names are worth anything, how do people choose domain names to buy? The biggest part of the answer is both very simple and incredibly vast: information. We live in the information age, and nowhere is that more prevalent than on the internet. To know what domain names might be worth a lot of money one day, a company or individual needs to gather as much information about the future as possible and sift through it to see what things (could be anything from new companies to new scientific advances to new popular artists) are going to need a good domain name.

Beyond the act of gathering and sifting through information to find out what up-and-coming things are going to need a domain name, there are many strategies for honing the instincts and skill set of a domain flipper. Expert domain flippers are able to appraise a domain name’s worth at a glance, and are usually quite accurate when doing so. How do they do this? Their experience lets them judge the domain name on several key factors of value: length (shorter is better), how brandable/recognizable the word(s) in the name is, history (domain names that have been around longer are almost always worth more), and extension (.com, .net, .gov, etc. The domains worth the most have .com extensions.).

How much money?

The most common question people ask when thinking of starting to flip domains is along the lines of: How much money could I actually make doing this? The answer is “a lot.” Some domain names have sold for hundreds of thousands of dollars! However, these are the exceptions, not the rule. Thousands of domains change hands daily, most only for small amounts of money. Most successful domain flippers will bring in a good amount of money, but only a lucky few will ever be millionaires.

Here are some of the domain names sold by domain flippers that made them millions:

Power.com sold for $1,261,000 in 2014.

DataRecovery.com sold for $1,659,000 in 2008.

Dating.com sold for $1,750,000 in 2010.

114.com sold for $2,100,000 in 2013. (Why? The number means “information” in China.)

Youxi.com sold for $2,430,000 in 2014. (Another Chinese sale. Youxi means “games.”

Shopping.de sold for $2,858,945 in 2009.

Vodka.com sold for $3,000,000 in 2006. (Was bought by Russia’s biggest vodka maker, unsurprisingly.)

Whisky.com sold for $3,100,000 in 2014. (In an interesting side note, the seller had bought the domain name for absolutely nothing in 1995.)

Medicare.com sold for $4.8 million in 2014.

Slots.com sold for $5,500,000 in 2010.

Z.com sold for $6,784,000 in 2014. (Z.com is one of only 3 single-letter domain names currently in use.)

And, the biggest domain-name-only transaction to date: sex.com sold for 13 million dollars in 2010! The old adage is still true — apparently, “sex sells”.