Author: ToughDomains

Tips on Making Money with Domain Names

helpful-tips1

Domain names have become quite a popular investment over the recent years. Flipping domain names have made quite a few people very rich in recent years. There are sites out there where you can buy/sell domains, while others are auction based where the highest bidder gets the rights to purchase the domain. Auction sites are more popular when you are selling high profile domain names where the value exceeds $1,000. Buy/sell sites usually have the niche domain names for sale.

Generic domain names about a product or a service can be quite a valuable asset. An example of a generic domain being sold for millions of dollars would be www.insurance.com. That domain name sold for $36,500,000 in 2010. These domain names are typically high in value as long as you avoid copyright infringement. Due diligence is very important when it comes to domain names because the court can order you to give up your domain name for free if you are found guilty.

Business domains is another great investment. These domains can be pair with a geographical location for example NewYorkDentist.com is a site where people review their dentist online. These domains can bring in ad revenue due to their specific nature.

-Geographic domains is another great investment because it is relevant to a large group of people. Owning a domain like NewYorkBroker.com can be quite handy when people are looking to start a business for Brokers in New York.

-There are also issues with investing in domains. The biggest issue for domain names is the liquidity and their value. The value of a domain name is very subjective and can be valued very differently. There are different aspects to a domain that can increase its value like the backlinks. Selling the domain is also an issue because a buyer might not come along until months after the initial auction/sale is posted.

There is no way to tell if a domain will yield profit like other investments you can make. Investing in domains is a lot of work and it will take a long of time before you make a high return on an investment.

If you have any questions please feel free to leave a comment on or use our contact page.

10 Most Common Mistakes New Domain Buyers Make

10Everyone has to start somewhere when it comes to investing in domains. Sites like namepros is a great resource for beginners and experts alike. Before you decide to buy a domain, you should look at some of the common mistakes beginners make before purchasing your first domain.

  1. Not all premium domains are premium – The word premium is used a lot in domain auction/selling sites. While they call all these domains premium, only a small amount of domain names are premium.
  2. Valuation tools – Tools like Estibot are a great resource in getting an idea on what a domain name could be worth. While Estibot is a great tool when it comes to valuation, do not expect it to give you the exact value of a domain. There are many factors in why a domain might be worth more or less that an algorithm will not be able to calculate.
  3. Trying to sell a domain when it is registrar locked – New domain buyers might not be aware that editing the registrant information will locked their domain for 60 days. This system was put in place to help prevent a hijacking of the domain. In the event that it is hijacked, the registrar will be able to retrieve the domain.
  4. Do some research before buying a domain – There are a lot of tools out there that can be use to find information about the domain you plan to buy. You might want to use some SEO tools to help you evaluate the value of the domain.
  5. Do not hide your Whois if you are planning to sell the domain – If you are planning to sell a domain, it might is better to leave your whois information unhidden. When your whois is unhidden, it will allow a potential buyer to see your contact information and possibly negotiate a sale.
  6. The hype of new TLDs – There is always a lot of hype behind new TLD and their potential. While some TLD see moderate success, a lot of the new TLD fall flat. You should always do some research before buying into a new TLD.
  7. Auctions – When you are selling a domain through an auction, you should always include a reserve price. You do not want your domain sold for less than what you hope to get out of it.
  8. The length of a domain name – You should be careful when choosing a domain name for yourself.  Your domain name can contain words like Doctor, and Dentist, but do not go for something too long. For example, cosmeticsdentistinmanhattan.com would be too convoluted to read or remember.
  9. Avoid Typosquatting – Typosquatting is a form of cybersquatting where the individual relies on a typo to get clicks on their sites. These websites would attempt to deceive and take advantage of the unknowing user. Websites like Twtter.com and wikapedia.com  were both fined for $156,000, so it is in your best interest to avoid typosquatting.
  10. Park all your undeveloped domains – Parking your domain is not going to make you rich over night, but it is still a great way to make some money out of your unused domain names. Checkout our list of parking websites before making a decision on which parking company to use.

 

If you have any questions please feel free to leave a comment on or use our contact page.

Top 20 Most Expensive Domain Names Adjusted for Inflation

top20

Most people in the domain industry are investors who buy domain names in anticipation of a high return in the future. These investors typically park or develop the website as a way to monetize it.  Developing the website could lead to a higher return because it will already be an established website.  If the website can maintain a high amount of traffic, it can increase the value of that site.  The process of buying and selling these domains does not guarantee profit as there is no way to tell which domains will be profitable in the future. If the domain is a one letter domain or is something that is relevant, the value will generally increase.

There are quite a few domains that sold for over a million dollars and we decided to make a list of the top 20.  Instead of a typical top 20 list, Tough Domains decided to adjust it for inflation to 2015 to see how much it would be worth today.

  1. Carinsurance.com – This domain was sold for $49,700,000 in 2010. When we adjusted this for inflation, it came out to be $55,208,788.
  2. Vacationrentals.com – This was one of the most expensive domains to be purchased before 2010 with the record of $35,000,000 in 2007. When we adjusted this for inflation, it came out to be $40,838,545.76.
  3. Insurance.com – This was another domain that sold in 2010 for $35,600,000. After we adjusted this for inflation, the total came out to be $39,545,932.65. Quinstreet owns both Carinsurance.com and Insurance.com
  4. Privatejet.com – This domain sold for $30,180,000 in 2012. After we adjusted it for inflation, the price came out to be $31,910,230.63.
  5. Internet.com – This deal was finalized in 2009 for $18,000,000. After the adjustment for inflation, the price would be $20,315,056.64.
  6. 360.com – This domain was sold in 2015 for $17,000,000.
  7. Insure.com – This is another domain owned by Quinstreet. This was brought in 2009 for $16,000,000. When we adjusted it for inflation, it is $18,057,828.12 in 2015.
  8. Bankaholic.com – This domain was sold for $15,000,000 in 2008. If this was purchased in 2015 the price would be $16,861,497.01.
  9. Sex.com – This domain was sold for $13,000,000 in 2010. After the adjustment for inflation, the value is $14,440,930.46.
  10. IRS.com – This domain was purchased for $12,500,000 in 2007. After the adjustment for inflation, it is $14,585,194.91.
  11. Hotels.com – This domain was sold in 2001 for $11,000,000. After the adjustment for inflation, the value is $14,585,194.91.
  12. Cardratings.com – This domain was sold in 2008 for $10,200,000. After the adjustment for inflation, the value is $11,465,817.97.
  13. Fund.com – This domain was sold in 2008 for $9,999,950. After the adjustment for inflation, the value is $11,240,941.80.
  14. Porn.com – This domain was sold in 2007 for $9,500,000. After the adjustment for inflation, the value is $11,084,748.13.
  15. Porno.com – This domain was sold in 2015 for $888,888,888.
  16. FB.com – Facebook acquired FB.com for $8,500,000 in 2010. After the adjustment for inflation, the value is $9,442,146.84.
  17. We.com – This domain was sold in 2016 for $8,000,000.
  18. Business.com – This domain was sold in 1999 for $7,500,000. After the adjustment for inflation, the value is $10,796,667.22.
  19. Diamond.com (undeveloped and not parked) – This domain was sold in 2006 for $7,500,000. After the adjustment for inflation, the value is $8,996,148.22.
  20. Beer.com (Parked) – This domain was sold in 2004 for $7,000,000. After the adjustment for inflation, the value is $8,898,929.85.

As you can see, domain names can be quite a high value commodity.  Domainers who were lucky enough to register these domains made a fortune from selling it. While a lot of these domains are developed, some domains like Beer.com is wasted since it is just parked.

Contact us at info@toughdomains.com for a full report.

 

As Certain as Domain Names and Taxes

Domain Name Tax Guide

 

When it comes to buying and selling domain names, one issue that many domainers consistently overlook are the tax implications.  For the purpose of this article, we would like to focus on domainers domiciled in the United States.

According to the IRS, Internet Domain Names are generally regarded as intangible personal property and the nominal annual domain name registration fees are generally deductible.   If a retailer acquires a domain name, then capitalization should also be considered.  To clarify further, we can break down the acquisition of domain names in the following scenarios:

  • An entity purchases a domain name for the purpose of developing a brand; The monies spent are allocated as an asset that can be depreciated over time.
  • An entity purchases a domain name with the purpose selling in the future; The monies spent to purchase the domain name(s) are treated as inventory or cost of goods sold.
  • An entity monetizes the domain name; The monies earned from domain monetization are  treated as revenue.

Any expenses that are incurred with the process of purchasing or maintaining a domain name offset any revenue or cost of goods sold.  Typical expenses include the following:

Registrar fees, Hosting fees, Commissions or fees paid to brokers to buy or sell your domain name, domain development tool costs, or any domain development costs.

Some important tax issues to consider:

  • Purchasing and selling domain names as a business or individual; Businesses use Form 4797 while individuals report the sales on Schedule D for capital gains.
  • Donating domain names; This strategy must be carefully considered because donations of property that has appreciated falls under very strict IRS guidelines.  For example, for noncash gifts with a valued more than $5,000, you will need to acquire a qualified appraisal which must be dated no earlier than 60 days before the donation date and not past the filing date of your tax return.
  • Leased or Owned Domain Names;

A couple of professional references for tax guides at a relatively low cost are available online called Domain Name Tax Guide and  Domain Tax Guide.

Tough Domains does not promote any tax strategy and before making any important decisions regarding your tax affairs. You should always consult a licensed qualified tax professional that understands the domaining industry and has experience in filing taxes for entities in the domain business.

Contact us at info@toughdomains.com for a full report.

Top Parking Companies 2016

Domain Parking:     It is our opinion that this form of domain monetization is the one that is suffering the most in the industry.  The payout is controlled by domain parking companies that provide very little to zero transparency on the true payout.    The payouts are relatively small for the owner of the domain names but high for the domain parking company.  The Domains per Nameserver can be use to determine how many domains are parked at their servers. There are several domain parking companies you can choose from.  Here is a list or what we believe are currently the best ones out there:

 

Bodis

Pros:  Minimum of 5 domains to open account , Easy sign up and approval process

Cons:  Below industry average payouts.

Payout Details:  7th day of the following month. No min payout threshold.  Paypal, Wire

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver:  238,049

 

Voodoo

Pros:  Minimum of 10 domains to open account.  Easy sign up

Cons: Must own quality domains for approval.  Below industry average payouts.

Payout Details:  30th day of the following month. $20 min payout threshold. Paypal, Wire

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver: 143,956

 

Parking Crew

Pros:  Easy sign up.  Payouts can be negotiated depending on quality of portfolio.

Cons: Must own quality domains for approval.

Payout Details:  15th day of the following month. $20 min payout threshold. Paypal, Wire

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver: 9,167

 

Domain Sponsor

Pros:  Geared for high quality domain portfolios.  Payouts can be negotiated depending on quality of portfolio.

Cons: Must own quality domains for approval.  Monitors account traffic for at least 2 months before enabling your payment status.  (Part of the approval process)

Payout Details:  7th day of the following month. $50 min payout threshold. Paypal, Wire

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver: 19,491

 

Rook Media

Pros:  Geared for high quality domain portfolios.  Payouts can be negotiated depending on quality of portfolio.

Cons: Below industry average payouts.

Payout Details:  30th day of the following month. $50 min payout threshold.

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver: 19,491

 

Sedo

Pros: Easy sign up and easy to use.

Cons: below industry average payouts.

Payout Details: 15th day of the following month. $20 min payout threshold. PayPal, Wire Transfer, Direct Deposit (ACH), and Paper Check

Payout Split (Percentage of Ad Revenue Split Between Parking Company and Customer):  Unknown, parking company will not disclose the payout details.

Domains per Nameserver: 1,445,747

 

Tough Domains is working on viable solutions to revolutionize the domain parking industry which we believe will be the next generation in domain monetization.  Our solutions will offer the largest payouts available for ad offerings and affiliate product as well as the ability to offer dynamic relevant content on your parking page with the ability to post a sale or lease sign.

Please contact us at  info@toughdomains.com for a full report.

Top Domain Forums 2016

top 5

There are quite a few forums domain enthusiast like to visit. With the death of DNforum.com, we used Alexa to find out which forums everyone is visiting. For the top 5, we have used Alexa to determine which site has the most traffic.  The lower the number, the better the ranking is.

  • webhostingtalk.com  This forum is ranked 3,819 in the Alexa global rank.  This forum is owned by inet interactive which is own by Penton media.  This is primarily a webhosting site with a section on domain discussion.  This site has pretty good traffic compared to other sites on this list.
  • forums.digitalpoint.com This forum is ranked 5,854 in the Alexa global rank. This forum has a lot of sub-forums, but beware since this site does have its share of scammers.
  • Namepros.com  This forum is ranked 9,929 in the Alexa global rank, is owned by BODIS and is very well known within the domain industry.  This site allows their users to discuss everything about domains from buying to selling and having others appraise their domains.  There are some features that are behind a paywall $5 for individuals and $10 for business.
  • acorndomains.co.uk  This forum is ranked 108,457 in the Alexa global rank. This domain forum has it all when it comes to domain discussions.  They have discussions like buying and selling domains, but they also have sub-forums for domain rentals.
  • domainstate.com  This forum is ranked 186,622 in the Alexa global rank, is owned by above.com and is very similar to namepros.  They have a discussion area for domains as as well as a wanted section for individuals looking for a specific name.  This forum is not very active compared to the other forums.

Contact us at info@toughdomains.com for a full report.

Best Domain marketplace based on Alexa Global Ranks

Top-10-trophy2

We have all seen or heard of different domain market places, but which one is the best? We decided to create a top 10 list of domain market places based on their Alexa Global Rank.  This method of ranking website is not perfect and does have some flaws.  Alexa Rank is only affected by users who are using the Alexa toolbar and users without this toolbar is excluded in their rankings. While this method is not perfect, it does give us insight on what websites the Alexa toolbar users are going to.  This list was created February 26, 2016 and the ranks on this list is subject to change.

Here is the top 10 websites based on Alexa Global Rank:

  • Godaddy.com                                     Alexa Global rank 186
  • flippa.com                                          Alexa Global rank 4,423
  • Sedo.com                                           Alexa Global rank 5,593
  • Domainnamesales.com                      Alexa Global rank 8,840
  • buydomains.com                               Alexa Global rank 13,961
  • afternic.com                                      Alexa Global rank 15,162
  • namebio.com                                    Alexa Global rank 31,327
  • undeveloped.com                             Alexa Global rank 103,081
  • namerific.com                                  Alexa Global Rank 107,894
  • igloo.com                                         Alexa Global rank 116,411

This is our top 10 domain market place based on Alexa Global Ranking.  The ranks for these websites might differ depending on the tools you are using to rank websites.

Contact us at info@toughdomains.com for a full report.

China Is Buying the Internet : Here’s Proof

images-73

Over the past few months, China has been trying to convert their money into foreign investments. The surprise devaluation of the Yuan last year has pushed the Chinese to invest in commodities.  Due to a limitation of how much Yuan an individual is allowed to convert into foreign currency each year, investors are buying up different types of commodities, such as the domain market, a niche area that has investors are quickly venturing to. The main reasons domain names became such a hot commodity is because they are tax-free, unique, portable, and  domain names have been an established market for 20 years.

Domain names are not a type of investment the general public knows about. When there are big sales in the domain industry, there is very little transparency and no one really reports on it even if the demand for specific domain names are growing. Domain names have become an alternate investment for those who understand this market. According to DNjournal, there was over $30 million in domain name sales last year and there are domain names that will fetch for well over $500,000.  For example, domain names that contain only two letters are considered extremely valuable. Domains like GJ.com sold for 694,095 and WE.com sold for 8,000,000.

Chinese investors have been buying these short domains and holding them as a form of commodity because they are considered assets.  Supply dictates that because there is a finite combination of letters in LL.com to LLLL.com , naturally this drives the price of these domains to increase in value.  Before the Chinese started buying domains, combinations such as domains like for example, axpk.com were not worth a lot of money. Due to the shortage of these four letter domains, even randomly put together 4 letter names can sell from a few hundred to thousands of dollars. While the LLLL.coms is not valued as highly compared to LL.coms, there are certain combination of letters that well sell for more than their counterparts. Domains without A, E, I, O, or U, typically sell for a higher amount than domain names that contain these letters. According to namejet.com, sale history, mlgd.com sold for $999 while opxg.com sold for $160. These examples come up very often if you look at their at the sales data.

However, the Chinese have a very specific buy pattern to these domain names. Domain names with the number 8 will sell for a higher price than the number 5. This is due to Chinese culture and the symbolism that these numbers have. The number 8 is often associated with prosperity. The number 4 is considered a very bad number because it is pronounced the same way as death in Chinese. DNJournal reported that the domain 989.com sold for over $800,000 to a Chinese investor last year. In these short domain names, the number 8 will only show up a certain amount of times. This combined with the fact that there are also bad numbers limits the pool of premium domain names to a very small amount.

So Here’s the Proof:

We conducted our researched and mined data from a popular auction site over a 6 month period and we discovered that China accounted for over 56% of the money spent on domain names over the time period of our data set where the individuals were not duplicated.

Contact us at info@toughdomains.com for a full report.