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Domain investing—the practice of purchasing domain names with the intent to sell them later at a profit—can be an awesome and rewarding experience. Over the last 17 years, I’ve had the privilege of working with domain investors of all sizes and stages. One of the most frequently asked questions that I receive from new domain investors is regarding domain investing pitfalls that I’ve seen in my decade of experience. Today, we’ll cover what investment traps I tend to commonly see.
While I can’t cover all of the possible pitfalls in this guide, I want to share with you some of the most common issues I see for new domain investors and how you can avoid them. Here are six of those pitfalls:
Let’s get started.
Key Takeaway: Domain investing rewards patience and hard work, not shortcuts—expect to hold domains for months or years before seeing significant returns.
It is probably best to get this one out first: Investing in domain names is not a way to get rich quick.
It is common to see blogs or social media posts that talk about how a domain was bought for $200 and then sold for $20,000. With those sorts of numbers, one might think that it is easy to make money on domain investing.
What you aren’t seeing in those posts, however, is the overall strategy and hard work that the owners put into their portfolios that led them to those individual sales.
Most successful domain investors that I know are some of the hardest workers I’ve ever met, so if you are looking to get rich without much effort, then domain investing is probably not for you.
Key Takeaway: Investing time in education before spending money on domains dramatically increases your probability of success.
I’ve met too many new domain investors who have not taken the time to learn from existing knowledge that has been shared on how to invest in domain names before taking the plunge themselves.
While it might be possible to be successful without learning from others, your probability of success is much higher if you take the time to learn from the mistakes and successes of others and then apply what you learn to your own strategy.
Here are a few resources that I recommend to anyone interested in getting into domain investing:
You can contact GoDaddy’s Partner Seller team for a free consultation by emailing: [email protected].
Key Takeaway: Start with a small portion of your budget, test your strategy, and only scale up after you see indicators of success.
Nothing pains me more than talking to someone who has spent their entire investment budget on bad domain names.
Over the years, I have been on more phone calls than I can count where I had to break the news to someone that they just spent their entire budget on domains that would not sell. There isn’t a single domain investor who hasn’t made mistakes or bought some bad domains in the beginning. Everyone does it at some point, so the key is to move slow enough that you have time to learn from your mistakes and adjust.
Define your domain investing strategy and lay out a plan on how to execute and measure its success.
Test out your strategy, refine it as needed, and only after you see indicators of success should you accelerate.
If your strategy fails, that’s OK. You can regroup, do some more research, and come up with something new. Make calculated decisions on what you are going to do; don’t just jump headfirst into a strategy that you have not proven yet.
Key Takeaway: Emotional attachment to your domains prevents you from making smart business decisions and churning a profit.
This is an easy domain investing pitfall to fall into.
Growing up, I collected sports cards and memorabilia as a hobby. As time went on, I discovered that I could buy cards off eBay and sell them at my local sports card shop for far more than I originally paid, allowing me to fund more acquisitions of sports cards. Once I learned this, I decided to transition my hobby into a business.
After I’d made the decision to become a business, I was looking to acquire an autographed Peyton Manning helmet and considered liquidating some of my basketball card collection to fund it. I brought my collection to my local shop and became upset at the offer that was being made on my Steve Nash and Shawn Marion rookie cards. I was a hardcore Phoenix Suns fan and, to me, those cards meant much more than the face value that was being offered.
It was then that I realized that I had grown attached to my basketball card collection and was not truly willing to part with any of them at a reasonable price. My reluctance to let go of those cards meant that I was still a hobbyist and not a business.
Over the years, I have run into a lot of domain hobbyists. It’s OK to have a handful of favorite domain names that you would be hard-pressed to part with. But if you are a new domain investor and you are too attached to your domains, it can become difficult to churn a profit.
If you are going to turn domain investing into a business, it is important that you treat it that way.
A good philosophy that many domain investors use is to ask yourself: “If I sold this domain for this price today, how many other similar quality domains could I buy (whether on expiry or elsewhere) to replace it?”
Key Takeaway: Before buying any domain, you should be able to clearly articulate how a business or person would use it.
When buying a domain, you should be able to explain how a business or person could use the domain.
If you have a hard time explaining the value the domain is going to provide to a business, the chances that a business or person will pay a premium price for the domain is low.
Taking it a step further, pay attention to the word structure of the domain.
Take the time to walk through the use case of the domain you are interested in.
An example from my own domain investing is PodSoup.com. I saw the domain on a GoDaddy closeout auction (a type of auction where expiring domains are sold at reduced prices) and became excited because I could think of several use cases for the domain. First, I knew that podcasts have been on the rise, and I could imagine some sort of soup-for-the-soul podcast being able to brand itself as PodSoup.
Next, I thought with all the at-home meal kits, wouldn’t it be cool if someone came up with a system to make a soup into a little pod that you just need to drop into a bowl of hot water for amazing at-home soup — a literal pod for soup.
Feeling confident in my use cases, I went ahead with my purchase of PodSoup.com. After I received my new domain, I listed PodSoup.com for sale on Afternic and received a sold notification within less than a month. With the domain selling so quickly, I started to wonder if maybe I hadn’t priced the domain high enough. This seed of doubt leads me to my next tip.
Key Takeaway: Trust your research and pricing—if a quick sale lets you reinvest in multiple quality domains, you made the right decision.
Every domain investor has an experience just like mine.
They buy a domain name, research a fair sales price, and list it for sale. The domain sells quickly, and they immediately second-guess if they lost money by pricing it that low.
And yes, that might be possible — you might have been able to sell the domain for more than it sold for. However, it’s also possible that if you had priced it higher, you might not have sold the domain at all.
My advice is to do your research, price your domains appropriately, and be happy with what you get.
If you are able to get a price for the domain that allows you to buy more domains of similar quality, there is nothing to regret.
If you are not able to replace the domain names you sell, then you should consider re-evaluating your pricing.
Ultimately, a big part of being confident in your pricing comes down to understanding the economics of a domain portfolio.
As you form your strategy, using metrics such as Average Sale Price (ASP), Sales Velocity (SV), and Revenue Per Domain (RPD) will help you gauge the success of your portfolio over time and be more confident in your approach to acquisitions and pricing.
It’s important to remove the emotion from your domain sales.
Domain investing is hard work, but at the end of the day, it can be super rewarding.
While it may not be a way to get rich quick, as you utilize your resources to create and test a solid game plan, you will put yourself on the road to success.
Recognizing yourself as a business and putting sound reasoning into each domain acquisition will allow you to implement your gameplan.
Don’t second-guess yourself, measure your business metrics for any adjustments that may be needed, but don’t base decisions on emotions. As you avoid these potential domain investing pitfalls, you can set yourself up for the highest chance of success in domain investing.
Yes, domain investing can be profitable, but it requires patience, research, and a solid strategy. Success comes from treating it as a business rather than expecting quick returns.
How much money do you need to start domain investing?
You can start domain investing with a modest budget, but it’s important to only invest what you can afford to lose while learning. Many beginners start by purchasing domains through closeout auctions or expired domain sales where prices are lower.
What are the biggest mistakes new domain investors make?
The most common mistakes include spending too much too fast on unresearched domains, getting emotionally attached to domains, buying domains without clear use cases, and expecting quick profits without putting in the work.
How long does it take to sell a domain?
Domain sales timelines vary widely—some domains sell within weeks while others may take months or years. Building a quality portfolio and pricing appropriately increases your chances of faster sales.
The post 6 domain investing pitfalls to avoid appeared first on GoDaddy Blog.
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6 common domain investing pitfalls
While I can’t cover all of the possible pitfalls in this guide, I want to share with you some of the most common issues I see for new domain investors and how you can avoid them. Here are six of those pitfalls:
- Domain investing is not a get-rich-quick strategy: Success requires patience, strategy, and consistent effort over time.
- Skipping research leads to costly mistakes: Learning from existing resources and experienced investors dramatically improves your odds.
- Moving too fast depletes your budget on bad domains: Start slow, test your strategy, and scale only after seeing results.
- Treating domain investing like a hobby limits profitability: Emotional attachment to domains prevents smart business decisions.
- Domains without clear use cases rarely sell: If you can’t explain how someone would use a domain, buyers won’t pay premium prices.
- Quick sales don’t mean you priced too low: Trust your research and focus on reinvesting profits into quality replacements.
Let’s get started.
1. Domain investing is not a get-rich-quick strategy
Key Takeaway: Domain investing rewards patience and hard work, not shortcuts—expect to hold domains for months or years before seeing significant returns.
It is probably best to get this one out first: Investing in domain names is not a way to get rich quick.
It is common to see blogs or social media posts that talk about how a domain was bought for $200 and then sold for $20,000. With those sorts of numbers, one might think that it is easy to make money on domain investing.
What you aren’t seeing in those posts, however, is the overall strategy and hard work that the owners put into their portfolios that led them to those individual sales.
Most successful domain investors that I know are some of the hardest workers I’ve ever met, so if you are looking to get rich without much effort, then domain investing is probably not for you.
2. Skipping research leads to costly mistakes
Key Takeaway: Investing time in education before spending money on domains dramatically increases your probability of success.
I’ve met too many new domain investors who have not taken the time to learn from existing knowledge that has been shared on how to invest in domain names before taking the plunge themselves.
While it might be possible to be successful without learning from others, your probability of success is much higher if you take the time to learn from the mistakes and successes of others and then apply what you learn to your own strategy.
Here are a few resources that I recommend to anyone interested in getting into domain investing:
Domain Investing Resources
| Resource | Type | Cost | Best Use Case |
|---|---|---|---|
| DNAcademy.com | Online course | Paid | Comprehensive beginner education on acquiring, valuing, and selling domains. Must have. |
| NameBio.com | Sales database | Free | Researching historical domain sales prices for valuation |
| DomainSherpa.com | Interviews & podcast | Free | Learning strategies from successful domain investors |
| NamesCon | Industry conference | Paid | Networking and learning from peers in person |
| GoDaddy Aftermarket | Marketplace & services | Varies | Portfolio management and sales optimization |
| TheDomains.com, DnJournal.com, DomainInvesting.com, DomainNameWire.com | News blogs | Free | Staying current on industry trends and news |
| NamePros | Forum | Free | Community discussions and advice |
You can contact GoDaddy’s Partner Seller team for a free consultation by emailing: [email protected].
3. Moving too fast depletes your budget on bad domains
Key Takeaway: Start with a small portion of your budget, test your strategy, and only scale up after you see indicators of success.
Nothing pains me more than talking to someone who has spent their entire investment budget on bad domain names.
Over the years, I have been on more phone calls than I can count where I had to break the news to someone that they just spent their entire budget on domains that would not sell. There isn’t a single domain investor who hasn’t made mistakes or bought some bad domains in the beginning. Everyone does it at some point, so the key is to move slow enough that you have time to learn from your mistakes and adjust.
Define your domain investing strategy and lay out a plan on how to execute and measure its success.
Test out your strategy, refine it as needed, and only after you see indicators of success should you accelerate.
If your strategy fails, that’s OK. You can regroup, do some more research, and come up with something new. Make calculated decisions on what you are going to do; don’t just jump headfirst into a strategy that you have not proven yet.
4. Treating domain investing like a hobby limits profitability
Key Takeaway: Emotional attachment to your domains prevents you from making smart business decisions and churning a profit.
This is an easy domain investing pitfall to fall into.
Growing up, I collected sports cards and memorabilia as a hobby. As time went on, I discovered that I could buy cards off eBay and sell them at my local sports card shop for far more than I originally paid, allowing me to fund more acquisitions of sports cards. Once I learned this, I decided to transition my hobby into a business.
After I’d made the decision to become a business, I was looking to acquire an autographed Peyton Manning helmet and considered liquidating some of my basketball card collection to fund it. I brought my collection to my local shop and became upset at the offer that was being made on my Steve Nash and Shawn Marion rookie cards. I was a hardcore Phoenix Suns fan and, to me, those cards meant much more than the face value that was being offered.
It was then that I realized that I had grown attached to my basketball card collection and was not truly willing to part with any of them at a reasonable price. My reluctance to let go of those cards meant that I was still a hobbyist and not a business.
Over the years, I have run into a lot of domain hobbyists. It’s OK to have a handful of favorite domain names that you would be hard-pressed to part with. But if you are a new domain investor and you are too attached to your domains, it can become difficult to churn a profit.
If you are going to turn domain investing into a business, it is important that you treat it that way.
A good philosophy that many domain investors use is to ask yourself: “If I sold this domain for this price today, how many other similar quality domains could I buy (whether on expiry or elsewhere) to replace it?”
5. Domains without clear use cases rarely sell
Key Takeaway: Before buying any domain, you should be able to clearly articulate how a business or person would use it.
When buying a domain, you should be able to explain how a business or person could use the domain.
If you have a hard time explaining the value the domain is going to provide to a business, the chances that a business or person will pay a premium price for the domain is low.
Taking it a step further, pay attention to the word structure of the domain.
- Are the words in the right order that someone would use?
- Does having the plural of the word make it more or less desirable?
- Is it a domain that a business could actually use?
Take the time to walk through the use case of the domain you are interested in.
An example from my own domain investing is PodSoup.com. I saw the domain on a GoDaddy closeout auction (a type of auction where expiring domains are sold at reduced prices) and became excited because I could think of several use cases for the domain. First, I knew that podcasts have been on the rise, and I could imagine some sort of soup-for-the-soul podcast being able to brand itself as PodSoup.
Next, I thought with all the at-home meal kits, wouldn’t it be cool if someone came up with a system to make a soup into a little pod that you just need to drop into a bowl of hot water for amazing at-home soup — a literal pod for soup.
Feeling confident in my use cases, I went ahead with my purchase of PodSoup.com. After I received my new domain, I listed PodSoup.com for sale on Afternic and received a sold notification within less than a month. With the domain selling so quickly, I started to wonder if maybe I hadn’t priced the domain high enough. This seed of doubt leads me to my next tip.
6. Quick sales don’t mean you priced too low
Key Takeaway: Trust your research and pricing—if a quick sale lets you reinvest in multiple quality domains, you made the right decision.
Every domain investor has an experience just like mine.
They buy a domain name, research a fair sales price, and list it for sale. The domain sells quickly, and they immediately second-guess if they lost money by pricing it that low.
And yes, that might be possible — you might have been able to sell the domain for more than it sold for. However, it’s also possible that if you had priced it higher, you might not have sold the domain at all.
My advice is to do your research, price your domains appropriately, and be happy with what you get.
If you are able to get a price for the domain that allows you to buy more domains of similar quality, there is nothing to regret.
If you are not able to replace the domain names you sell, then you should consider re-evaluating your pricing.
Ultimately, a big part of being confident in your pricing comes down to understanding the economics of a domain portfolio.
As you form your strategy, using metrics such as Average Sale Price (ASP), Sales Velocity (SV), and Revenue Per Domain (RPD) will help you gauge the success of your portfolio over time and be more confident in your approach to acquisitions and pricing.
It’s important to remove the emotion from your domain sales.
Conclusion and next steps
Domain investing is hard work, but at the end of the day, it can be super rewarding.
While it may not be a way to get rich quick, as you utilize your resources to create and test a solid game plan, you will put yourself on the road to success.
Recognizing yourself as a business and putting sound reasoning into each domain acquisition will allow you to implement your gameplan.
Don’t second-guess yourself, measure your business metrics for any adjustments that may be needed, but don’t base decisions on emotions. As you avoid these potential domain investing pitfalls, you can set yourself up for the highest chance of success in domain investing.
Frequently asked questions
Is domain investing profitable?Yes, domain investing can be profitable, but it requires patience, research, and a solid strategy. Success comes from treating it as a business rather than expecting quick returns.
How much money do you need to start domain investing?
You can start domain investing with a modest budget, but it’s important to only invest what you can afford to lose while learning. Many beginners start by purchasing domains through closeout auctions or expired domain sales where prices are lower.
What are the biggest mistakes new domain investors make?
The most common mistakes include spending too much too fast on unresearched domains, getting emotionally attached to domains, buying domains without clear use cases, and expecting quick profits without putting in the work.
How long does it take to sell a domain?
Domain sales timelines vary widely—some domains sell within weeks while others may take months or years. Building a quality portfolio and pricing appropriately increases your chances of faster sales.
The post 6 domain investing pitfalls to avoid appeared first on GoDaddy Blog.
Continue reading...
it would be cool if DNForum was also included as a community at some point 