Lord Brar: How I “Really” Make Money From Domain Names

A great post from Lord:

This is My True Story

There was a time when I was extremely frustrated with my domaining business. I was seeing people sell domains for hundreds of thousands of dollars and yet I had so many domains which no one was willing to pay even registration fee for, let aside thousands. What was worse was that I was not making much money in parking either.

Whenever I saw the domain-sales charts I would cringe. What was I doing wrong? Was there a fault in my investment strategy? I had to do something about it or simply get out of domaining business. It was a do-or-die situation for me.

There is another thing — I hate failing.

So, I sat-back to take a rational look at my investment strategy and find out what was wrong with it. And very soon I did.

What Was Wrong With My Strategy

Simple – My domains were neither “premium” nor had butt-loads of traffic. Most of the domains in my portfolio were — and still are — keyword rich and brandable and had excellent development potential.

Most domainers look for easy money and investments where they don’t have to put too much effort — and development is not one of them.

My major problem was that I was selling wrong thing to wrong people.

But there were two other BIG problems — 1) Premium and Traffic Domains cost lot more than I could spend and 2) I had a lot of money invested in portfolio of keyword-rich domains.

Very soon I was about to discover something that would change my fortunes.

Finding the Solution

When I analyzed the domains which I had sold till now, I discovered that the keyword domains which had some sort of content on them were super-easy to sell. Not only this, whenever the domain had traffic and revenue, it was able to fetch much-higher prices, which meant more profit for me.

There was this dating discussion forum I had started. I had spent $160 for a vBulletin License, $120 for 1000 paid posts by forum-posters and a few hours on building links. Within a two and half months, the site was getting a few hundred visitors a day and made some revenue from adsense and a few affiliate programs.

I put it up for sale at an auction site and sold it for $1500 in a few hours. That was a profit of roughly $1200 on a site which took less than 10 minutes a day to run.

Sometime ago I had purchased a database of 1000 riddles for $20 and paid a coder $50 to code a simple script to read from this database and display on the site. I put it up on a riddles related domain of mine, posted links to it at some social networking sites and spent about 10 bucks for a 100 directory submission.

I ended up selling this particular site for $750 after five months. My investment was $80 and time spent uploading the database and script on my site.

Another was a small-business marketing related site where I had posted 27 blog posts which I had paid freelance writers $10 per post for. My cost was $270 and a few hours of link-building and sold it for $1300.

More interesting was this web-design related blog which I had purchased from someone for $700. I spent a few hours and wrote a kick-ass article which I was able to get on the front page of digg. Then I posted some re-printable and PLR articles and paid another 120 bucks to freelance writers to write 12 articles for it.

The site started getting loads of traffic and started making $200 – $300 from affiliate revenue, $70 or so in Adsense revenue and $150 from text-link sales every single month. After 5 Months, I sold it for $4250. I not only made a huge profit by selling it but also kept all the money it made from affiliate programs, adsense and text-link sales. My Net Profit from this site was roughly $5700.

All this was more than enough to prove to me that there was a potential to make money — and a LOT of it — by doing something that others were not doing. And the fact that I had keyword-rich and brandable domains was a huge advantage for me. All I had to do was to rinse and repeat.

Step by Step Method

Find a Niche. The very first thing that you need to do is to find a niche you will be developing the site in. You need to make sure that the niche has certain demand — which means that you will get some traffic — and you have a way that you can make money from it. You also need to know the methods that you can use to identify these profitable niches.

Register a Domain. Once you have your niche, you need to register the domain name which you will run the site on. The domain should be brandable and keyword rich to help with SEO. You need to know how to come-up with domain names, research expired domains and even purchase from the after-market.

Create a Site. The very first thing you need to do is to setup the site on your web-host. If you want to create a content site then you need a content management system like WordPress or Joomla. You could also setup a Photo Gallery or a Discussion Forum.

You could also hire a freelancer to code a script for you but you can usually find an out-of-box open-source script to do the job.

Publish Content. Once you have the site up, it is time to start posting the content. Remember, it is the content which attracts people to your site and gets you the rank in search engines. You can create the content yourself or hire freelancers to create it for you. You also have an option of using content with reprint rights. Getting great content is much easier than you think.

Revenue Streams. You don’t want to waste your traffic by not commercializing it. Put up affiliate links, CPA links, contextual advertisements, text links and products for sale on your site. Contrary to the popular belief, you don’t need thousands of visitors to make money. What you need is “quality traffic”.

For example, I have a site which got 8 visitors last week and made me $147 in affiliate revenue. I also have another site in more popular niche which gets a few thousand visitors a day and makes only a few bucks. I usually commercialize my site before I even start promoting it at all. After you have a pagerank, you can also start selling text-links on the site.

Promote the Site. When your site is up and running and has some content that people can use, you need to get the word out about your website. You can promote on the Internet by doing Search Engine Optimization and Link Building, Social Marketing, Paid Advertising, Viral Marketing, Internet Public Relations and what I like to call Twisted Marketing.

While SEO is the cheapest and easiest way to get traffic to your site and keyword domains are a big help. However, being on Digg’s homepage can easily get you 20,000 – 30,000 unique visitors in a day. Getting a top-blog to link to you is another very effective strategy. When LifeHacker.com linked to one of my sites, I got like 17,000 Uniques in a day and made a nice change.

Let it Ferment. While the results of paid and viral marketing are instantly visible but search engine optimization takes some time to show results. For most of my sites, I just optimize the site, build some links to it and forget about it. If the niche is not super-competitive, search engines start sending a fair bit of traffic.

Sell the Site. Once you have a site which has some good content and, hopefully, gets some traffic and makes some revenue, you may want to sell the site. Some of the options that you have if you want to sell your site are domain forums, auction sites, domain brokers or through private sales.

The Devil is in Details

As an entrepreneur, you have to remember that your profits are your revenues minus the cost.

Profit = Revenue – Cost

Your objective is to maximize your profits and to do that you need to increase your revenues and reduce your cost. The challenge is how you can reduce the cost of creating the site, creating content and promoting the site while maximizing the revenues, traffic and cost you can sell it for.