Domain Names Can Be Used To Make Money In Several Ways

While more and more people and companies are investing in domain names, it has become clear that not all of these names will realize their full income potential. As a domain trader and investor with a portfolio of manageable size, I have often been asked how best to make money from these investment domains. Here are the most common methods to create an income stream or maximize resale value.

• Parking the name with a valet service.
  These services pay a percentage of advertising revenue from ads placed on a page that is displayed when someone visits your domain. Most of these parking services also offer a sales listing service to help resell your domain.

• Create your own parking page.
  Same as above, but you create your own small website with ads and get 100% of the revenue. However, this will not be as profitable as parking services get a much larger traffic stream.

• Develop a small but content rich website.
  These small mini sites are usually filled with articles and contextual Adsense ads. They are often referred to as AdsenseSites.

• Develop a full website.
  Sell services or products and also have paid ads and links, whether by selling your own products or as an affiliate of an existing site.

Factors that increase value

At all the above stages of development and exploitation, you can make money by reselling the domain/site at a higher value than the purchase price.

• Keywords and the ability to use the name brand.
  For example, http://Become-rich.biz is rich in keywords and has a higher value than http://CrappyNames.com.

• Amount of visitor traffic.
  Simple equation: more visitors = more revenue = more value.

• Revenue of the website.
  (Revenue earned from ads, sales, or paid links). More revenue earned means more value to the website.

• Current demand for similar names.
  If a certain type of name is a hot property, all similar names will increase in value due to demand.

• Current search engine ranking.
  If the name is not listed by major search engines or is on page 346, its value will be low; on the other hand, if it is on the first page of listings, its value will be higher.

• Number of websites linking to your website.
  Associated with traffic and S.E.ranking, more links = more traffic + better ranking.

• Buyer's interest in the name.
  The buyer may want the name for a specific purpose and will pay a premium to make sure they get it.

Ways to lose money with domains.

• Register a brand name
  like "PyPlFees.com" because of the legal hassle. Most big companies can afford an expensive legal battle - can you?

• Pay too much for a domain name.
  Just because http://ReallyGreat.com sold itself for a high price, doesn't mean you'll pay a high price for any domain name and it will resell for an even higher price.

• Being ripped off by emails and other types of scams.
  Domain investors attract more than their share of scammers. One of them is an email claiming to be someone who wants to buy your name. All you have to do is use their favorite valuation service to confirm the price offered. This is just a trick to get you to pay an inflated price for the valuation.