Investing in UK Domain Names

Getting started investing in UK domain names is easy but that doesn’t mean it’s a suitable investment for everyone. Before investing, the most important thing to understand is that domain names (even good ones) are illiquid assets and there are no guarantees that you will be able to find a willing buyer when required.

This article will seek to teach you all of the basics of getting started in investing in UK domain names:

UK domain names – the basics

What is a domain name?

A domain name simply refers to the web address you enter when you access a website. For example, the domain name for this website is InvestmentGuide.co.uk.

A domain name is not a website, it is the website address.

What is a UK domain name?

A UK domain name is a domain name which ends in ‘.uk’. There are four different domain extensions which fall into this category – .co.uk, .uk, .org.uk and .me.uk.

Nominet manages each of these domain extensions in its role as the official registry for UK domain names.

Whilst .com is the most popular global domain name extension, a Nominet Domain Industry Report published in 2010 found that 80% of UK users would choose a .uk website over a .com website in the Google search results.

UK domain extensions

  • .co.uk – The original domain name extension for British businesses online. Generally regarded as the premium UK domain extension and has the most established sales history.
  • .uk – Originally launched in 2014, this newer extension was only made available to the holders of the equivalent .co.uk for five years. This ‘right of reservation’ period ended in June 2019. Domain industry participants are currently split on whether the shorter .uk extension will ultimately become more valuable than .co.uk once consumers become more aware of its existence.
  • .org.uk / .me.uk – Less popular and neither extension is generally recommended for investment purposes.

How can I register a UK domain name?

Whilst Nominet is the official registry, you would not typically purchase domain names through Nominet unless you are a Nominet member (you can, but at an overly inflated price). Instead, you would register through a domain registrar intermediary such as Namecheap.

Becoming a Nominet member gives you access to wholesale domain prices. However, this option is only cost-effective if you own a large number of domain names as it costs £400 (plus VAT) to apply for membership plus a £100 (plus VAT) annual subscription.

How much does it cost to register a UK domain name?

At the time of writing, a .co.uk domain name registered with Namecheap will cost £5.50 in the first year and £5.98 thereafter for renewal (both figures including VAT).

By comparison, as a Nominet member, the price for registering a .co.uk is currently £3.90 (excluding VAT, or £4.68 including VAT) per year. The current pricing schedule is accessible here.

What gives a domain name value?

Domain name valuations are very subjective. Automated valuation services such as Estibot are worthless as there are too many variables which can impact value.

Personal domain valuation services by experienced domain resellers are more likely to add value. For example, by giving you a better idea of the sale price you should aim for when pitching your domain name to prospective purchasers.

However, a domain name is ultimately only worth what an interested party is willing to pay. For a sale to proceed, that sale price must meet the expectations of the owner of that domain name.

Having said that, there are multiple factors likely to contribute to the price a prospective purchaser may be willing to pay for a domain name:

  • End user vs. Reseller – An end user would be willing to pay more for a domain name than someone looking to simply resell the domain at a profit.
  • Resources of end user – A premium domain name is likely to be worth more to a global conglomerate than a local business because the larger firm will be able to leverage its size to generate more profit from using the domain.
  • Intended use – A company would be willing to pay more for a domain name it intends to use as its primary business address than it would for a domain name for a one-off marketing campaign. Further, a commercial name would be worth far more than a domain name intended for non-commercial use.
  • Niche – Certain sectors naturally attract higher domain prices. For example, premium gambling domain names can attract high prices due to the high value affiliate offers available to website owners.
  • Length of domain – As a general rule, shorter domain names with fewer words attract higher sales prices as they are easier to remember. For example:
    • 2 and 3-letter domain names are valuable as they are often acronyms, which would be suitable for a large number of businesses.
    • A domain like claims.co.uk is likely to be more valuable than insuranceclaims.co.uk as it is more memorable.
  • Memorability/branding – Memorable / easily brandable domain names are likely to attract higher sales prices. For example, bloom.co.uk would be a perfect brand for a flower delivery website and tasty.co.uk would be great for a food delivery service.
  • Radio test – The radio test is a check of whether people would be able to spell a domain name when they hear it for the first time.
  • Traffic / links – If the domain name has pre-existing traffic and/or links from other websites (for example, due to having been a developed website at some point in the past), this can increase its value as a new website developed on the domain name would be able to use the traffic/links to its advantage.
  • Cost per click and search volume – If search volume and cost per click (CPC) on Google Adwords for a particular keyword is high, this proves that there is demand for monetising traffic from that keyword. An exact match keyword domain name is therefore likely to attract a higher sales price than a domain which is not an exact match.

Domain name research

Historical domain name sale prices

If the best indicator of a domain names value is the price a buyer is willing to pay, then what could be a better appraisal method than looking at previous sale prices?

Websites such as DomainPrices.co.uk and Seemly provide databases of historical domain name prices free of charge using data sourced from DomainLore, Sedo, DN Journal and private sources.

It’s important to note that whilst these sites can provide good reference points, many sales go unreported with buyers/sellers preferring to maintain privacy.

Historical use of domain name

You can use the Wayback machine to see whether the domain name was previously used for a website. If a domain name was previously used by an active website, this may add value because the domain name may have some ongoing traffic (which can be monetized via parking the domain, or developing a new website) and/or links (which can be beneficial in helping a new website built on the domain name to rank higher in search engines).

Whilst it is impossible to ascertain the level of traffic a domain name will continue to receive once the old website is no longer operating, it is possible to identify the number of links the domain name still has from other websites to gauge whether it has value from a search engine optimisation (SEO) perspective.

To do this, you can use tools like Ahrefs backlink checker or Moz Link Explorer (both tools have free and premium options).

Potential end users

If you are thinking of buying a domain name to resell, then considering the potential end users for that domain name is probably the most crucial form of research.

The best way to find potential end users is by conducting various Google searches for the niche your domain relates to. When you have found your potential end users, don’t stop there. Think about the best way to contact them.

For instance, if it is a multinational company, using a contact form on their website is unlikely to result in your message making its way to the right decision makers. Instead, you may wish to try contacting the marketing director on LinkedIn for instance, or seeing if you can find someone who knows the relevant decision maker who would be willing to introduce you.

How to profit from UK domain names

Buy domain names to resell

This strategy involves buying domain names and holding them until a willing buyer is found at an acceptable price. This could involve proactively contacting prospective purchasers or simply using a landing page to enable interest parties to contact you.

Domain names are illiquid but also unique assets. By unique, I mean that there can only be one InvestmentGuide.co.uk, for example. This creates an interesting dynamic where if an interested party approaches you about a domain name, you will need to consider both what you value the domain name at but also whether you are willing to wait for another potential buyer to potentially come along at a higher price.

Buy domain names to park

If a domain name has traffic, it can be ‘parked’ with a parking provider like Sedo. This means that you will profit when users type in your domain name and click an advert on the ‘parked’ page.

This strategy is only profitable where the domain name has pre-existing traffic either due to:

  • being so premium that people type it in naturally, expecting to find content relevant to what they are searching for (e.g. its plausible that a user may type in carinsurance.co.uk when looking for a deal on their car insurance renewal)
  • having previously been the web address of an established website
  • being a typo of an established website

Buy domain names to develop

Domain names only have value because they can ultimately used to build profitable websites.

A quality domain name adds instant credibility to a new website. Consider this: if you are searching for superfoods in Google and you are presented with two choices (1) superfoods.co.uk and (2) newworldsuperfoods.co.uk, which would you be more likely to visit and purchase from?

It’s now far easier than ever before to start a website. The free WordPress content management system makes it incredibly easy to start a blog or content website, whilst you can setup an online shop within minutes using eCommerce platforms like Shopify or BigCartel.

Whilst it’s easy to setup a website, it’s a lot harder to drive traffic and generate profits so be sure that you have sufficient time to commit before embarking on a new project.

How to invest in UK domain names

Whilst it’s possible to acquire unregistered domain names via a domain registrar like Namecheap, the reality is that the vast majority of unregistered domain names remain unregistered for a reason and lack any significant resale value.

Think about it. By acquiring an unregistered domain name with the intention of reselling, you are effectively hoping that the prospective purchasers you are contacting simply lacked the foresight to acquire the domain name when it was freely available to register.

The standard approach when starting to invest in UK domain names is therefore either to (i) acquire domain names from the existing registrants, or (ii) to catch domain names which existing registrants have let expire.

Acquiring domain names from existing registrants

Contacting the owner of a specific domain

If there is a specific domain name you are interested in, you will need to find out who presently owns it and their contact details.

The first step to finding the owner of a UK domain name is to use the Nominet whois service. Whilst some owners hide their details from view, many registrants details (name/company name and address) will be available using this service. You can then Google the name of the individual or company to find publicly listed contact details (phone number/email/linkedin profile) online. To find the names of company directors, you can use the Companies House database – simply search the company name and then click the ‘people’ tab.

If the owners contact details are hidden from view, you could also try:

  • Visiting the domain name to see whether it features a landing page with ‘make an offer’ functionality or contact details.
  • Googling the domain name to see if you can find any previous sales listings (e.g. on domain forums).
  • Using the wayback machine to search for clues of who the owner might be. For example, the domain may not currently list contact details but they may have been listed six months ago.
  • Asking users of AcornDomains if they are aware of who owns a particular domain name.

Remember to always ask for proof of ownership before conducting any domain name purchase and use an Escrow service where possible, especially for high value purchases.

Domain auction platforms

DomainLore

DomainLore is the original and premier domain auction platform for UK domain names. Launched in 2009 by Denys Ostashko, a successful domain catcher and reseller, DomainLore has facilitated over £3.1 million in UK domain name sales.

Whilst the platform is open for anyone to use, the vast majority of buyers and sellers tend to be domain resellers/catchers or those involved in the web industry somehow (developers, SEOs, domain investors).

As a result, sale prices are typically lower than you might expect if the domain names were to be sold to end users of the domain name (i.e. a company or individual intending to profit from developing a website on that domain name).

Sedo

Unlike DomainLore, Sedo primarily deals with US domain names. However, from time to time, quality UK domain domain names can be found among their auction listings.

AcornDomains forum

AcornDomains is the only forum which exclusively focuses on the UK domain name market. It is frequented by many domain resellers/catchers who post domain names for sale across multiple categories (premium names, fixed price, auction, bargain, swaps). Domain names sold here are often available at reseller prices as users are proactively seeking to sell their domain names.

Domain marketplaces

Domain resellers often list their domain names for sale on marketplaces such as Sedo / Dan. Be aware that pricing is often catered towards end users and you are far less likely to find a bargain price via this avenue.

Domain brokers

A quick search for ‘uk domain brokers’ in Google will return an array of brokers willing to act on your behalf to acquire one or several domain names. A good domain broker will be able to work within set criteria and advise on suitable acquisition targets, though be aware that you will pay a premium for this service. If you decide to follow this route, speak to numerous brokers to understand the experience they have in the field and their ways of working.

Catching expired domain names

The alternative to acquiring domain names from existing registrants is catching domain names as they expire.

UK domain names become available to register 92 days after expiry, if the domain name is not renewed by its current owner. However, whilst the day that a domain name will become available to re-register is widely known, the exact time is unknown.

It’s impossible to register a coveted expiring domain without the services of a dropcatcher as dropped domain names are acquired within milliseconds of becoming available. You can do this by (i) using the services of an experienced dropcatching service provider, or (ii) by becoming a domain catcher yourself.

Public domain catchers

There are several domain catching services including Dropcatcher, Dropped, and UK Backorder. The business models employed by these platforms vary. For instance:

  • Dropcatcher – Charges £29 per catch which is not refundable as cash in the event your desired domain is not caught. However, you will retain a credit on your account to be used for future dropcatches.
  • Dropped – Charges a fixed fee of £35 if the domain you wish to catch is caught and you are the only person who booked the catch. If multiple users request a catch, a 3-day auction will commence between those users. Nothing is payable if Dropped is unsuccessful in catching the domain name.
  • UK Backorder – Charges a minimum of £50 to catch a domain with higher bids accepted to increase the priority a particular catch will receive by its dropcatching system. Similar to Dropped, a 3-day auction will commence between the individuals who ordered and no fee will be payable if UK Backorder is unsuccessful in catching the domain name.

Become a domain catcher

You also have the option of becoming a domain catcher yourself.

In order to start catching UK domain names yourself, you will need to:

  • Become a Nominet member (£400 initial fee plus £100 annual subscription, both figures excluding VAT)
  • Subscribe for Domain Availability Checker access (£25 per annum, excluding VAT).
  • Sign up for DAC hosting / catching script. Unless you are are proficient coder, this will mean using the services of a provider such as Caught who charge a fixed fee of £195 per month and an initial setup charge of £25.

Researching expired domains

Irrespective of whether you choose to engage the services of a public dropcatcher or becoming a domain catcher yourself, you will need to research which domains are due to expire/drop.

There are multiple services providing droplists for UK domain names, including:

  • UK Droplists – 90 day droplists for £12.99 per month
  • Dropped – Same day droplists are free of charge, with prices for 7 to 90 day droplists ranging from £5 to £20.

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