Ed from Michigan asked me to discuss how to sell a domain name, and I am happy to give some pointers. There are many factors to consider once the decision to sell has been made, and each factor can have many implications.

The first thing I do is evaluate the domain name based on its natural traffic, revenue, estimated number of searches (Overture or Wordtracker), number of Google listings for the “bracketed term,” number of advertisers for the term, and comparisons of recent sales of similar names from DNSalePrice.com and DNJournal.com. Using all of this information, I determine my ideal sales price.

With my price in mind, I decide whether I should target an “end user” or a domain investor. End user sales can be more lucrative, but they can also be very time consuming. Conversely, selling a domain name to a domain investor will almost certainly yield a lower sales price, but the sale may be completed more quickly because there are less hurdles to leap to close the sale.

In order to sell the name to an end user, it is important that the name be a one word .com or “category killer” name to avoid wasting anyone’s time. For example, I wouldn’t try an sell a name like AwesomeDevices.com to Advanced Micro Devices, however, I would consider selling Devices.com to them if I was interested in selling it (which I am not).

If I decide to sell the name to an end user, I first compile a list of potential buyers. The next step is to hone in the decision maker for each end user company. More often than not, an email to the Whois contact will not yield a response. Keep in mind that while I may think this particular domain name would suit them well, they may not feel the same, and they may not respond regardless of their thoughts. I would also target each company’s advertising agency in an attempt to close the sale. If all of this fails, I would try to contact a broker or possibly another domain investor.

It is very important that the domain name be generic when contacting end users. An attempt to sell a domain name can possibly be considered bad faith if it isn’t 100% generic. If you are unsure, consult an attorney.

In order to sell a domain name to another domain investor, the domain name must have a clear meaning, and it should have some inherent traffic. Unless the domain investor intends to develop the name, he will usually want to know the traffic and revenue generated by the name. Although I have never sold a domain name based on revenue, I believe it’s important to be honest about these figures. If you are dishonest once, it could cost your reputation, something that is most important in a small industry like this.

Naturally, the next question is about finding other domain investors who might be interested in buying your names. My best piece of advice is to use various outlets such as the domain forums or even Ebay to make contacts within the industry. You can list your names there, and when someone buys a name from you, there is always the opportunity to upsell other names of interest. Another option is to contact a domain broker who may have more connections within the industry. Typically, brokers charge anywhere from 5% – 15% of the total sale, and can be an invaluable resource. If you are looking for a broker, drop me a line and I will put you in touch with a couple people I know.

If you are honest with yourself and set a reasonable price, the sales process is much easier. You generally shouldn’t expect to sell a newly registered name for thousands of dollars, as it just isn’t likely to happen. People with thousands of dollars to spend on a domain name typically do enough due diligence to know you just paid $8. Selling domain names is much harder than buying domain names. I think people should do their due dilligence, research the market, and specialize in a niche before spending recklessly.