New top-level domains can sell for lots of money
What do flip.xyz, bit.cloud, m.chat and quest.xyz have in common?
They’re all domains with “new top-level domain” extensions that have sold for at least $25,000 this year.
It’s proof that even non-.COM names can sell for good money and be profitable domain name investments. But investing in these alternate extensions requires different considerations than .COM domains.
Why investing in new TLDs might make sense
There are a couple of reasons that domain investors should look at new top-level domain names for investing.
First, compared to .COM domains, the entry cost to investing in new TLDs might be lower. Because most great .COM domains are already registered, investors have to turn to auctions or buy existing .COM domains from other people. Prices for even so-so .COM domains are often thousands of dollars. But good names are available in other extensions for less than $100.
Second, it’s a lot less crowded. There’s lots of competition figuring out the best .COM domains to acquire for resale. Since fewer people pay attention to extensions like .XYZ, .APP and .CLOUD, investors might find more opportunities.
There are several things to consider when investing in new top-level domain names.
Unlike .COM domains, the registries that sell new top-level domain names sometimes charge different prices depending on the quality of the second-level domain name (that’s the part to the left of the dot). Domain registrars like Namecheap have to pass this cost on to you.
Depending on the top-level domain, the premium cost might apply to just the initial registration or it might apply for renewals, too. For example, .CLUB charges a one-time premium when you acquire the domain and then the regular low price each year after that. But other domains will charge you a premium price each year.
Premiums can be modest. Super.furniture costs more than most domains that end in .FURNITURE, but it’s still less than $100 per year at Namecheap. Other premium domains are really expensive.
Here are some examples of premium domains and their annual costs at Namecheap:
- Mortgage.shop $3,250
- Online.tech $6,500
- Great.blog $130,000
- Get.fashion $2,700
- A.homes $10,400
These are all great domains. If you could register them at regular prices, they’d probably make good investments. But it’s harder to turn a profit with the premium price that already assumes the person buying the domain is an end-user, not an investor. It basically takes the investor’s potential markup out of the equation.
Find domains with reasonable renewal costs
Even non-premium new top-level domains can have high annual costs. .AUTO and .INC domains cost over $2,000 per year regardless of the second-level domain. And .TICKETS domains are over $400 per year.
Less expensive domains might be relative bargains, but the renewal costs add up. Renewing just one .POKER domain at about $50 per year is the cost of renewing four or five .COM domains.
Domain investors call these renewal costs holding costs. It’s the cost to hold the domains over time until the right buyer comes along. Domains with lower holding costs are much easier to invest in.
Consider domain investor Swetha Yenugula. Swetha has made lots of money investing in .XYZ domains. Some of her sales include quest.xyz for $69,888, flip.xyz for $27,888, and optics.xyz for $19,888. She has also sold lots of .XYZ domains for about $2,000 each.
Swetha owns nearly 20,000 .XYZ domains! This is only possible because .XYZ domains are relatively inexpensive — currently, only $10.98 to renew at Namecheap. That’s over $200,000 a year for 20,000 names, so her sales need to cover those costs.
Now, imagine if .XYZ domains cost $50 per year to renew like some domains do. That would cost her $1 million a year just to renew the domains! You can see how the economics are much harder for domains that cost a lot to renew.
Be careful with niche domains
The downside to super-niche domains is that they will only interest a small set of potential buyers. While anyone can use a .COM or .XYZ domain for a website, some names appeal to fewer people.
Geographic domains are an example of limiting domains. Artist.miami is great for an artist in that city, but you won’t be able to sell it to someone who lives anywhere else in the world.
And while the term best makes a great second-level domain, if you own best.plumbing, then people in other professions won’t be interested in the domain.
The new TLD opportunity
Recent sales show that new top-level domains can sell for a nice return on your investment. But you should be careful before investing in these top-level domains.
Evaluate the end-user market for each extension. Understand the registration and renewal costs for the domains. And consider how much it will cost to maintain your domain portfolio.
Ready to find new top-level domains? Search on Namecheap.