With domain registration costing as low as $1.99 for some domain extensions, and the possibility of selling those said domains for $x,xxx, one could easily get into the habit of registering domains on impulse without much research.

But with that been said, you would be surprised to learn the number of people who buy domains on the aftermarket as well, purely on impulse, without any clear purpose or strategy.

Domaining can be a very deceptive business. This is even more so with aftermarket domains. You buy a domain name on the aftermarket thinking to yourself, well, from now on, its only going to cost me $8 per year for renewal.

Sometimes you just register or purchase domains because you have enough money on your credit card to successfully checkout or complete the transaction. This is fine if you have a clear and definitive intention and methodology to monetize the domain name, successfully.

However, some people spend today, and realise that rather than making sensible investments, they have instead accumulated senseless liabilities.

If you have had issues with spending frivolously on domain names, here are a few essential questions to ask yourself before you buy the next domain name.

1. Can I afford this domain name?
If you are buying domains at $1.99 (mostly for .INFO) or the average $8 (for .COM) then the answer will most likely be a resounding “yes!”. However this is a trick question. I believe the fact that you can afford the $8 registration for a domain name is the problem here. Registering one domain at a time or taking advantage of bulk registration deals will not be a problem. You will only start feeling the weight of your overspending when you have to settle the credit card bills or have to contend with huge renewal expenditure for your entire domain portfolio.

So perhaps the question that you really want to ask is, “Can I afford to maintain my domain portfolio if I buy one more domain name?”

2. Do I really need this domain name?
This is again another trick question, as the answer will depend heavily on your domaining strategies.

If you are investing in domains for development, you will need to be proactive in your buying activities, in that you only buy domains that you will have the time and resources to develop, successfully.

If you monetize domains through Pay Per Click (PPC) or domain parking, then you will need to gather enough data to help you determine if the domain will be able to earn enough revenues to cover its renewal fees and more.

One of the golden rules of domaining is never to buy domains for the sole purpose of reselling them later. This will help you eliminate loads of mistakes and to avoid errors in judgement. However, if you are in the process of buying and selling domains, simply buy domains that someone else would want to buy, without the need for any hype.

3. Will I use this domain?
This question was dealt with above. However you do need to have a clear purpose for every domain that you purchase. Each domain name should help you in some way or another in your domaining strategies. This can be brand protection, monetization or development.

4. Can I buy the domain name cheaper or find a similar domain name?
This is a multi-million dollar question, for people who are selling domains. Think of the choices that your potential customers will have. When you do, you will either decide not to buy a particular domain for re-sale purposes or know how to price the domain accurately.

For domain buyers, I believe the question is self-explanatory. Simply do some research before each domain purchase. Read blogs and follow up on the daily domain news.

5 . Can I wait to buy this domain name?
I think in 99% of all cases, the answer will be a resounding “NO”! If you have found a great domain name that is unregistered, the chances are that it will not remain unregistered for long. Quite a few times when I am researching domains, I find a few that are unregistered. By the time I settle down to register them, I realise that someone else had beat me to them, only within the last few hours.

The same thing applies with an aftermarket domain name. You have a little bit more luxury where time is concerned here, but you still want to get your domain name before your competitors do.

With such tight time constraint, you want to be sure that you really NEED the domain name.

6. Will this domain save me time or money?
This is really a question that is normally asked by end-users. Will buying and using the domain name help you to reduce costs, such as marketing and advertising? Will it save you time in trying to promote and establish your brand?

7. Will this domain help me financially?
This I believe is the most important of all these 7 questions. Except for the cases where you are buying a domain name solely for brand-protection purposes, you definitely want to acquire domains that will make you money.

If you develop the domain name, the website should give you a decent Returns On Investment, and provide you with a consistent flow of revenues. If you park the domain name, it should at least comfortably earn enough to cover the annual renewal fees.

Ask yourself those questions whenever you plan to make a domain purchase and I guarantee that you won’t regret wasting money on domain names that will prove to be liabilities rather than assets.

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