Flipping 101: How to Flip Digital Products Online; the Profitable Way in 2022
Updated: Aug 23, 2022
If you wish to go beyond traditional investment instruments, consider flipping digital products. It's a surprisingly profitable practice, and it's gaining traction in tandem with the widespread use of the internet.
Platforms like Flippa make it easy to buy and sell digital products.
Table of Contents
Flipping 101
As tech and digital firms continue to innovate and develop, digital real estate continues to become even more valuable—and lucrative.
Similar to flipping houses in real estate, one can buy a website or other digital assets at a low price. After fixing and improving the asset, you can then sell it at a profit.
No matter where you are in your flipping journey — whether you’re a casual onlooker, a fund manager, or a beginner investor — this quick guide will help you grasp the basics of how to flip a digital product.
But first, let’s take a closer look at these online investment tools and where you can find them.
What Are Digital Products?
Simply speaking, digital products (also known as digital assets) are online platforms or entities that an individual or company owns. Any digital product with a regular audience has the potential to be monetized. Given the almost unlimited reach of the internet, these assets show great growth potential.
Think of them as the real estate of the online world. Like real estate, digital assets can be taken over, restructured, and resold at higher prices.
Some investors keep multiple assets and maximize their profits through monetization efforts like ads, affiliate marketing, and the like.
Let’s look at the various types of digital assets that are flipped for profit.
1. Websites
Websites are a top choice for flipping because they can be monetized in several ways. These include:
eCommerce stores
Affiliate sites
Blogs
One such example is Ariana Huffington’s blog, The Huffington Post. Established in 2005, it features lifestyle and political content written from a liberal point of view. Since its inception, The Huffington Post has attracted a large audience, thanks to ads and other means of monetization.
In 2011, the New York-based web giant AOL purchased Huffington’s blog for $315 million while allowing her to remain as Editor in Chief. That’s an impressive return on investment within six years.
2. Domain Names
Domain names or website URLs are also a common type of digital asset. Not only do they increase in value over time, but there’s also a limited number available at any given time.
Any digital marketing effort hinges on a well-chosen domain name. A catchy and memorable URL gives businesses incredible brand recall and helps them stand out from the competition.
The best part? Domain names (website URLs) become more valuable as they age and gain site visitors' trust. The most expensive domain name ever sold was Cars.com, which was purchased at an astonishing $872 million.
For more information about flipping domain names specifically, check out: "How to Make Money Flipping Domain Names."
3. Mobile Apps
Mobile apps are also a type of digital asset that can be flipped. However, since they are harder to develop and market, apps are not as widely flipped as websites.
Some notable examples of flipped apps are:
Navigation app Waze was caught in a bidding war between Facebook, Google, and Apple. It was eventually sold to Google for $1.3 billion.
Text condenser app Trimmit, later rebranded as Summly, was developed by then 15-year-old Nick D’Aloisio. A billionaire investor saw its potential and invested $300,000 in the app, which Yahoo later acquired for $30 million.
Usually, it is the developers of the apps themselves who sell their creations for huge sums. A developer may be an individual, a group of people, or even a tech company.
4. Digital Products
Investors may also acquire digital products and information resources like subscription-based or membership programs. An investor can earn a lot from an existing training program that already has a large number of subscribers.
People also invest in digital and info products that have great potential but require small improvements. These include video courses, training programs, and membership programs. Afterward, these products are rebranded to highlight the enhanced content and features.
A good example of this is the Authority SEO course that RankXL first created. This course was later acquired by Alpha Investors for an undisclosed amount and was relaunched as Authority SEO 2.0.
Since the original course was popular in the SEO community, Alpha Investors saw the opportunity to grow it even further. They added new modules and refreshed content before relaunching it. This is a classic example of asset flipping.
Flipping Digital Assets: A New Type of Trading
More and more people are buying and selling digital assets such as websites and apps for profit. It has become a multimillion-dollar industry, one that shows no signs of slowing down.
Wondering how it works?
Flipping digital assets is similar to flipping physical assets like cars and real estate. The basic assumption in flipping houses is that it’s easier and more convenient to renovate a part of it than building an entire structure from the ground up, which would take a considerable amount of time and money.
Likewise, people who buy and sell websites and other digital assets look for existing assets that are already earning money. With a couple of improvements, such an asset can fetch an even better price when resold.
Flipping digital assets can be a lucrative endeavor even for someone who might not have the capital for real estate and more costly investment instruments. Secondly, building a business from scratch can also consume a lot of time and resources.
Do You Need to Have Technical Know-How?
You don’t have to be an app or web developer to make the most of this opportunity. All you need to do is choose and invest in an existing website or app that is already making money.
What’s the Key to Success in Flipping Digital Assets?
The key is spotting existing assets with great potential and knowing exactly what needs fixing so that they can sell even better.
Following this principle can get you as much as 24% ROI when flipping digital assets.
A great example of this is investor John Chen, who acquired the online business Blush & Bar in 2019 for $7,500 from Flippa. After two years’ worth of improvement, he was able to resell it on Flippa for $550,000. That’s an astounding ROI!
With the right tools and a keen eye for potential, you can find online businesses with tremendous potential like Blush & Bar that you can flip later on.
High-potential online businesses typically sell for around $10,000 to $15,000. It’s worth the investment because these businesses can be resold for up to 20 or 40 times of their monthly profits in a year.
Where Can You Buy or Sell Digital Assets?
Investors find digital assets in a variety of ways. Most of these involve an intermediary or platform.
1. Brokerage Firms
Brokerage firms can also act as stockbrokers for digital assets. They can either be a person or a company that acts as a middleman to help you buy or sell digital assets in exchange for a commission.
Among a broker’s responsibilities when flipping websites are:
Marketing a seller’s website
Giving them an estimated valuation
Presenting the website to potential buyers
Presenting buyer offers to the seller
Helping both sides negotiate
Providing after-sales support for both seller and buyer
Keep in mind that you need to pay an additional fee for purchasing or selling a digital asset via a brokerage firm.
2. Closed Groups
These are private groups and communities that buy and sell digital assets. Closed groups are often made up of seasoned, professional investors looking for long-term investment opportunities. Novices are often not aware of such groups as they tend to be very exclusive.
Listings are not available to outsiders, and most purchases are high-profile. It's a great channel if you’re a serious buyer looking for community support among fellow investors.
3. Global Online Marketplaces
You can also visit platforms that specialize in buying and selling digital assets. They are run by experts that are committed to overseeing the entire buying and selling process. Their responsibilities include ensuring that transactions are secure, running background checks on both parties, and determining market value.
Flippa is one of the most popular global marketplaces for digital assets. It’s a platform where you can buy and sell domain names, websites, and apps. Over 120,000 registered buyers have used the platform, which has facilitated the sale of over 250,000 businesses to date.
The website itself is user-friendly and provides a wealth of information. One can search by price, asset age, or category across an extensive database.
Here are some of the assets you can buy and sell through Flippa:
Apps
Digital services
eCommerce sites
Affiliate sites
Amazon FBA stores
Domains
SaaS businesses
Online businesses
Blogs
From their homepage alone, you can see a plethora of revenue-generating websites, eCommerce stores, and other online businesses. It’s easy to compare the site age, net profit per month, asking price, as well as the number of bids each asset currently has.
If you’re just getting started on your digital asset flipping journey, check out the section called “Get a fast start under $2,500. Browse through a vetted list of beginner sites, apps, and side hustles.
For more specific needs, you can easily do filtered searches. For example, you can find options as specific as “businesses that earn $100,000 annually,” “recession-proof businesses,” or “drop-shipping businesses.”
Flippa has a concierge service specifically for first-time buyers. The company also assists you with due diligence, finding a third-party broker, and getting financing.
Curious?
Check out Flippa's 45-minute introductory course to help you get started with buying and selling.
The transaction fee starts at 5% of the sale amount, while due diligence is $1,500.
4. Public Marketplace Sites
If you’re just starting and prefer to browse casually, online forums for buying and selling websites are a good alternative to closed groups. Examples of public marketplaces for digital assets include Webmaster Sun and Warrior Forum.
Unlike private groups or paid platforms, these sites are usually free and accessible to everyone. Traffic is quite huge, which can be advantageous for sellers.
However, a common disadvantage here is that there isn’t much of a screening process. You need to be extra careful when interacting with new sellers or buyers. Plus, there’s no guarantee that your transaction will be secure.
5. Direct Contact
If you know plenty of developers or content creators, this may be a good option. But, how does this work?
If you are a seller, you simply reach out to a site owner or buyer directly with an offer. But this will only work well for you if your site is already popular or if you have a groundbreaking app.
Keep in mind that your success is largely contingent on the quality of your network. A non-technical person or a beginner may find it limiting to rely solely on their contacts. It’s also not as efficient since you have to handle the entire process yourself.
Always exercise due diligence. Without the assistance of professional brokers, you lack the protection of being certain that the buyer or seller (or the site) is properly vetted. You are also not assured that you’re transacting at the correct market value.
A Quick Guide on How to Flip Digital Assets
Buying and selling digital assets used to be the forte of technical investors. However, that’s no longer the case, and even non-technical investors are now showing keen interest in managing and flipping websites and similar assets. This is possible due to the wealth of information available on the subject.
Over the past few years, buying and selling digital assets has become a multi-million dollar industry. In fact, some funds operate solely in this niche. Investors place money in the fund, and their fund managers then enlist the help of a team focused on growing their site portfolio and reselling them for a profit. This way, investors get massive returns on their investments.
Some investors prefer to purchase a website or other asset directly. They then either manage or fix it themselves or hire a team to manage the said asset.
You can also focus on one digital asset or diversify by working on several all at once. If you are a novice, the first option might be better for you. Depending on how proficient you are at it, you can consider flipping digital assets either as a side gig or a full-time business.
While flipping assets is a promising investment opportunity, like all other investments, it has its own share of risks.
Let’s look at the process in more detail.
Step 1: Set Your Strategy, Budget, and Timeline
Before you take any action, you need to have a strategy. This will help you make the most profits and ensure you stay on track with your goals.
Strategy
As part of your strategy, you must decide the following:
The niche you will focus on
The improvements you’re going to make
How much it’s going to cost you
How long it will take to implement the improvements
The skills you’ll need to make it happen
Other resources you’d require like equipment and software
Whether you want to focus on one asset at a time or improve multiple assets simultaneously
Keep in mind that you want to choose a niche that:
Promises a steady income over time
You are interested in it because that will keep you motivated
Timeline
Your deadline can be based on a fixed number of months or when you reach a revenue goal. For example, you can resell a flipped blog:
After 12 months of fixes
Once it starts earning an average of X amount within a quarter
This ensures that you won’t spend too much time and resources on a digital asset that’s not profitable.
Budget
There’s no magic number for this, as it depends on your strategy and goals. If you have limited funds, you can focus on buying smaller digital assets and fixing them yourself. If you have more capital, you can set your eyes on flipping bigger online businesses.
To reiterate, flipping digital assets is inherently risky. Like any high-profit business, you can potentially lose your entire investment, so choose wisely.
Step 2: Find an Asset in Your Desired Niche
Once you know how much you can spend and what strategy to use, it’s time to identify assets with high growth potential.
Here’s a good rule of thumb: Find a site or asset that is already making money but can be made more profitable with a few adjustments.
Here are other pointers for choosing a good digital asset:
Find an asset that only requires minor adjustments, not a major overhaul
Find sites that have organically built communities around them
Choose sites with strong domain names
Go for sites with solo web owners because this usually equates to lesser cost (as opposed to sites run by teams of professionals)
Domain names are a great digital asset for first-time flippers. You can search for available domain names below:
Step 3: Negotiate and Purchase the Asset
Before making an outright purchase, see if you can reach out to the asset owner to negotiate a sale. Based on your research and the asset’s analytics, set a reasonable price range that you can use to discuss terms with the site owner.
Remember to be both patient and realistic when negotiating a sale.
You can then purchase the asset using any of the platforms listed above. Again, remember to exercise caution when dealing directly with clients without the help of established brokers.
After negotiating, it’s time to draw up a contract to transfer the asset’s ownership to you officially.
The contract should include the following details:
Domain name
Business name
Registration details
Business information
Before you sign, ensure that all third-party software, subscriptions, and other important details are updated with your information as the new owner.
Step 4: Improve the Asset Based on Your Strategy and Timeline
Start making improvements on the asset you acquired. Depending on what you purchased, improvements can be around any of the following aspects:
Content
SEO
Conversion Rate Optimization (CRO)
Technical aspects
Features
Design
User experience (UX)
Speed
Traffic
The goal is to improve the asset so that its monthly earnings and overall value sees an increase.
Say you want to flip an eCommerce website. You can increase the value of this asset by:
Improving traffic. This can be done by adding SEO optimized landing pages and targeting competitive keywords. Check out: "How to Drive More Organic Traffic to a Shopify Store for Free" for more information on how to accomplish that.
Improving user experience with a mobile-friendly theme
Improving clickthrough rates and conversions with CRO
Improving profitability through affiliate marketing, advertising, offering digital products, and marketing attractive subscription services
You can do the revisions yourself or hire a team to implement them. Freelancers are a good resource since flipping is usually done on a per-project basis.
Some prefer to hire a permanent team, especially if they are working on a large project or planning to flip assets long-term. However, full-time employees mean higher labor costs.
Step 5: Sell the Asset at a Profit
Once you’ve improved your asset, you can expect an increase in value. Go ahead and sell it off to another investor for a much higher price.
Remember: Don’t undervalue your work. You’ve already invested months of your time, so make sure you get a healthy profit.
If you choose to sell, here are some tips to increase your chances of selling immediately:
Make your listings descriptive
Create a pitch deck that focuses on the asset’s strengths and potential
Leave out the fluff and any irrelevant data when presenting your asset
Be friendly and responsive to potential buyers
Looking for a steady income stream? You can also keep the improved asset for continued cash flow if that’s a better fit for you than reselling.
How Long Does It Take to Flip a Digital Asset?
The entire process can take anywhere between six months to two years, based on the unique conditions of each purchase. For example, if you purchased a blog or business that is already revenue-generating, you may only need a few months to improve it.
However, if you have specific goals for an app or digital product, improving it might take longer. Issues like poor SEO, technical bugs, or outdated content may require more time. Most flipped assets also need rebranding before being relaunched.
Practical Tips for Flipping Digital Assets
1. Take an Inventory of Your Time and Money
Before you start looking for assets to flip, evaluate how much time and money you are willing to invest in the endeavor. Your goal is to grow your money, so it’s prudent to consider how much you can truly afford to invest.
Remember: only invest what you can afford to lose. Similar to any other investment or business opportunity, flipping assets involves substantial risks.
Once you have an approximate budget, then factor in your time. Are you committing to this as a side hustle or as a full-time occupation? Consider the number of changes that you’re willing to make on an asset.
Are you willing to do development work, a content overhaul, SEO reboot, or just a few enhancements?
2. Do Your Due Diligence
Watch out for online scams and fraudulent digital assets. You stand to lose a lot of money if you fall victim to these schemes. If it sounds too good to be true, it probably is. The US Securities and Exchange Commission lists some warning signs to look out for.
If you buy or sell digital assets on platforms like Flippa, they will handle the due diligence work for you.
Here are some things you need to look out for when looking for assets to flip:
Find Out Why the Asset Is Being Sold
This could reveal crucial information that may stop you from buying a site or product. Maybe it’s been losing sales due to waning interest in the market. Perhaps it has been flagged by Google.
The information you find out will help you make an informed decision later on.
Check the Backlink Profile
You don’t want a site that has no backlinks at all. If it has too many paid backlinks, the chances are high that they are also either penalized by Google or rank low on Google SERPs.
Ask for Analytics and Proof of Revenue
Study the platform’s analytics and look for consistencies or dips in traffic, page views, and users. You can use a tool like Google Analytics for this purpose.
Do a Background Check
Some platforms have user profiles with feedback and ratings, so you can check if the buyer or seller is trustworthy. Make sure the customer reviews are authentic and recent. You can also look at review sites and other third-party sources for verification.
3. Choose the Right Niche
The secret is to find a niche you are interested in and also has the potential to earn money. Otherwise, your lack of interest may slow you down as you improve and market the asset.
Also, you don’t want to pick an app or site based on a short-lived trend. You’re investing a significant amount of money, so you might as well choose an asset that will continue earning profits for a long time.
As a rule of thumb, it’s great to look for sites that have evergreen content. Since their content isn’t time-bound, the information remains useful for years to come.
Here are great examples of evergreen niches:
Food and recipes
Sports and hobbies
Health and fitness
eCommerce
Education
Money and finances
Self-help and personal growth
Business and entrepreneurship
Current events and political commentary
Entertainment coverage and analysis
Science and technology
If you’re buying, you might want to check out this guide for first-time buyers on Flippa. It contains tips on what to look for while buying digital assets.
There’s also a guide for first-time sellers that talks about listing your assets, generating interest for your listings, accepting an offer, and finalizing a deal.
Success Stories for Flipping Digital Assets
We’ve outlined helpful tips and tools above, which will hopefully help you get started on your digital asset flipping journey.
If you need more inspiration, here are more success stories:
The Amazon Associates site Outdoor Man Cave sold for $138,000 only two years after its launch.
Indian entrepreneur Priyadarshan Joshi was able to turn Split Screen, an app he acquired for $1,000, into an app that has earned $92,000 within five years.
The online golf shop, Blue Tees Golf, was sold for $160,000 two weeks after being listed on Flippa.
The story of the influencer marketing and analysis platform Ninja Outreach, which sold on Flippa for a whopping $2.5 million, is truly inspiring. Its seller got a whopping 300% return on investment.
Beauty brand Zone-365 Beauty saw a quick turnaround from posting to sale. The company was snapped up for $220,000 eight days after being listed.
When Should You Build a Digital Asset Instead of Flipping an Existing One?
While we’ve been talking largely about flipping that involves buying and selling, building your own asset is also an option. If you’re a developer, this might be an attractive option for you. Besides, building your own site or another asset can be incredibly cost-effective.
Provided that you have the technical skills and know-how, you can definitely build your own assets and flipping them later on for profit.
If you choose to build, you can save time and money from finding and fixing existing assets. You can then proceed immediately to Step 5: Sell the Asset at a Profit.
Final Thoughts
Now that you have a better grasp on how to flip digital assets, it’s time to take action. You can start small with a starter blog that’ll help you get a feel of the flipping process. There’s no limit to the type of asset you acquire, as long as you have a clear vision of your goals for each project.
Remember that investing in digital assets also entails risk. Don’t dive headfirst into the first opportunity you find, no matter how great it sounds. Enlist the help of a trusted broker or company to make sure that you’re acquiring a high-quality asset or selling to a reputable buyer.
Happy flipping!
