Everyone says the riches are in the niches but not all niches are winners.  Here are the top three ways to pick a bad niche for web design.

What We're Looking For
When identifying a good target market for high-ticket web design there are three criteria we want to look for.
B2C or B2(small)B
It's best if your client is in either the Business To Consumer or Business to Small Business space. Large businesses have too long of a sales cycle for or tools (email lists, webinars, paid ads, funnels, etc.) to be effective. Non-profits often times don't need a $10k+ marketing plan. I don't even touch government contracts.
$100,000+ In Gross Revenue
The client's business needs to be able to sustain at least $100k in gross revenue. They don't have to be there yet. But, if they can't sustain that level of revenue then they don't need a $10k+ marketing package.
$1,000+ Customers
We want the annual value of the client's customers to be at least $1,000. That doesn't mean the transaction value is $1,000. We want the customer to spend at least $1,000 over the course of the year. For example, a chiropractor may only charge $100 for an adjustment but the patient comes in every month. So, that patient is worth $1,200 per year.
This leaves a lot of room for good target markets like, real estate, HVAC, roofing, lawn care, auto detailing, residential painting, pest control, personal trainers, local gyms, etc.
Bad Niches For Web Design
Now let's look at a three different categories of niches that tend not to fit this model.
Hobbyists and Side Hustlers
There are some industries that tend to be considered “fun” businesses and they attract a lot of daydreamers who fantasize about how cool it would be to have a business doing something that was exciting all the time. In other words, there are some industries that tend to attract people who aren't all that business savvy and they are very hard to work with. They tend to have a very hard time making decisions and they also have extremely low budgets.
Work Now, Get Paid Later
People in this category tend to want you to share their enthusiasm and “invest” your work into their business in exchange for some future payout. If the client isn't fully committed to their own business, it's unfair for them to ask you to be fully committed. This shows up when people ask you to work on commission, on payment installments, or in some way where you have to lay out a bunch of unpaid work upfront in the hopes that you'll get paid later.
Notorious Hobby Businesses
I'm about to make a bunch of sweeping generalizations which obviously aren't always true. But, in my experience, these are the niches that I've found that tend to attract daydreamers with low budgets who have a very difficult time committing to a marketing plan.

* Artists and musicians
* Dropshipping businesses
* Most apparel/clothing businesses
* Health/diet coaching
* Yoga studios
* Event/Concert promotion

Micro-Businesses Trying To Compete With Giant Businesses
This category is not as rare as I originally thought. I regularly get contacted for marketing advice from people who believe they are going to take down PayPal with a new online payment system. Literally, yesterday, I spoke to someone who wanted to take down Amazon in favor of a local online marketplace.
The problem is not that these people have bad ideas. The problem is they have absolutely no idea what they're getting themselves into from a financing, staffing, and marketing perspective. It's easy to get excited about really good ideas, but those ideas also need the structure and funding to support them. Most of them don't.
The Selfish Niche
This is the most common problem – by far – that I see when working with people on defining their target market and picking a niche.