Art of Pricing a Domain Name
Yesterday, I blogged about the “Art of Selling a Domain Name,” and I want to take a step back a bit and discuss an important step in the process: Pricing. If you price your name too high, it won’t sell, and it will set a price ceiling for the name. If you price it too generously, you won’t achieve as high of a return as possible. There is an art to pricing a domain name, and I would like to share my own personal process for pricing my domain names when I sell.
For the sake of this blog post, I will use my domain name AlcoholCounseling.com as an example, and I will set a sales price for the name at the conclusion of this.
When I decide to sell a domain name from my portfolio, I look at a variety of factors in order to determine the price, including:
1) Traffic the name receives
2) Revenue the name receives
3) Google listings for the “bracketed term”
4) Advertisers on Google
5) Comps of recent sales
6) Gut feel
Although I don’t buy my names based on traffic or revenue, I know that many of my clients pay close attention to these figures. The amount of natural traffic a domain name receives is important because it shows how many people are looking for something on that domain name without having to incur advertise costs. I also use the Overture search tool to get an idea of how many people are searching for the phrase or keyword of the domain name I am selling. For AlcoholCounseling.com, the traffic is light, only receiving about 1/2 a unique per day.
The revenue is important because a name might receive very little traffic, but the revenue per click may be very strong. Conversely, a domain name might receive a ton of traffic, but the click through rate might be low and the revenue per click might be low as well. This is important because if a name has strong revenue, a developer can build compelling content, increasing search engine traffic, and dramatically the revenue produced by the name. For AlcoholCounseling.com, the CTR is about 25% and the revenue per click is around $1.50. It is important to keep in mind that revenue share and CTR will differ for each parking provider and can be very different. This is one reason I only use this as a guideline.
I use the number of Google listings for the word or term in my domain name as an indicator of how much information is being published about the topic. It is likely that there is a parallel between the amount of information available and the number of people looking to find information. In the case of “alcohol counseling,” there are 154,000 Google searches for the topic. It is important to put the term in brackets, otherwise the results will include all pages that use alcohol or counseling, which is deceptive.
The number of advertisers who are paying per click is also a good indicator of the importance of a keyword or phrase, and thus the value of it. The more advertisers, the more competitive the bidding is, and that may mean a higher revenue per click figure. In the case of “alcohol counseling,” there are 8 sidebar advertisers, and there are 2 top advertisers, which is very strong in my opinion.
In order to get comparisons of other sales (both recent and historical), I like to use DNJournal’s Domain Sales chart or DNSalePrice.com. I also reference personal sales and other sales that might not have been published. For AlcoholCounseling.com, I would compare it to other psychology, rehabilitation and counseling domain sales. I have been fortunate enough to have sold a few similar names, so I have a good internal base. There have also been several public sales ranging from $3,500 – $10,000, which is in line with names I’ve sold.
Just like a real estate broker, I spend countless hours analyzing the domain market. This has given me a good “gut feel” for certain domain names. I also take my clients’ needs into account. I think about their verticals, their needs, and the types of names they buy as well as the price they would consider for this name.
In the case of AlcoholCounseling.com, I will set a price of $5,800 for the domain name with the hopes of a quick sale. Of course, if you are interested in acquiring the name, drop me a note or post a comment.
I just want to add that these are the most important factors I consider when setting my prices. There are plenty of other considerations, including: whether the other extensions are owned and used, registration date of the name, prior sale price/listing of the name, amount of inquiries the name has received in the past….etc.
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