Quick Tip for Buying a Domain Based on a Revenue Multiple
People still frequently sell domain names based on PPC revenue multiples. Personally, I don’t generally buy or sell based on a revenue multiple since that number is a moving target, but in case you do, here’s a quick tip that could help.
Do a quick back-of-napkin investigation about the domain name’s current owner. See what other domain names he owns and where he parks them. If he has a number of good domain names all parked with the same company, you can probably assume he has a more favorable revenue share with the parking company than the average client – which may or may not be you.
If his revenue share happens to be 50% higher than yours, you will make much less money even if everything else is the same – exact same landing page, same layout, same parking company…etc. If you change parking companies, that number is even more of a crapshoot.
On the other hand, if you see that his landing page isn’t optimized, or if you know your revenue share is on a VIP level, you could be paying an even better revenue multiple.
Just beware, as public companies need to disclose on their forward looking statements, “past performance is not indicative of future results.” This is especially true with PPC revenue.
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