Valuing a Domain Name | DomainInvesting.com
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Valuing a Domain Name

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Determining the value and sale price of a domain name may seem fairly simple, but there are quite a few factors that need to be considered. Frequently, domain names are priced based on a gut feel, and that gut feel takes many factors into consideration.

In the comment section of my article yesterday about the difficulty in getting market prices on domain flips, Leonard Britt made a suggestion to me: “Perhaps your readers might find it useful to learn how you determine a reasonable end user price for a particular domain.” I shared some of the factors I consider when valuing a domain name, and I thought it would be a good topic to discuss in its own blog post since many domain investors struggle with this issue.

When a domain name is priced too high, prospective buyers may look elsewhere. They may purchase a better priced domain name on Sedo or Afternic, or they may hand register a domain name. When a domain name is priced too low, the seller will end up leaving money on the table. My philosophy is generally to price domain names on the higher side but negotiate a fairer deal with qualified prospects because there are plenty of deals to be had and cash flow is king to the growth of my business.

Listed below (in no particular order) are some of the factors I consider when valuing a domain name:

  • How much advertisers are paying in Adwords for the keyword
  • How many similar domain names are developed and (and by whom)
  • Public and private comparable sales
  • Public and private comparable asking prices
  • How many companies in that market
  • How many companies advertising for that keyword
  • How much income the domain name earns
  • How much I paid for the domain name
  • How my business is doing
  • Who wants to buy the domain name
  • How many inquiries I’ve received for the domain name
  • Past offers for the domain name
  • Recency of offers
  • Can I use the cash to buy something better
  • How quickly will I be paid
  • How complicated is the deal

Some of the factors I listed need to be researched considerably, and other factors are immediately known off the top of my head. Obviously some of the factors are more important than others.

I invite you to expound upon the factors I’ve listed as well as share some other factors you consider when valuing one of your domain name assets.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (3)

    NameYouNeed

    How the BUYER’S business is doing is a factor I take into consideration.

    March 26th, 2014 at 11:38 am

    Leonard Britt

    Yes, pricing is a critical strategy for any business. Overpricing a product/service can lead to lost sales while underpricing yields reduced revenues and cash flows. In the case of domain names, a domain can only be sold once so one could potentially price on the high side knowing there are numerous prospective buyers. On the other hand, while it is normally not difficult to find potential buyers for a quality domain name, it can be considerably more difficult to find actual buyers. So overpricing a domain can have a more adverse impact on your business if say you do outbound marketing to a number of companies and only one or two respond, “How much?” Overprice the name and your efforts yield nada.

    As I mentioned previously, SEDO reports a median sales price for .COM domains of around $600 with quality keywords in ohter extensions a bit less. There is considerable variability and pro domainers such as Michael Berkens, Frank Schilling and Rick Schwartz have illustrated how keen negotiating can yield a much larger sales price than one might normally expect from a particular domain name. It really depends on who the buyer is. Back to reality – most of my sales are in the $300 to $799 range with an occasional sale up to $1500 and only rarely above that. I do try to gauge keyword / TLD quality and adjust prices accordingly but my sales generally come from mid-quality names rather than my best domains. So with most sales under $1000 I cannot afford to get into bidding wars on Namejet etc.

    I really wish Godaddy provided more reporting data of the sales on its platform similar to what SEDO does with their quarterly reports. I don’t place as much reliance on the Afternic reports because their sales generally are from their own inventory and oftentimes the sales prices vs keyword quality just really don’t make sense.

    The other challenge is that while buyers might prefer fixed pricing, it is really difficult to fairly assess hundreds of domain names when recent sales of comparable keyword names can influence one’s view of market price. It has happened to me on a number of occasions where I receive notice from Godaddy/SEDO of a domain sale and feel that I underpriced the domain. But we all need revenue to pay renewals.

    March 26th, 2014 at 1:47 pm

    John

    Uniqueness can come into play. Obviously every sld in .com is technically unique, but of course I’m talking about when there can be no substitute rivaling the best of the bunch whatsoever no matter how hard people try with variants. I have one like that consisting of a many years famous phrase established in popular culture on a global scale, and no matter how many variants people make, of which there are certainly some, there is and can be only one. That would fall into the brandable category that can be used for virtually any purpose whatsoever. On the flip side, I have another which is explicitly useful for a specific purpose. There can be many variations of it which can be useful for the same purpose, but there can be only one version of its kind that exists apart from them all as the exact definitive phrase for that purpose. That’s the one I’ve had a new suitor for lately with the “bod” (board of directors I guess), who just got back to me recently after I threw up the $x, x x x, x x x expectation to him. He says they have deep pockets, but he’s still asking for stats, which I still plan to tell him I won’t be giving out.

    March 26th, 2014 at 6:42 pm

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