What Is My Domain Worth

Background

It Started in the Forums

Chuckingit Featured Image PoolSparkles 46-144Recently there was a thread in a Yahoo Developers Forum that I subscribe to about how to sell and value a domain name.

Since I’ve bought and sold many domains over the years, I thought I’d post this Yahoo thread here as it ends with my response which may be of value to those who are thinking of buying and/or selling domains.

The Discussion Thread

Here is the Yahoo Forum Discussion

The Yahoo thread started simply when one member reached out to the group and said:

I was contacted last week by an attorney who wanted to know if I was interested in selling a domain that I own funpoints.com

I have never used the name and have held onto it thinking that the right project would come along. Anyway, he later offered $1000.00 for the domain. Before I just blow him off, I thought I would ask the group if I am over valuing the domain name. By the way, he specializes in the Entertainment Industry and Trademarks.

I always thought it would be a great name for a rewards points program for one of the airlines or card issuing banks.

The first reply to his question was this:

I feel you have legitimate reason to hold out for more. That’s actually a really good domain name. Just come up with a counter offer of $7,500 and then he’ll meet you at 5,000.

And the second reply was this:

you might want to start the negotiations by letting him think you are not that interested in selling (instead of throwing a number out there right away). you will then find out how interested he is in buying. That is usually the best starting point.

My Reply

And Here is the Third Reply

And the third reply was from me – enjoy!

i happen to have some decent experience buying and selling domains for self and clients and your situation reminds me of one of my early 5 figure sales … so here are a couple rambles for whatever it’s worth dept …

a) values … there are a number of sites out there that will give you a valuation … some are bogus, some are legit … in the end, domain values are a lot like antiques – sure your Picasso might be worth $10 million but the bigger question is not the value but finding a buyer who is willing to pony up the $10 million at a time when you are looking to cash in … thus there is an opportunity cost vs a valuation … ultimately, it is only worth what someone is willing to pay for it …

b) domain values are also a lot like diamond valuations in that there are several characters that determine value (e.g., cut, clarity, carat, color) … ditto for domains (e.g., shorter = better, dot com = better, phonetic one-way spelling = better) … consider one of my domains, cooltea.com … this is short, a dot com, but if you say it aloud or heard it on a radio station, one could spell it as KoolTee, CoolT, etc … vs a longer domain like DiscoverNewEngland.com but can only be spelled the way it sounds … thus on some level the second domain could be argued to be more valuable than the shorter one ..

now this concept of values does not take into account any revenue generation from ppc (pay per click) or ecommerce you might be doing (all of which would add to the domain value)

c) selling yourself short … i got similar out of the blue offer for a real estate domain i had in my portfolio (without naming names, lets call this domain “SomeStateRealestate.com” … the guy offered $2k in his initial email thus i knew he wasn’t a tire kicker … so we picked up phone and spoke … ultimately i settled for $12k by financing the domain … e.g., i modified the name servers to point to his network so he could use domain while he then paid monthly payments … when paid in full, i transferred domain and was done … the legal contract i had to produce was a bit of a head scratcher as i didn’t want to be liable for anything while he was using the domain during the finance period but i digress … later, i learned of a related domain, NewYorkRealEstate.com, which sold for $100k … thus i knew i undersold but that is part of the learning and at the time i was happy to get the money and break into the five figure sales …

d) another scenario … a couple years back i had been contacted by large travel web site that hired former Microsoft brand strategists to negotiate for one of my domains, LuxuryForLess.com … the company had a brand issue in that they were known as “CheapTravel” or something like that and their suppliers (e.g., the Marriots, Hyatts, Hiltons, etc.) did not want to be associated with “cheap” anything … the MS guys went and got a domain evaluation from independent group that came back with valuation under $5k … i laughed at him because around the same time i found high end domain brokers in Boston who had a minimum $20k commission (yes, twenty thousand) and confirmed that my domain was a minimal 6 figure, possibly 7 figure valuation …

morale of the story = domains are the brand in today’s global wired economy … who cares if you have a trademark for McDonalds – as long as you own mcdonalds.com … besides, there are common law trademarks and the legal eagles will tell us that when it comes to law, possession is 9/10ths of the game … ditto for domain brands …

thus my feeling is your domain, funpoints.com, is a minimum $20k domain … and possibly $50-60k for the right buyer … e.g., i know of a company locally that purchased patio.com for $100k and built their analog stores around said domain name … thus funpoints.com for a Mastercard or Discovercard kind of player (or even Las Vegas types) would have no problem ponying up fair market value … and besides, they aren’t making any more dot coms so the price will only increase with time …

accordingly, here is hoping you get what you are entitled to :>) cordially, chuck scott

FYI After the Discussion

PS – This Was not Part of Yahoo Thread

And fyi, here is a PS that was not part of Yahoo thread …

Earlier this year we were approached by a group in the UK with a phone offer to buy DiscoverNewEngland.com for $5k … I didn’t inquire if that was in Euros or Greenbacks but promptly declined that offer and wouldn’t even consider unless it had another zero attached … thus beware of those low ballers out there … this is also another reason I don’t advocate domain auction sites like Sedo … the only real buyers and prospects at domain auction sites tend to be bottom feeders looking for basement bargain prices knowing they can flip the domain at a future point to a real brand at a hefty profit … i also have real concerns about firms like Sedo as their featured domain service produced not one inquiry but i digress …

 

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