How Much Is My Domain Worth?Posted: September 28, 2011
In my last post, I mentioned that the number one question I receive when I tell people I am involved in the domain business is, ‘How much is my domain worth?” I guess I shouldn’t be surprised that I’ve had a dozen people contact me in the 24 hours since that post asking me that same question!
One of the good and bad things about domains is that pricing is very subjective. The closest industry that the domain industry can derive some kind of formula from is the real estate industry. In real estate, pricing comes down to location, size, features, comparative property sales and demand vs availability. A small amount of the price of physical property can be related back to how much a buyer wants a property.
By contrast, with most domains, the bulk of the pricing of most domains comes down to two factors: how flexible the seller is on pricing and how much the buyer wants/needs a specific domain.
In my previous blog post, I mentioned that the first domain I sold went for a hefty amount. I can guarantee you that no one in their right mind who works in the domain industry (including me) would have pegged that domain for having sold for as much as it did. But it came down to the buyer having sufficient funds to get to a price that I said yes with and that they really felt they needed to have that specific domain since it was their startup’s new name. It would have cost them much more to rename their company and deal with the delays than what they paid for the domain.
Even when pricing domains in our own portfolio, Steve Jones and I do a lot of it on “gut check.” What our experience and knowledge of comparative sales have shown us. What we feel the potential end user demand will be. How marketable a domain is. How much money is in the industry. There are a lot of different factors that go into setting a price. Even then – and even with the experience of having sold over 15,000 domains – when we do close a sale, even if it’s for a large amount we’ll find ourselves asking, “Should we have asked for more for it?” There’s very few domains I’ve sold where I didn’t wonder if I/we couldn’t have made more money.
At Domainate, we try and focus on making our domains for sale affordable for buyers. Others in the industry would likely ask several times what we do for the same names. We’d rather turn inventory over faster and have buyers feel they got a good buy rather than feeling ripped off.
Given all of what I’ve shared is it any wonder when people come to me and ask, “What is my domain worth?” that I am forced to tell them that I really can’t answer that?
Most of the time, I’ll refer people to Estibot.com which provides automated appraisals based on search volume, ad competition, cost per click pricing, the extension of the domain and comparative domain sales. At best, any tool like this can just give a ballpark. But it is a tool we use daily ourselves.
For people not directly involved in the domain industry, I can appreciate that knowing whether their domain is gold or fool’s gold can be difficult. Probably 99% of the domains people contact us about for appraisals or wanting us to find a buyer for (brokering) are not even worth registration fee.
We used to offer (for fee) review of domain portfolios and make pricing suggestions. We no longer even do this. The subjective aspect of domain pricing really puts us in a tricky position. The last thing we want to do is say a domain is worth only $100, for example, the owner sells it for that to someone who sells it for $100,000 and we find ourselves facing potential legal action.
In an upcoming post, we’ll share some ideas on how to determine whether your domains are actually worth anything or not.