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Valuing a Domain Name
Is this a good methodology?
cuid




msg:4323595
 7:06 pm on Jun 8, 2011 (gmt 0)

I would appreciate thoughts on this methodology for valuing a domain/website please.

My website is example.com and is developed with articles and news about examples. It receives 4000 visitors via Google via the keyword "example". The Approximate CPC on Google Keywords for the keyword "example" is $10.

Does it make sense to say that this would be worth $40,000 per month to a company who sells examples? And that this is why a company selling examples should buy examples.com?

Thank You

 

wheel




msg:4323601
 7:22 pm on Jun 8, 2011 (gmt 0)

I'm not a professional, but as soon as someone starts with the 'I own a website in a niche that has $10CPC", I lose interest.

How much money are YOU making right now? That's the starting point for your valuation. Not how much money you wish you were making.

cuid




msg:4323606
 7:39 pm on Jun 8, 2011 (gmt 0)

I appreciate that how much examples.com is making now is one way of valuing the website. I'm looking at it from a different perspective. If a company who sells examples were to own the website they would have 4000 extra visitors to promote their products to. I am simply using Adwords CPC to set a value on these 4000 visitors who are searched for examples.

wheel




msg:4323619
 7:59 pm on Jun 8, 2011 (gmt 0)

Well, value it however you like. But you asked for opinions, and my opinion is that if you tried to sell me a website with a valuation like that, we wouldn't be doing business. not because I'd be offended, but because I'd know you've got a site that's worthless. Because every time I've seen someone doing CPC valuation, the site has been worthless.

You can't sell wishful thinking.

buckworks




msg:4323694
 11:16 pm on Jun 8, 2011 (gmt 0)

I am simply using Adwords CPC to set a value on these 4000 visitors


FWIW, AdWords advertisers who know what they're doing are unlikely to pay the CPC that Google suggests.

You're right that CPC prices can be a useful starting point for valuing a domain, but potential purchasers would crunch their numbers based on what they really pay, not on what Google suggests. Expect that to be a lot less than you're envisioning.

In addition, potential purchasers would also discount what they'd be willing to pay to allow for the risk that traffic from the search engines can be seriously unstable. Past performance is no guarantee of future performance.

walkman




msg:4323708
 11:42 pm on Jun 8, 2011 (gmt 0)

wheel I disagree :)
some people just park it for example so income has zero value.

For me it would be:
Is 'example' going to be here 5-10 years from now?
Is 'example' likely to be bought /sold /referred to online?
How lucrative is?


I have a site that technically has ads with $20+ CPC but at most I got was $5 clicks.

Whitey




msg:4324920
 9:22 am on Jun 11, 2011 (gmt 0)

Domain and website valuations are likely to be different.

Domain .com = $15
Website = cost price of replacement

Anything else is a business valuation, based on the criteria of the purchaser and the market. And it could be from zilch to billions.

wheel




msg:4324969
 1:39 pm on Jun 11, 2011 (gmt 0)

some people just park it for example so income has zero value.

I didn't suggest income is the only valuation. In fact, it's probably a poor one as well in many cases. But it's a heck of a lot better than CPC.

If the domain is worth a lot because of CPC, then you would need to prove it. Nobody's buying based on high potential CPC.

If you're actually earning a high CPC, that's another matter entirely. Now you've got revenue - use that to start instead.

If you aren't earning high CPC but are in a high CPC arena, you need to find another non-tangible reason someone would buy that domain/websites.

Basing value on high CPC is the realm of people who register the domain bestlowratemortgageonline.info and then claim the site is worth $400 because it's in a high CPC realm. That domain's not even worth the $9 to register it if you ask me.

Webwork




msg:4324991
 2:54 pm on Jun 11, 2011 (gmt 0)

Read this classic from the Domain Name Forum library about how to pick and value domain names for resale:

[webmasterworld.com ]

walkman




msg:4325126
 1:03 am on Jun 12, 2011 (gmt 0)

wheel, CPC is correlated with potential earnings. If I have l*wyers.com we know that lawyers advertise a lot so the odds of me making money are higher than having, say, birdwatch*rs.com.

Obviously it's not an exact science and the name has to be top of the line too, not just have the keyword. The OP stated that he has example.com and that 'example' is popular with advertisers.

cuid




msg:4325153
 4:12 am on Jun 12, 2011 (gmt 0)

I agree that there are other ways to value a domain/website. Let's look at selling the actual domain name. I would suggest that this CPC method would be one way to approach a potential buyer of the domain name. You can demonstrate with a live website that they could (with a small amount of effort in this case) have a top ranking website generating leads for them. The website in question is number 2 on Google and the domain name is the actual keyword.

Why don't marketing people understand this? I believe it's because it would mean someone putting their neck on the line and taking a risk.

topr8




msg:4325164
 5:57 am on Jun 12, 2011 (gmt 0)

i'd say webwork's link is definitive.

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