| This 35 message thread spans 2 pages: 35 (  2 ) > > || |
|How to Pick and Evaluate Domain Names for Resale|
Factors considered when bidding on or selling an aftermarket domain
I just bought a bunch of domains that I think are really good. All .doms, no hyphens, all highly searched keywords, all great branding, all good markets like travel, real estate, insurance, loans, cars.
So here is my delima. I want to pay for 2 featured listings on Sedo and/or Afternic, which costs 39.95 a month for each name. Obviously I want to pick the 2 best names that I think will be most attractive to potential buyers for these paid listings. But I can't pick 2, I think most of them have very good sales potential.
So how do I pick the top 2 to buy a featured listing for? How would you guess which ones would be most likely to sell? Would you base your decision on: the industry, # of searches on the KW, branding, number of words in the name, other?
I'm sure some of you have been in this spot. What was your thought process and how did you make a decision? I know there is no clear cut answer on this, but thought it would spark a good discussion.
Since you recently began posting at DS I would suggest you seek input there since the TOS are different than here, there's actual "value this" sections to the DS forum and there's also a more activite domain reseller contingent, one that will promptly disabuse you of your ideas about their value.
Here is a list of how to value domain names:
If you can't choose: the ones with the most type in traffic?
Thanks HitProf, that's exactly the type of info I was looking for.
Sedo doesn't sell domains. The domains sell themselves.
You question appears to be about domain value. Clearly, the one's 'with value' are the ones to list. Theories about naming are nice, but the acid test is value. Not perceived, though you could debate that - insisting that it's the perception that will evoke a buyer. Millions of domains that have lapsed passed the perceived value test. I'd rather focus on market value. Perceived is nice if you are prepared to wait and wait and lose money. Selection formulas help with assessing perceived value, but isn't the real test 'what domain(s) - with such perceived value - have actually sold in the past year?' Appraisals, not based upon comparable sales, are as abundant as they are useless. What do I mean?
There is often an inverse relationship between the sophistication of the domain appraisal formula (read: extensive wording) and the formula writer's experience in the aftermarket. Not in Lisa's case. Just often. Some of the crapiest appraisals I've seen have gone on for pages and pages of analysis. I guess that makes the purchaser feel that they got something more for their money. My favorite appraisal factoid is the number of appraisal scams that are being run: "I want to buy your domain but will only buy it if it is appraised for $X AND you - the seller - must supply me with this appraisal". Duh?
If you want to get a handle on value - which in my book means comparable sales - then go to the source for pegging value: BuyDomains. They have the largest inventory for sale, routinely beat all others in the domain drop process and likely have sold more domains than the next 100 resellers combined. You could also see info about past sales at Afternic and DNJournal.
Match up your domains with the closest domains you can find in BDs inventory that are currently priced. That will give you some sense of FMV. BD's prices are actually rationale 85%+ of the time, which is more than I can say about 85% of the remaining domain resellers.
The trick in the aftermarket is a sound naming theory. There are a handful of people, besides BD, whose naming theory I've come to admire. The person behind TheNameStore is a very good example. Look at his collection of dating and real estate domains. One of the early players - WebsiteNames - shows similar skills. Compare your multiword domains with their holdings.
I believe I saw a few of the domains you posted at DS. I see youthful enthusiasm. Been there. Paid the price. I assure you, any hot properties that are dropping are not falling into your lap or mine. Any hot properties that are currently available for registration are ... well ... most likely beauty in the eye of the beholder. You may find someone to love your registrations. Love happens. Just less often for some domains. A good idea of the loveliness of your domain holdings if the frequency with which you find love letters ('How much for your domain') in your email in box.
My holdings are in the 3,000 domain range, some of which you can find your way to by the link in my profile. I've been at this since 1999, not one of the early birds but early enough to have acquired some nice domains in the aftermarket before it caught fire again. I've sold domains in the $XX,XXX range. I've also bought domains in the high $XXXX range.
There's often a tendency for people to think they have found a niche, cornered an undiscovered market, etc. I've come across literally 100s of such domain entrepreneurs. People who cornered the "MyWidget, MyOtherWidget" market. The ABCDomain, 1800Domain, PlanetDomain, HotWidgets/HotSmidgets etc phenomena. The most dangerous experience is making a sale - which can appear to validate the theory. These days, with $6 and $7 registrations the risk isn't that great. When I started with was $70.
A decent acid test really is the response of a few of the bigger players at DS, people who've actually sold more than a few $1000+ domains in the aftermarket. There's about a dozen people who post there that demonstrate a good handle on the aftermarket. If you ask for a value and you get a polite response at DS the domain is likely toast. If you get a palpable lukewarm response then you are likely on to something worth at least a few hundred to a few thousand - if you are willing to wait. The problem with people asking for appraisals at domain forums is that they are usually posting junk and when they get no response the inference that they draw is often wrongheaded.
Here's the proven market: One word dot coms with a commercial nexus are the big league. Dot net is dropping like a rock, unless it's really network related. Traffic typos have value. 2 word industry phrases/generics are of some value - depending. Geo domains in most extensions have value. Biz is stillborn. Info is rising. Org is working out its role. My theory is that if you do the right thing with an org you can gain the advantage of the org TLD brand. A domain that is a "brandable domain" is another way of saying "shot in the dark" domain: Hold it long enough and you might find a buyer - maybe. Again, the better approach is to scope out BD's pricing.
The formula set forth in WW is nicely written and thoughtful. It is useless for fixing a value. Fixing a value is a whole 'nuther lesson. What's written is a guide to why/what someone else - or you - might want to register. It's of no use in setting a value and that, after all, is the most important part of the game.
Lastly, if the domain is desirable, you needn't list it at Sedo or Afternic. Someone interested in buying a domain that isn't serving an active website will reach out to you. You can create your own splash page and save yourself the money.
Thanks so much for all the information!
"I see youthful enthusiasm"
Actually I am not that youthful. I have 15 years in sales managment and over 6 in online marketing, but I am starting to feel rather naive. Out of all the advice I have gotten so far yours has been the most enlightning and knocked the rose colored glasses right off my head! I will most likely remain optimistic and enthusiastic as that's my nature, but will sure try to be stay a little more grounded in reality. I certainly won't get excited and buy any more names until I research them more thoroughly, taking your advice into account.
This started as a hobby and grew into an entreprenurial obcession. I have a very successful online consulting business in another arena. I just needed something new and exciting to focus on - on the side, for fun. I can afford to sink some money into domains at today's prices so I still think if it as a hobby and who knows, maybe some day I could sell some domains and make some money.
Since I have a strong SEO background, I plan to build some of the names into sites and once they have some traffic and revenue, they may be worth something. In the meantime I will have fun playing at this, learning from pros like you and you just never know...
Not much I can add to WebWork's masterful analysis, but just a quick pointer on appraisal threads on other forums.
It's amazing (or perhaps not) how many times such threads degenerate into two "camps", one occupied by the name owner (i.e. the person initially requesting the appraisal) and the other by everyone else.
The owner tries desperately to "defend" a high valuation for their domain in the face of "regfee" (i.e. "not worth more than registration fee") and low $$$ appraisals.
There's so much wrong with this picture that I won't belabour the issue, but I'll draw out what to me is the most forehead-slappingly obvious "no no" of such scenarios: even if the domain owner brow-beats others into assigning a "higher" appraisal value to their beloved domain, this is 100% pure ego-stroking since the exercise won't increase the *actual* value of the domain one iota.
Instead, go with first impressions and always knock 50-90% off the valuations assigned if you're trying to compute "potentially quick resale price".
For instance, if you get a decent number of appraisals around the $1,000 mark, it means in practice that you might get $100-200 for the domain name *if you try to sell it quickly* via one of the domain forums. Of course, if you hang onto it, track down a buyer and negotiate a private deal, the sky's the limit - but surprisingly few domain owners are willing to go this extra mile.
Not quite certain I follow you or, if I do, whether I agree Edwin. I agree that if you have to pound on the table to get your point across chances are that most often your proposition is standing on weak legs.
If you are dealing with 'the kiddies' then their appraisal numbers are certainly subject to interpretation, and seldom have any real value as appraisals.
I don't agree with your formula: 'Gut +/- X %'. A great deal of pricing is nuance. Having a good handle on the curb appeal of a so-called 'brandable domain' is an art, calling for industry savvy and negotiation savvy. I just sold one of my brandable domains for $3,500, no appraisal, etc, just a good handle on who the buyer really was and what industry would be interested, and what the value in use would be, AND whether the moniker was reproducable in a slightly modified sense. Domain values are still unknowns. I've been negotiating unknowns, the settlement value of personal injury claims, for 20+ years as a trial lawyer. That experience also comes into play. Also, in certain cases, the people with the pursue strings are a bit more ready to get down to business with a mature professional who talks like someone who has negotiated deals for years. All this, the process included, goes into setting the sale price. The hell with the appraisal price. I've bought too many appraised domains for 1/20 of the appraisal price. Ultimately only the closing of a deal will set a price.
My point: Value is fluid, in a range, and the object is to close a deal.
If you are dealing with the big dogs in the "value my domain" game, and you can get them to come and play the numbers hold water. Problem with the big dogs are they are busy and won't take the time if the domain is relative crapola or worth <$1000+ on a good day.
What most newbies fail to grasp is that the absence of people sending them emails, inquiring about the availability of an 'unused domain', is a pretty good indicator that most likely, the domains they hold are not worth the effort of writing. You really don't have to do that much to send a message that a domain is available for resale, such as putting that info in the WhoIs somewhere and, when the contact is made, having some valid idea of value and how people care to transact business, i.e., carefully, using and escrow.
There's other ways to never sell a domain, besides pegging a screwy price. Another way to kill the process or to scare people off is to say "make me an offer". Why is that? Because it indicates you don't know value and therefore are afraid to set a price. It may also lead the inquirier to believe that you are shooting for the moon. It can also be assumed to be a tactic whereby the seller, who has no idea of value, takes the offer as money in the bank and will now - after you make an offer - wait for a better offer, saying "Well, I've already received an offer for $XXXX, so make me a better offer."
There's nothing quite like the pain you can sense in communications from people hinting or disclosing that they once had a great offer, around 1999, and they just can't get over the loss of not selling when they had the chance.
Perhaps I wasn't clear enough.
I was saying 2 things:-
1) *If* you're soliciting appraisals, it's a nonsensical waste of time/energy to then "argue" with the appraisers that they've undervalued your domain. Bob says "Your domain is worth $50." Owner says "What? That's nuts! It must be worth at least $1,000 because X and because Y..." Surest sign of a Newbie.
2) *If* you want to sell a domain very quickly on one of the domain forums, don't count on getting more than a fraction of the "appraised" value for the domain.
Nothing in my post was meant to relate to the wider domain world outside the artificial confines of the domainer forums :)
|Another way to kill the process or to scare people off is to say "make me an offer". |
I agree with much of your advice, except this part. The number one rule to negotiation is do not be the first person to name the price. This is especially true if you really don't have a good handle on the asset's value (i.e., newbies in the domain game). The number two rule is that if you do name the first price, set it above what you want, and negotiate down from there. As a retired PI lawyer, I'm sure you had some experience with this process.
Personally, when I have an asset someone wants, I will NOT name the first price. I don't care if it costs me the deal. If a person wants the asset bad enough to make it to the negotiating table, then that person will offer a number. If that person does not want it bad enough to throw out the first number, then I don't want to be at the negotiating table with him anyway. I have applied this logic to domain sales, and it works for me.
Sevan, I write not for your benefit, because you are convinced you have the answer, but for the benefit of anyone else new to the business.
Based upon my experience, and this is my 6th year 'in the business', I've found the proof pretty compelling that a seller needs to know value ahead of negotiating, and that the risk of an opportunity being lost is higher if you are not prepared to give an asking price.
A simple first tier example of the validity of my proposition would be the domain forums themselves. When people post domains for sale, without posting any prices, the overwhelming response is 'nothing'. People don't bother to approach the seller. That this is a fact is often stated right in the forums themselves.
When dealing with end users what do you think they are going to do? Hit you with a big offer and work up from there? If they have any insight they will consult with someone who knows something about market values and bid below that. Very few domain buyers are 'must have' buyers. Your domain is one of many options. It is a well proven fact of negotiation that if you are to succeed you must enter the negotiation prepared to turn and walk away. If I am exploring multiple options then give me any reason to walk away and I will. A seller playing the "no, you go first" game is a perfect reason to walk. A seller that wants to know more about the buyer is another reason. In a world in which there are many options it's foolish not to get right down to business.
The bottom line is this: How will you know when the offer you have in hand is worthy of acceptance? When you get the giggles? When your nervous system jangles? When you find yourself saying 'omigosh, omigosh'?
What's your standard of value? If you don't know that going in then you will miss more opportunities than if you laid out your cards. You can alway hedge high in your price demand, but you've got to have some number in mind - of what would be acceptable - otherwise, how will you ever know if you should accept the offer?
Follow you own lead. My accumulated experience, and that shared by many others with a great deal of experience, is that not quoting a price is by far the less effective approach to domain negotiations.
If you have any doubt about this then track down the senior members of any domain forum and ask them the same question.
Again, I don't write to change your mind or debate you personally. I just wish to make it clear that there's a lot of experience behind the guidance offered, and I'm equally clear that there are example of exceptions to almost every rule.
|I just wish to make it clear that there's a lot of experience behind the guidance offered, and I'm equally clear that there are example of exceptions to almost every rule. |
Means: no matter what you say, I'm right.
Webwork, don't make a mistake: though SevanB2 is "only" a junior member, you never know that he/she might have more years of experience than you.
|Sevan, I write not for your benefit, because you are convinced you have the answer, but for the benefit of anyone else new to the business. |
:) I am putting this in my quote file...
The number one rule of *any* negotiation is to have an alternative offer / opportunity.
>>How would you guess which ones would be most likely to sell?<<
Simple answer here is to put yourself in the shoes of your buyer and evaluate the domain in terms of the potential (or current) profit. As webwork has mentioned, the domain buyer is sophisticated and this greatly increases with the true value of the domain.
With a great domain, i.e. use widget.com as an example, the domain is better than SEO. No work, no algorithm changes, and consistent traffic from people who type in "widgets.com" rather than going to a search engine. In this way, a domain is no different than any other kind of investment and you should consider its value based upon ROI and opportunity cost.
I agree entirely with webwork that you set a value on a domain because domains have tangible value. If you're entering this game, you should know yourself what the domain is worth because you can be sure that your buyer will. I say tangible because type-in traffic is all about people who are coming to your site because they are looking for the keyword in your domain name.
Now that said, not all domains have type-in traffic and are therefore more intangible in terms of their value. How do you value widgetplanet, cheapwidget, widgetworld, wigetmaster, etc.? You do it by knowing what the others are selling for (or have sold for), and by thinking to yourself how the development of the domain itself is worth. Sure play the negotiating game to get the most you can, but play set a price that's within the appropriate ballpark. The shakers in the domain market are really years ahead of you (and probably $$ as well) but it's a huge market, it's fun, and there is certainly money to be made.
In terms of choosing which one to put on afternic, look at the market and feature the ones that are "hot". i.e. If the media (offline and online) is focusing on a great new american car engine technology, feature a domain related to american cars.
Look at the most mature markets and where any potential buyer could make BIG money as that's what they'll speculate on when buying the domain.
For example I would lay my house on your getting 10 times more money for creditcards.com or carinsurance.com than coffee.com or pizza.com.
As you probably already know - when they come back with an offer it is almost certainly 50 - 99% lower than they will be willing to pay!
Good luck ;)
Im with webworks on this one.
There was time when buying and selling domains, especially one-worders, was lucrative. Since then, there has been great dilution.
I still have some 'great' domains that I bought before the domain name goldrush. No one is clamoring and hammering at my door for these.
I put some on ebay. I should have kept them... for they brought low prices. It would have been better to build sites on them.
Unless you have mucho cash, are up on the latest 'techniqes' and buying advantages (club drop, etc), or really managed to grab a HOT one or two, I don't think domain name speculation is a good field to be entereing. There are certainly exceptions. You'd be better off building sites on them and monetizing the sites or selling them after the site is built.
I even have some ONE WORD domains that generated little interest. It all in the buyers eyes. And a little luck.
How to pick them? If they make sense, are not confusing, and are, basically, brandable, then you might have something.
How to evaluate them? There are tons of evaluation systems out there, free and paid, and I've yet to see one that reflects an actual selling price.
The simple way? The Pros and Cons method.
Fairly short? Pro.
Size of market?
Easy to say?
Easy to remember?
Do you have to 'spell it out' to your mom so she understands it?
How would it sound on the radio? (a negative for hypen domains.. though I still love them)
Can it be easily misspelled?
Who has the other spellings?
Who has the com? net? org?
Add any other questions you can think of. Look at your pros and cons. More Pros, more value. More cons, less value.
As for actual numbers, you can compare similar names that have been sold (you used to be able to do that on afternic, its been a long time since I hung out there).
Although I am a brand new member to Webmasterworld, I am not new to buying, selling, registering, and managing domains, as we have been in the domain business since 1996.
Everyone is entitled to their opinion, however, it is always good to get an idea of value before making a decision on a sale or whether to move forward in developing a web site, etc. Having sold the industry's first Million Dollar domain snipped, the industry's first $2M domain snipped and more 6 figure and seven figure domains than all other domain companies combined, we have developed a pretty good appraisal tool that is based on current market values, web intellegence, and industry indicators.
We (snipped) measure the following in an appraisal...or try to:
google search results
TLD Value: Value of the TLD
Length: Value based on length
Hyphen: Value based on number of hyphens
NumPhrases: Number of Phrases Detected
Zone Taken: Value based on availability of domain name in zone file
WebFreq: Value based on Web Frequency
SearchFreq: Value based on search Frequency
Industry Value: Value based on Industry
NumTerms: Value based on number of terms that appear
ZoneFreq: How often the name appear in zone file
ProductPrct: E-commerce valuel how well it could be used in commerce
TermWebFreq:Value of individual term in web frequency
TermSearchFreq:Value of individual term in search frequency
TermZoneTaken: Value of individual term in zone file
TermProductPct: Value of individual term in e-commerce
TermInstancePct: Percentage time this term used as a trademark
Google Page Rank
Search Engine Saturation
So to summarize, there is now enough criteria and information available to get a good idea of value. The more names that sell, the more accurate the appraisals get....just as it is for real estate.
If I can be of any help to you, please let me know.
[edited by: DaveAtIFG at 11:35 pm (utc) on May 10, 2004]
[edit reason] Removed specifics [/edit]
Okay, nice formula M_M, but once again: As to each of those variables what value per unit do you assign, and please don't tell me 'that's the secret sauce'. The answer is likely 'a rough estimate', simply because the sample size of sold domains, as to each unique market interest, is limited.
It's one thing to articulate what to look for in a domain property, it's quite another to place an authoritative FMV on the domain. Yes, 'the formula' (criteria) helps to drive the conclusion/demand, but at the end of the day - currently - the market is still groping when it comes time for the buyer to rationalize the bottom line.
Other than the value assigned to type-in traffic - and heaven only knows how much of that is people looking to determine if the domain is taken, domain speculators looking to see 'what's up' and others looking to see if there's a website of any kind attached to it - the closest we have to a real metric is how well that type-in traffic converted into sales. Yes, raw traffic has potential value but the assumption of intrinsic value was proven to be a feigned calculus in the era of the dot com bubble. There were plenty of sites in 1999 that had lots of traffic that failed to produce a ROI.
Other than raw traffic that converts we have a lot of really neat analysis to play with, none of which yet defines value with any certainty. Past domain sales help to rationalize future sales negotiations but past sales do not predict future sales given the limited number of reported sales and the (relative) uniqueness of each domain.
Probably the best indicator of value is the size and interest level of the prospective buyer, and the skills of the seller in negotiating. ;-)
I am not saying you are wrong...on either of your posts. All I am saying that there are far more value indicators today than there ever was...and there will be more in the future. We have completed close to 400K domain appraisals to date so we can see the value indicators pretty clearly now.
M_M, I'm not hearing you say that I'm wrong, though that may simply reflect your good graces, and certainly you have a wealth of experience to draw upon if you wish to prove me in error. On the other hand, I'm looking for the best science has to offer and, as yet, I'm not seeing much science. I'm seeing rationale. I'm seeing an effort to define constituent variables.
The end of the secret sauce era - the arrival of a systematic approach to assigning value to those variables - awaits 1) the accumulation of a great deal more data (they don't report domain sales as reliably as they report real estate sales to the tax assessor and to the IRS); 2) the realization of the impact of the addition of new TLDs on the domain aftermarket (compare real estate: they ain't making more land/real estate on terra firma, unless it involves dredging); 3) whatever else I'm too tired to think about at the moment.
I'd still like to see your dollar weighting of the variables you have defined, including how the dollar values are ameneded as you traverse industries, and until I do I'll assume that's your secret sauce. Generally accepted standards of real estate or business appraisal aren't concocted of secret sauce.
There has been a very comprehensive set of points and areas to consider, however, regardless of which set of criteria you use to value your domain(s), any domain name (as with a house, car or any other material thing) is only actually worth what someone is willing to pay for it!
So whilst you may have a good idea of what YOU think it's worth, don't forget that you're not the one parting with the cash.
Excellent analysis Webwork-
Agreed however, that is part of our appraisal "secret" formula. It seems to work because we are selling more names today than we did in the .com boom days and the IRS accepts our appraisals for tax donation and charitable donations on tax forms.
You are right on target and we incorporate this into our appraisals as best as we can.
|There has been a very comprehensive set of points and areas to consider, however, regardless of which set of criteria you use to value your domain(s), any domain name (as with a house, car or any other material thing) is only actually worth what someone is willing to pay for it! |
Market value in real estate is usually defined by what a buyer will pay and a seller who is not under duress will accept. Real estate is rareley marketed for sale based on an appraisal, neither are new cars or jewelry. Why should domains be any different?
My very limited experience in selling a few industry specific domains was that the valuation set by companies like monty's was far lower than what I was willing to take. I got my price by finding the right buyers. It took more work, but I got 20x the valuation price.
|Real estate is rareley marketed for sale based on an appraisal |
I've been practicing law for 20+ years, and handle an average of about a dozen real estate closings a year, and I assure you the very first action a real estate agent/broker takes is to survey comparable sales before setting an asking price.
It may not be called a formal appraisal, but the process of evaluating comps before listing a property is 95% of what the appraisal process entails.
When I sell a car the first place I look, before listing a price, is the NADA book and Kelly's Blue Book. Again, it's not a formal appraisal but it's 95% of the work.
Not necessarily true. Prices are set based on what a similar piece of property sold for. Just look at the housing market. As you know, when a house is sold, the appraisal is done to confirm the value of the house. This is based on what like houses have sold for in the same community.
similarily, when you put your house up for sale, you do not price it 2x a similar house in on your street if your housing description is the same. This concept has been around for many years and works with domains as well as only one important value indicator of many mentioned above.
The domain valuation discussion doesn't seem to cover the value of a website used for an existing business that is primarily service oriented so that the website is essentially a brochure for services provided on site. Like for a dayspa/salon.
So a client is selling the business and wonders how to value, as part of the business, the website and an ancillary mailing list of 300 members. The site generates 65 unique visitors per day and the services section is the most visited.
while most of her clients are return customers, most of her new clients are generated equally from wor of mouth and the website (which does well in google)
I assume that this is different from valuing a domain on its own but how different?
There are both similar and diffent factors to evaluate with a live website. With a website you can measure other vital criteria such as unique visitor count to revenue generation, page views, member list/email lists, google page rank, alexa ranking, link popularity, search engine saturation, etc.
Many times that is not measured with a domain that is "dead" or not even on a landing page.
Two days ago I got an email from someone who wanted to buy an inactive .org domain that I own. He offered me $50 for it and I accepted. I was pleasantly surprised to get any kind of offer at all, since I was not even trying to sell the domain.
| This 35 message thread spans 2 pages: 35 (  2 ) > > |