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How to Pick and Evaluate Domain Names for Resale

Factors considered when bidding on or selling an aftermarket domain

9:29 pm on May 5, 2004 (gmt 0)

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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.

Thanks, Linda

11:16 pm on May 15, 2005 (gmt 0)

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Because we're featuring this as a "classic thread" I've opened it up for further comments. Please note, we do not allow evaluation of domains here - this is a discussion of the principles used to find the negotiating numbers.
2:00 pm on May 16, 2005 (gmt 0)

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The domain game is alive and well as we now know. DNJournal does a great job of reporting domain sales on Tuesday evenings.
It is hard to fathom the prices paid for some very obscure and very long names.
By far .com is the leader but headway is being made by .us .info and .biz. and .de.
Surely this is old news to regulars on this thread.

*Reading the posts from a year ago is instrumental. The online world changes so much in a year. I imagine some of the authors of some old posts here wish they had secured some nice names along the way.

11:42 pm on May 16, 2005 (gmt 0)

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I find this thread very interesting because on the one hand you have evident dealers (vultures) that think its good business to buy every domain keyword driven name they can for a few quid in the hope thats someone is mug enough to pay a fortune for one of them.(A bit like buying a lottery ticket and hoping that some or all of the numbers are drawn out) whilst on the other hand you have the serious webmasters who would make full use of the name for their specialist area but find a load of related keyword names taken up by chancers who offer nothing to the development of the internet other than to suck a bit of profit from those starting a website business.

Frankly, if i could, i would make it illegal. If they register a domain with no intention to use it, they should lose it imo! However, that being said, does anyone now truely care with so many alternative options available?

As for domain value in its own right, i see little commercial value. A well designed quality website with quality content can feature well without a keyword domain.

Website branding imo is vital to a good business, that branding does not need to be keyword driven.In fact with so many keyword driven names in some sectors its can positively be an advantage not to have keyword domains. Something entirely different may stand out from the crowd and gain more business?

I think as the web expands more webmasters will move towards branding and away from keyword domains - those dealers holding loads of domains may well end up with a bag of pepetual lemons on their hands.

I remember speaking to a dealer a short while ago that had 80 keyword domain names and "didnt deal for less than 2000" I didnt buy one of them. Why should i pay 2000 for a name worth 2? - the same dealer is probably now still stuck with his 80 domain names - let him enjoy them! They trade on greed and fear, greed because many want to exploit new webmasters and fear because new webmasters still think they need something keyword driven because they dont know any different.

1:39 pm on May 17, 2005 (gmt 0)

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I think you are blowing this out of proportion.

How is buying a domain name any different than buying real estate? Do you think people who buy a bunch of land and sit on it are wrong?

And as for the guy who doesn't sell things for less than 2k, all he has to do is sell one name for 2k and he makes more than selling 100 names at 20....if you don't like it, don't buy it.

4:46 pm on May 18, 2005 (gmt 0)

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How is buying a domain name any different than buying real estate?

It is almost no different. Many people have failed to understand for years now that domain names ARE the real estate of the Web. Only they are more intriguing than simple real world addresses like "1234 First St.", that carry very little value. (Of course, even in the real world, some addresses have inherent value, e.g., 1234 Rodeo Drive).

But domains are far more interesting as real estate addresses go, because they have not only 'real value' (the revenue they produce) but also 'marketing value' (their inherent meaning).

webwork's excellent posts from years ago still apply.

Domains with real/tangible value are the easiest to put a concrete price on, since real value involves type-in traffic, which involves revenue. Once you've got revenue, you've got a way of valuing things that even Wall Streeters can appreciate. And indeed, the business people are bringing more structure and transparency to this market by the day. Recent highly publicized sales of domain portfolios have established a new benchmark for domain name value: roughly 8X revenues. (That's right, revenues, not earnings.) That ought to tell you something about the perceived value of domains in the current marketplace, though it is not necessarily predictive of future values, any more than stock valuations are predictive. What's interesting is that this sort of valuation goes so far as to employ the same sorts of financial valuation and future discounting that is used to value other financial instruments. These days, it is as easy to value certain classes of domains as it is to value tax free bonds.

What is interesting this time around is that the Web has come into its own, and isn't going away, so there is reason to believe that domain name properties and portfolios may well hold their value, more or less.

So, do you have a domain that's generating $500 a year in reveunes? If so, it's probably worth about $4K right now, give or take.

But, what if you've got a domain that has potential branding power, or is sharply focussed as a generic (LargeBlueWidgets.com), but doesn't necessarily generate much revenue? Well, if the domain generates more than $7 per year, and you think it has potential, why not hold on to it? Hey, it's breaking even. The only question is, when and how to sell it.

As noted before, most domains sell themselves. Unless the domain is really high profile, industry stats suggest the most important element in the sale of a mediocre domain is simply making it clear on a landing page that the domain is for sale. Advertising 101. ;-)

At what price should mediocre domains be sold? Clearly that's up to the seller. If you really want to move a domain, make the price appealing ... perhaps something in the $70-$200 range. Most buyers can afford that.

If you care about making serious money though, you'll need a LOT of those sorts of domains to support yourself. ;-)

OTOH, let's suppose that you don't want to sell your cool (but not very valuable) domain for a couple hundred bucks? That's OK. Just be prepared to lose a little money, break even, make a little money on it each year, etc., until a passionate end user comes along, who must have your domain. That'll happen about once every 5 -10 years. But it does happen, sometimes.

One more thing, regarding pricing. In this market, the old saw that a seller must never give the first price quote does not apply. In fact, it's easy to spot a newb who's behaving that way...

Virtually all of those who are making money in this market know exactly what they are doing, where they sit in the seller/reseller chain, and how much the domain is worth to them. As a seller, knowing how much a domain is 'worth' is completely relative to your one's one business strategy. IF you don't get that, don't even think about trying to make a serious buck in this market. ;-)

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