The Pricing/Valuation Of It All

Discussion in 'Business and Economy' started by Swisslist, Oct 31, 2017.

  1. Swisslist

    Swisslist United States Member

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    In our opinion, what exactly, if anything, determines the value/price of a domain name as seen through its extension?

    Everything I have seen on this topic tells me there is no method at all to the madness.
     
  2. dibon

    dibon Kenya Member

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    I believe that you can get many answers to this question, based on many factors that make every domain out there (irrespective of the extension) different in its own way. You will never get any justification for a owner looking to sell a domain for $2,000 if 8 years ago, they bought it for say, $1,000. I stand corrected but I don't think there's a 'shoe that fits all', in this case.
     
  3. JackD

    JackD United States Active Member

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    The only thing that determines the value/price of a domain name is what a buyer is willing to pay for it. I agree with @dibon that there is not a "one size fits all" solution. Experience in selling domains and setting prices can help but it is not a guarantee of getting the price you ask. There are so many domains listed for sale for $x,xxx that I would not give the price of a reg fee for it. Doesn't mean that sometime, somewhere someone would pay the asking price, just means I would not. There is no hard and fast rule as in most pricing schemes. I just read about a domain name that was purchased in 2008 for $55,000 just sold on SEDO for less than $3000. What made the value different? Just what a buyer was willing to pay and what the owner was willing to accept.
     
  4. tulip

    tulip Kenya Active Member

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    I love your last illustration @JackD about the domain that was eventually sold for $3000 or thereabouts. Could we then add that in addition to what a buyer is willing to pay, how much a seller is willing to sell a domain at still matters? If, as a seller, I feel that whatever price a prospect has quoted is peanuts, then I could possibly hold onto it until better offers come?
     
  5. JackD

    JackD United States Active Member

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    It does matter because if the seller is not willing to "give the domain away" for the peanuts being offered then it will not sell. But the question was about valuation. Let's say I have a domain that I think is worth $10,000 and I am not willing to accept any offers under that. Now, 10 years later I have turned down 7 offers of $3000 or less and I still have the domain paying reg fees each year, what is the "real" value of the domain? I could argue that to me it is worth $10,000 but in reality it has not been worth more than $3000. Now if it is a single keyword .com domain under 12 characters and I am willing to hang on to it, then it could be said that the domain is actually worth the $10,000. That is why domain evaluations are so hard to get right, Everybody has an opinion and there is not a scale to pin it down as in other sale items. Real Estate comes as close the the same issue as Domains than any other product I can think of. The difference is we are "trained" to believe that real estate agents can give us the correct price but not many in the domain business has that kind of experience that we are willing to listen to them. So, let's say that 80% of a domain's value is determined by what a buyer is willing to pay and 20% percent by what a seller is willing to take for it.
     
  6. dibon

    dibon Kenya Member

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    I think I now get the idea here @JackD, that the buyer is the one that actually has the upper hand in these matters. Allow me to indulge you further and wonder, what if the asking price for a domain is $10,000 and 9 out of 10 prospective buyers think it is worth less than $2,000 but then the remaining person goes ahead and meets the asking price, what would be the valuation?
     
  7. JackD

    JackD United States Active Member

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    Then the value would be $10,000 because you only need one buyer who agrees to pay the price. It really boils down to this: If you think the domain is worth $10,000, are you willing to hold on to it for 10+ years in the hopes of getting $10,000 for it? I know that we all want to flip our domains fast and make the big dollars, but buyers who can afford $xx,xxx and are willing to pay that price are not plentiful. So the final valuation of a domain name is twofold, what a buyer is willing to pay and a seller is willing to accept. Putting an exact dollar amount on that domain is extremely difficult. As sellers, we all think we have great domains and that they are worth a lot of money. Buyers are just the opposite, they think the domain is okay and not worth the asking price. I find that if I have a domain for several years and have not found a buyer, then I may have to face reality and lower my price. However, if I do my research and I feel that my valuation is correct, then I will hold on to that domain until I can get my price. But I advise that you re-evaluate at least once a year so that the example I gave above ($55,000 in 2008 but less that $3000 in 2017) does not happen to you. Loosing $52,000 over nine years is not something we want to happen to anyone. We do not know the history of that domain. Maybe the buyer who paid $55,000 turned down an offer of $65,000 or $75,000 the next year because he thought it was worth more but then for whatever reason the value went down considerably. We just don't know. As best as I can remember when reading about the sale, the domain was never developed into a revenue generating website.

    This whole domain pricing thing would be easier if we had a chart to go by but that is not the case. Only experience can help you with putting a real valuation on a domain. Check the sales on NameBio for similar domains and see at what price they have been selling. If it is a niche domain, what have other domains in the same niche have been selling for. I am really amazed that some of the domainers I know want to snatch prices out of thin air then don't understand why their domains do not sell.
     
  8. dibon

    dibon Kenya Member

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    That is quite an explanation @JackD and I had no idea that there are people that are few people willing to meet a five-figure valuation for a purchase. I believe that all this gets better with experience. Thanks so much for this.
     
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