here's why anything less than 5yrs multiple ain't enough

[Biggie]

for those looking to buy "proven" domain names that produce revenue, thru type-in traffic.

here's why anything less than 5 yr multiples is too low.



if, i have a domain that makes at least $1 every month...it's a profitable domain.

why?

because it earns more than the cost to renew it.

if you offer 60 month multiple for a $1 a month earner, that equals minium bid for domains at namejet with "no stats"


so which would you rather have......a proven earner or to still be guessing


increase the multiples!

 

[katherine]

$60 isn't exactly life-changing either
So yeah why bother. It's like selling the chick that you don't have to feed but that gives you an egg on a regular basis.

Domainers tend to liquidate the domains they no longer want, the ones that make money are under no pressure to find a new home.

 

[RTM.net]

I agree completely... the current situation is exacerbated by the fragile market which brings even more lowballers out.

Unless of course, it is a domain (or traffic) that is truly limited in duration - for example a domain or site about a president where it's a given that after the political term is over the traffic will wane considerably.

But for keywords with a long term (or inderminate) life 60x earning is a minimum.

Rob

 

[airmax]

Agreed multiples are out the window when dealing with generic domains, earning income is a bonus, as well as continuing to increase in value in their given niches, to many lowballs, try to use this multiple nonsense when attempting to create offers on quality keyword domains. I have seen many recent ads on the wanted ads, discount such aspects of a quality domain, with total neglect for the generic keywords of that domain.

 

[Biggie]

$60 isn't exactly life-changing either
So yeah why bother. It's like selling the chick that you don't have to feed but that gives you an egg on a regular basis.

Domainers tend to liquidate the domains they no longer want, the ones that make money are under no pressure to find a new home.

true, $60 is no life changer, it was used just an example.

but i have posted generic type-in names for sale that earned $1 > $3 month and the multiples offered were in 10x's > 24x's range

to me, either those making the offers think i'm stupid or they assume the names were hand-regged


either way, i'd never sell that low.

I have seen many recent ads on the wanted ads, discount such aspects of a quality domain, with total neglect for the generic keywords of that domain.

exactly my feelings as well

 

[DigiNames]

I think using a multiple of income make more sense when buying/selling a developed site, or a business. In those cases you can see something that is reaching much more of it's full potential and then an investment can be made based on that information with some reasonable expectations of performance.

A parked domain is hardly reaching any of it's full potential (unless maybe it is typo traffic and parking is all you can do with it). To base a domains value on a multiplier of type-in traffic income with no development or promotion completely ignores the potential that the domain has. Sure, it's nice to know that there is some type-ins but it is hardly the best way to determine a name's value in most cases.

 

[Biggie]

I think using a multiple of income make more sense when buying/selling a developed site, or a business. In those cases you can see something that is reaching much more of it's full potential and then an investment can be made based on that information with some reasonable expectations of performance.

A parked domain is hardly reaching any of it's full potential (unless maybe it is typo traffic and parking is all you can do with it). To base a domains value on a multiplier of type-in traffic income with no development or promotion completely ignores the potential that the domain has. Sure, it's nice to know that there is some type-ins but it is hardly the best way to determine a name's value in most cases.

recently i posted a domain for sale, earning about $10 during the month


got two offers (pm) from exclusive members, one at $500 the other at $150

the $150 guy, always lowballs, but he wasn't that way initially

the $500 guy, sometimes lowballs and sometimes makes decent offers


both are resellers, but the $150 guy is relatively new to the game, while the $500 guy has much more knowledge and experience


the point is, in the future, the $150 guy won't be taken seriously, while the door will always be open for the $500 guy


imo...

 

[amplify]

I believe that a 60 month multiplier is slightly high as this market has an unknown future, such does a 60 month auto loan... cause it may break down on you in 48 months.

For someone new to the industry, they should focus on stars first and then fund them with the 60 month multiplier cash cows if they have the initial startup capital.

To first get the 60x isn't a smart move as your interest plus monthly charges on a loan would be greater than this amount.

You're lucky if you got them years ago for 18 months... then you'd have a good mix of stars and cows.

For a beginner, a 60x is an unknown investment.

 

[Biggie]

I believe that a 60 month multiplier is slightly high as this market has an unknown future, such does a 60 month auto loan... cause it may break down on you in 48 months.

For someone new to the industry, they should focus on stars first and then fund them with the 60 month multiplier cash cows if they have the initial startup capital.

To first get the 60x isn't a smart move as your interest plus monthly charges on a loan would be greater than this amount.

You're lucky if you got them years ago for 18 months... then you'd have a good mix of stars and cows.

For a beginner, a 60x is an unknown investment.

Dave,

auto loans have nothing to do with domains, so let's stay focused.


if, the/this market has an unknown future, then ANY investments in it, are not guaranteed.

so it doesn't matter whether it's a beginner, novice or pro.

however, the pro or novice may be in better position to choose the right name @ 60 x's, in comparison to a beginner who doesn't know what characteristics of an income producing domain to examine.


imo...

 

[ERCollins]

See I would have no problem paying 60x on a domain from a proven seller that has a good track record. However over the years I have purchased too many income producing domains at X times revenue for the traffic to instantly stop after the transfer of the domain.

Also if you are looking at a typo that the brand name might be washed out in 5-10 years 60 months is way to long to start earning money on it. Lets say 5 years ago you bought a typo for myspace at 60x, odds are you will never double what you paid for it and that would have been a bad investment.

 

[Anthony Ng]

auto loans have nothing to do with domains, so let's stay focused.

While it's true that the auto loan analogy by David (Walker) may not be exactly appropriate, VERY few investors would pay up to 5 times earnings multiple even for established business.

 

[amplify]

While it's true that the auto loan analogy by David (Walker) may not be exactly appropriate, VERY few investors would pay up to 5 times earnings multiple even for established business.

That was a bad analogy, you used a better one. However, you can use an apartment complex for sale at 90% capacity too (traffic/revenue). Who's to say it'll remain at 90% (go up because lowered rent or down cause higher taxes) to pay the loan/get a ROI... which is essentially the same as an established business.

 

[Anthony Ng]

Yes, when professional investors buy, they usually look at a) industry, b) sustainability and c) growth among other things. But like I said, it's really rare that they would pay 5 - 6 times of earnings (EBIT).

When it comes to investing in domain names, a rational buyer should always take into consideration whether previous earnings (though proven) are sustainable in the foreseeable future, which often depends on the larger climate of specific industry (e.g. competition from social media) as well as growth potentials (or even negative growth).

 

[angel69]

It's useful to sellers to bring up decent past earnings to buyers (noobs or pros) but that should be secondary to the quality of the domain independent of earnings. While a gem always makes good revenue (no matter how new anybody is), anything less than a megadomain (such as names seen as wise acquisitions by some pros during some good market period) has the risk its income may fluctuate, and often the swings downwards are wide and long-lasting. Many times the original income you received as avg at 1st can just never be replicated

When I started I read a thread when you buy a name you should never move it away from its current pkg co for at least 3 mos (preferably 6), if the revenue was good you might lose most of it by changing cos. I did that as much as I could. I had one parked at Sedo which made $10/mo consistently for like the 1st 2 yrs. I did not reconfigure anything, not even its awful template. All of a sudden it started making $5/mo and then just $2/mo for no reason other than the domain market in general had gone south. It wasn't a trendy name or anything that may have been cool at 1st and would die off later. I tweaked its optimization and even tried parking with 2 other cos, it stayed at $2/mo

Biggedon's reasoning ($1/mo assumed min earnings, the $60 min price some sites will accept = 5 yrs of that $1/mo rev) I don't have much of a problem with, I assume he meant his selling price for any domain would then be:

1) price X if the name is superior, plus a premium for its projected revenue for X yrs, or.......
2) projected earnings for however many yrs you want to take, and no premium added if the name is low quality

and you would ask one of the two as the initial asking depending on what the domain was (I always use my gut feeling too such as do I like owning the thing or not ?..... lol)

I find many buyers hate basing an offer on past revenue because it may not last. A lot of buyers just want a price for your name and if they don't like your 1st answer they walk. I hate being put in that position especially w/noobs, having to justify my reasoning, but we all have to if we want to sell. It's also funny as a noob I tended to believe what domainers I knew said about their domain's pkg stats. Just to find out later the thing would earn $0.00 as long as I owned it

And I see that in biggie's book a novice is a few McNuggets above a beginner (#9) lol, I thought we called people new at domaining: beginners, novices, newbies, newbs or noobs interchangeably, but I might've been wrong all this time.....? lol ....and which one exactly am I according to your world, Biggedon ? ....lol

:rofl:

I also liked David's two examples btw (cars and apts), I think they're relevant in biggie's argument...

 

[Biggie]

See I would have no problem paying 60x on a domain from a proven seller that has a good track record. However over the years I have purchased too many income producing domains at X times revenue for the traffic to instantly stop after the transfer of the domain.

Also if you are looking at a typo that the brand name might be washed out in 5-10 years 60 months is way to long to start earning money on it. Lets say 5 years ago you bought a typo for myspace at 60x, odds are you will never double what you paid for it and that would have been a bad investment.

the $500 offer was close to 5yrs, considering the amount earned at time of posting and as such, i would see you and them in same category and door is now open for you as well.



i also agree that 5 yrs ago that myspace typo @ 5 yr multiple would be bad investment, simply because ms faded long before that and overture had died as well....but i feel your point.

however, many old schoolers" still use 10yrs as the min for generic dn's that produce earnings and that 's without inclusion of intrinsic value for/of the domain.

While it's true that the auto loan analogy by David (Walker) may not be exactly appropriate, VERY few investors would pay up to 5 times earnings multiple even for established business.

i doubt that is accurate, as co's like "the new yahoo" are buying start-ups now based on "projections, trends and sm probabilities", where the multiples of off the chiz-zain

It's always useful to the domain seller to bring up any decent past earnings to a buyer (noob or pro) but that should be secondary to the quality of the domain itself, independent of earnings. While a gem should always make anyone good revenue , anything less than a megadomain has the risk that its income may fluctuate, and often the swings downwards are wide and long-lasting. Many times the original income you received as an avg at 1st will just never be replicated

if there are past earnings, it does help a "fence leaner fall over" and if i think of at the time, it's included. but many of the names have been posted in the past, with stats, so some consistency is there.

domain income doesn't always go down

i bought a name from a member years ago for low $,$$$, changed keyword and made $16k on it.

other names I've purchased still produce income since ovt, so i feel asking range is justified

but the variations in ppc income, is what caused the launch of so many other options of monetizing a domain.

I just find that many buyers hate basing an offer on past revenue because it may not last. A lot of buyers in fact just want a price for your name, and if they don't like your 1st answer they walk. I hate being put in that position especially w/noobs, having to justify my reasoning, but we all have to do it if we want to sell.

you said "hate" too many times.... find out why

And I see that in biggie's book

that book, is written "in-between" the lines and some have difficulty cyphering

I also liked David's two examples btw (cars and apartments), I think they're most relevant in biggie's argument

if we were a car or housing forum, i might agree

housing complex for sale versus a domain for sale

property is assessed value based on area plus rental income vs property taxes/mortgage/insurance/maintenance

5 yr auto loan on new cars come with 5yr 50k warranties, and insurance costs

where is the relevancy?

 

[Anthony Ng]

i also agree that 5 yrs ago that myspace typo @ 5 yr multiple would be bad investment, simply because ms faded long before that and overture had died as well....but i feel your point.

Weird enough though, I still think it's a steal for Justin Timberlake and his friends to acquire MySpace for just $35 million.

i doubt that is accurate, as co's like "the new yahoo" are buying start-ups now based on "projections, trends and sm probabilities", where the multiples of off the chiz-zain

True, but that's because they are NOT using the earnings multiple model AT ALL. (Remember, there are OTHER business evaluation models.) However, if we talk about earnings multiple, it's very difficult to justify anything that high.

Having said that, I'm not a big fan of traffic and earnings myself. I still believe domain names are about words and their connotations, which differentiate them from IP addresses and websites.

 

[Biggie]

Weird enough though, I still think it's a steal for Justin Timberlake and his friends to acquire MySpace for just $35 million.

I agree, it was a steal as the brand is already recognized.....but it depends on how marketing can attract and entice the ux

True, but that's because they are NOT using the earnings multiple model AT ALL. (Remember, there are OTHER business evaluation models.) However, if we talk about earnings multiple, it's very difficult to justify anything that high.

just saying that logically, there has to be some type of "predictable earnings multiple", either a short term or a long range projection where that "business model" will become productive, in an effort to please shareholders and lure investors.

Having said that, I'm not a big fan of traffic and earnings myself. I still believe domain names are about words and their connotations, which differentiate them from IP addresses and websites.

I believe same thing you do and support that in pricing, when directing potentials to consider "intrinsic" value of the domain name "without provided stats".

still, "earnings" is the prime for being, and traffic is a key.


imo...

 

[amplify]

As a side note... I believe that this post should have been made on a personal blog and not this DNF section.

I know that this response may not be widely viewed as popular public opinion because older folks on here know Biggie and can separate him from Biggie the moderator, but I'll explain my stance why.

A beginner (typically gold) will see this post made from a moderator and associate it with being fact because it's made under a moderators account which has positional power. They will take it as the golden truth and follow through with it.

However, I and many others know it's posted in good faith as expert/informational power.

A lot of others chimed in with expert (in other industries) power and informational power, but it may be discredited by most newcomers because the title you hold.

JMO

Edit: This is because I don't want to see an influx of pigeon sh*t being pawned off for multiples of 5 years when it's already hard enough to find gems.

 

[Biggie]

As a side note... I believe that this post should have been made on a personal blog and not this DNF section.

I know that this response may not be widely viewed as popular public opinion because older folks on here know Biggie and can separate him from Biggie the moderator, but I'll explain my stance why.

A beginner (typically gold) will see this post made from a moderator and associate it with being fact because it's made under a moderators account which has positional power. They will take it as the golden truth and follow through with it.

However, I and many others know it's posted in good faith as expert/informational power.

A lot of others chimed in with expert (in other industries) power and informational power, but it may be discredited by most newcomers because the title you hold.

JMO

Edit: This is because I don't want to see an influx of pigeon sh*t being pawned off for multiples of 5 years when it's already hard enough to find gems.

Dave

trying to assume what a beginner will think?

why?


seems you're the one who has problems with "separation" of my forum job title versus focusing on the subject

as with each reply, you defer to something other


still, beginners go to blogs everyday and swallow the content they read there, hook, line and sinker. then they may come here posting links to articles and video's and next thing that blogger is their new hero

but after they get different opinions, the confusion starts.

that's just the nature of how and what some mo-fo's learn or don't.


but the title of this thread, represents similar viewpoints expressed by other members in the past, who were here before you, so it ain't a new philosophy

AND....who gives a fizz-zuck whether it's popular opinion?


shit don't get popular unless you put it out there!


finally, you're gonna see pigeon shit as long as you belong, regardless to multiples asked.

 

[amplify]

Suppose you got a point, guess stepping back and looking at it from a different perspective always helps.

I've been here to see opinions on 18, 24 and 36 month multiples... but just disagree on 5 year+ unless it's a killer name.