How do I value a domain

[Biggie]

The so called "experienced" is based on previous sales of similar domains, sales of your own domains, and with time, you develop a general feel for domain values based on this vast database of sales that's stored in the brain. It's hard to explain, and this is why you get a lot of "gut" responses. Most people have not sat down to identify the indicators they use for valuating domains, but if they did, they would definitely find them.

In domaining, just like in every other industry, this is the so called "gut feeling", and most people generally develop this after years in the industry.

This is something that CAN be done with an automated system for domains (though all have failed).

Here are a few examples of other industries relying on automated prediction models...

• The real estate industry uses automated systems of calculating real estate value based on HISTORICAL sales and industry trends.
• The banking and credit industries use automated systems for determining "credit" worth of an individual based on their income and HISTORICAL credit usage.
• The insurance industry uses automated systems for analyzing RISK and calculating premium costs.

Compared to domain valuations, the above three are MUCH harder to work with. It's not extremely hard to determine the value of a domain given enough HISTORICAL data. And that's the source of the problem. Historical domain sales aggregators have only recently begun to pop up (namebio, etc). The core component in valuation was always missing. Additionally, there have been a lot of sites over the years that produced very exaggerated valuations (in order to excite the domain owner and get them to purchase more appraisals) and this created a lot of confusion and gave the appraisal service a bad name.

With that said, I AGREE with the veterans here. There is no GOOD automated system for domain valuations.

This is why I became involved in Estibot (2.0) which powers valuate.com. We are working on creating a standardized model for valuating domains for both end-users and domainers (retail and wholesale), which are truly different prices. This is work in progress, and we are still quite far from a finished product.

The reason most domainers laugh at automated prices is because they sell to other domainers, and Estibot/Valuate.com (2.0) pricing largely reflects end-user prices which most in our industry never see. Hence the need for dual pricing, retail and wholesale (just like when you sell a car to a dealer VS selling it to an individual, though the gap in our industry is much bigger).

To answer your question... There are two values. The end-user value, which can be very broad, and the wholesale value (price a domainer is willing to sell for) which is a small fraction of the end-user value but directly proportional.

The best indicators are:

1. Previous sales of similar domains.
2. Industry in which the domain falls into (ex: financial, banking, domaining, etc).
3. The search popularity of the terms within a domain.

Good luck, and PM me if you need specific help.

Thanks,
Luc L.

Hi

all above is good insight, especially when speaking of "gut" feelings

however, i can't consign that a domain has "two" values

To answer your question... There are two values. The end-user value, which can be very broad, and the wholesale value (price a domainer is willing to sell for) which is a small fraction of the end-user value but directly proportional.

there is only one value for a domain

and that is the price the owner is willing to sell for.

that is the attitude of those who own and can afford to hold domains that are in demand.

value is a perceived attribute, that is based on concrete statistics and/or an obvious/communicated potential.

the more you can influence or raise the perception of value, the higher your return will be.

for those who don't hold domains that are in demand, then value is determined more by what a buyer is willing to pay.

still, marketing and presentation can raise the perception of value and thus increase the potential of demand and higher roi.

this is where experience and knowing how to negotiate, present, market, and influence potentials, in the potential of the domain come into play.

without experience in assessing a value, how will you ever know what value is?

can be confusing, but basically i see value as a fixed point in the mind of that respective domain owner, at the time they consider selling.

once or if the domain is sold, changes hands, value can increase or decrease, depending on what the new owner does.


imo...

 

[Luc]

great points...

however, the problem with that theory is that domainers always get attached to their "gems" and as a result present an unrealistic price to the buyers. they think they're doing great because they're holding off for that "million dollar sale" but it never comes.

i guess the point i'm trying to make is that most domainers are not experienced veterans like you. they've never sold a domain to an end user, they don't even know how to go about it. their perceived prices are based on the attachment to their domains.

without a point of reference, a "reality check", so-to-speak, most will never sell their domains or let them go for pennies to other domainers prior to dropping.

domains are great long term investments. what most people forget, is that they are investments.

sellers dream up of amazing prices and great fortunes, but ultimately it's the buyer who decides if the price is fair.

you're right though. value is a perceived point in the sellers mind. but it also exists in the buyers mind. finding that balance is key to a successful transaction.

 

[iamjimmorrison]

Can Sedo's free pricing be used as a guide? I know they seem to use a base around $100, but if they say a name is worth more is this useful information or just Sedo's take on things?

Sorry for late reply, I am new to this and getting started with trying to figure what my 75 names or so are worth.

Let me say to your question on Sedo price suggustions: They have suggested that I price one of my offerings (clothingequipement.com) at $3000 suggested "free pricing" guide. You would think if they are serious or there is merit to their suggestion madness, they would be willing to put it in their premium auction (I do not necessariy think it is premium either, but it does have great search criteria) But the refuse it....so something does not quite make sense. I have other names as well which they have suggested for 100, and I know the names are brandable.....os I would not put much into this...

again, sorry for late reply

 

[MAllie]

Don't worry, Jim. Better late than never, and that's useful information.

 

[syedi]

try valuate.com

 

[simon johnson]

Incidentally....Ancient Greek 101.

Acros oracle and greek algorithms are probably going to be more accurate than some of the estimates out there.

The reason most domainers laugh at automated prices is because they sell to other domainers

I'd respectfully disagree. Your assumption depends on a very limited definition of a "domainer", their strategy and (if they sell) who their target market is.

The bottom line is, a domains value is whatever the market will pay. This might differ from time to time. For example: who is in the room at an auction.

 

[Theo]

LOL I know that my answer, despite being esoteric and humorous, has more to do with the insight acquired through experience than with a real function. The truth is, that to accurately evaluate a domain, you need either lots of aggregate data (e.g. past sales, registrations of similar domains, keyword payouts etc.) or a list of potential buyers, either generic (industries, groups, organizations, companies) or specific.

There, I finally expanded on the "oracle" part