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Monday, April 25, 2016

Domain Name Valuation

By Duane J. Higgins, ceo and 

What is a given domain name worth?

There are a number of automated domain name valuation tools on the market and many of them are free to use. Many have some real benefits and some have none. However, if you want to value a domain name for consideration of a future sale, my best advice is to toss those valuation tools out of the window.

Here are some some generally valuable qualities often found in domain names:

Keyword Rich
Proper Names
Industry Wide

But, just as old saying goes that something is worth whatever another party is willing to pay for it.  Every once in a while I see a domain name sale go accross the teletype machine that is just a real head scratcher.  Most average domainers and even the occasional hobbyist domainer know exactly what I'm talking about. For example when we see the announced sale of  something like (just an example): with a sale price of  27,000 usd.

That's just a hypothetical case and in fact that domain name is currently unregistered if anyone wants it. But my point is of course that at domain name is worth whatever another person is willing to pay for it. In this hypothetical case it would appear that someone would have a strong interest in that name. However, there are completed sales just like my example nearly every day in the domain aftermarkets. Instances where a given domain name was worth a good deal to one party and not worth much more than a registration fee to others. Happens every day.

Here are two real life recent examples from the past month (March 2016) to further illustrate my point. These names were sold on the Marketplace:    30,000    USD    30,000    USD

Let me see if I can construct another hypothetical example that will illustrate my point. Lets say a new domain name registrar is launching as many are right now. The company has millions of dollars in resources for their venture and wants the perfect name. They consult with naming companies and utilize their own experts. The name they come up with is (pronounced like dinosaur).  Now lets say that name is registered (it actually isn't). But lets say that it is registered. How much is this new hundred million dollar venture willing to pay for that domain name? The answer could be quite a bit.

If the seller doesn't know the identity of the buyer then they might let the name go for a lesser fee. What would the seller hold out for if they knew who they were dealing/negotiating with? If they knew they were dealing with a large venture with nearly unlimited resources? The lesson here is to of course do your research. No matter which side of the negotiation fence you are on.

Or maybe you just think that you have this domain name that is a fantastic name.  A name that will ultimately sell for xxx,xxx or whatever. If that is the case, then hold out for the price that you want. It may take you 5, 10 or 20 years to sell the domain, however when you do, and you get your price-you'll be glad that you held out for your asking price.

Negotiating the sale and settling on a sale price are arts and sciences of themselves. I won't get into that here. My only point is that in this mythical case, you have a registration fee domain (currently unregistered) that could ultimately be worth a good deal of money- in the right situation, at the right time with the right parties involved.

And just maybe, if you hold out for your top price, (even if it takes years) you'll get the jackpot that you have dreamed about. As beauty has always been and will remain in the eye of the beholder. 

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