question Do you reference domain-valuation tools when buying?

[smartynames]

I've come across a few tools to estimate domain value, GoDaddy's being a popular choice, and having played with them for a bit I am curious - do you folks use them when pulling a trigger on a purchase?

Asking because the tools seem to use historic values of previously purchased domains, plus some kind of blag magic assessment of the keywords, in order to generate the value.

But, if I am buying something in 2023 when the supply is much lower and desired names are different, the price someone paid for a similar domain in 2017 probably shouldn't matter. The price should, theoretically, be mostly forward-looking. What would someone want to pay for this domain in 6 months, vs 6 years from now.

What's the best way to use existing predicted value, while evaluating what you're looking at ?

 

[DomainNature]

In the beginning I was using such tools, but later I realized that no appraisal will beat inquiries, the more inquiries you have the better chances that you will sell that domain name, ask experienced domainers, they don't use appraisal tools, maybe only for entertainment.
Appraisals confuse beginners "oh look how much my domain value is" but in reality there are no inquiries for it, so experience and inquiries for a specific domain, beats the appraisal.
I remember also a guy had a domain something with notebookpc.com if not wrong, this domain was appraised at around 40K or more by Estibot, he sold it for around 2K, not remember the full story, this is one example to not use appraisals.

 

[DealMaker1]

The only appraisal tool that MAY have some value is Godaddy's because it takes into consideration similar past sales with some similar keywords and extensions. But it is only a very, very rough thing. Use it with caution.

The better bet is to look at very recent sales in the overall domain market. That should give you a feel for what your pricing should be. After all, the mood of the market is always changing and you have to be sensitive to that. So perhaps look a bit to yesterday about prices but mostly what is happening in the present.

Hope that helps.

Cheers

 

[D Haynes]

First off, knowing your domain name’s valuation can make a big difference in the valuation of your business, should you decide to sell. In some cases – like the Cars.com example – a domain can account for as much as one-third of the entire price of a business. Other times it’s just a small fraction. But either way, knowing the valuation gives you some leverage in negotiations.

Secondly, domain valuations matter from a buyer’s perspective. If you ever find yourself in a situation where you’re looking to buy a website, acquire another domain, or expand your business in some capacity, being able to appraise or use domain appraisal and accurately domain value or value a domain will help you make a more informed offer and acquisition.

What you say is true, however none of it can be achieved with automated appraisal tools.

 

[DealMaker1]

What you say is true, however none of it can be achieved with automated appraisal tools.

Yes. Very true.

 

[Eric Lyon]

To add a little more meat to this topic, personally, I don't use automated tools solely as a way to determine value. Some tools may have 1 variable out of the 5 or 10 they offer that I would consider viable enough to add to compilation of data-point value metrics.

Generally, I evaluate each domain manually, myself, prior to considering any type of safe investment threshold.

My personal evaluations may or may not use multiple variations of (IP) Intellectual property evaluation methodologies.

Such as, but not limited to;

1. Cost method
2. Market method
3. Income method
4. Decision trees
5. Competitive advantage valuation
6. 25% rule
7. The Monte Carlo Method
8. Real Options method
9. Binomial method
10. Probability weighted expected return method
11. Relief from royalty method
12. Excess earnings method
13. Markov chains,
14. Bayesian Analysis
15. Probabilistic Methodologies
16. Acquisition comparables
17. Stock price indication methods
18. Venture funding comparables
19. Cross-licensing
20. Citation Analysis
21. Enforceability
22. Current Impact
23. Claim scope breadth
24. Technology strength
25. Validity Confidence
26. Research intensity
27. Litigation avoidance
28. Science strength
29. Franchising/Partnering licensing potential (White-label, partner-label, black-label, distribution, retail, etc.)
30. Innovation cycle time
31. Technology cogency
32. Exclusivity and independence
33. Future benefits
34. Automated appraisal tools suggestions
35. and more!

For those of you that are VIPs or Gold Members, you can get a better idea of how I dig into domain assets in consideration of the above by looking at some of the quick 30 to 60+ minute professional appraisals I do in the Professional Appraisal section of the Insiders Club on NamePros.

At the end of the day, we all evaluate differently. What works for one may not work for another and a domain name is truly only worth what a buyer and seller agree on.