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How do I valuate domains and set an asking price

Labeled as guide in Domain Industry News, started by AbdulBasit.com, Jun 9, 2016

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  1. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    Hello and Assalamo Alaikum,

    One of my reader Sumit asked me how do I valuate and set an asking price for domains when I don't use any valuation tools like Estibot and others. I have also mentioned some factors which I don't actually consider while assessing domains.

    It's an interesting question and many find it difficulty in setting up prices for their domains. Although I am not an expert or the domainer who mostly sell his domain in 5 and even 6 figures on regular basis. But if someone wants to know more as to how I operate my domain business, please continue reading.

    When I was in initial stage of my domaining career, I did flipping and sold domains at sacrificing prices just in order to keep the cash flow going and must not stop buying and selling domains. But as I am quite settled now ALHUMDULLILAH, I can wait for the right buyer and play waiting game.

    There are several factors in valuing my domains:

    1) No urgent need of money. When you have good cash flow your sense of judgement gets change and you act accordingly. However, I have tried to get maximum out of every domain sale I can no matter what my financial position was. I admit of selling domains at lower price than I thought of their actual value but it was done purposely for the need of cash flow. Now when there is no urgency of funds, I feel I am on top of enduser and can demand what I actually want for every domain.

    2) There are hundreds of domain I hold which are upgrades for companies but I have categorized several domains for which I have one specific buyer to target when selling. I won't mention any specific domain but you may check out the domain investment page to get an idea. When you target 1 specific buyer, you limit yourself selling the domain and requires lot of patience and wait for that buyer to knock your door first. But I tell you... the reward is really fruitful and sometimes life changer. But in such cases, I don't buy domains with having only one potential buyer on internet.

    3) When targeting of one specific buyer, that company will definitely be having good backing of funds. If a company has got series of funding in millions of dollars, why cannot they spend a peanut of share on buying/upgrading their domain to a better one. The more time that buyer will delay, the more he has to pay because I have to consider many factors in increasing the price as the time goes by. My investment which is stuck for long time, aftermarket from where I buy domains is as always going up so my price will be adjusted accordingly.

    4) That particular market is huge and has lot of potential. I don't need of going into much detail about this because we as domainers know which niche has what kind of potential. But this is one of the factor I take into consideration for valuing my domains.

    5) I don't give much importance to exact searches and CPC of Google Keyword Planner. For most of domain acquisitions, I don't even check these metrics. Also the length of domain doesn't matter unless it has meaning, demand and potential. The more shorter, the better. Doesn't mean longer in length domains are not valuable but surely less desirable than shorter names like 2L, 3L.com domains.

    6) Number of existing companies. I take this metric into consideration when buying and pricing my domains. I normally check when that domain is possibility of an upgrade. I use NameDroppers and ZfBot for this purpose. When selling any 4L .com, I don't see much benefit of checking existing companies through ND or ZfBot but Google is more helpful in such type of domains.

    7) Registered in other extensions. Let's take an example of one of my domain (BeeGreen.com). I prefer checking/considering NameDroppers or ZfBot and Google and rest of the factors I have mentioned in the entire post but just looking if BeeGreen is registered in other extensions doesn't bother me at all. Yes, there is possibility of .net owner to buy the .com version but never sticking solely to this option of checking if BeeGreen is registered in lower extensions and decide how much to ask while selling the domain. The result will always be poor and I will leave plenty of money on table.

    8) Language. Most of the domains in my portfolio consists of English words excluding 4L.com and brandable domains. I do have domains in many different languages but I try to buy good meaningful and very common words used in that language or has decent as well as common meaning in English language. I used decent because I don't buy domains which has relationship with alcohol/adult/gambling. It's difficult to sell less popular language spoken domain even in .com as compare to selling some German, Spanish, Italian words in .com. You have to see the domain you own is in which language and how much popular and common that word is in that language. Sometimes people prefer to have .de (German country code) domain than to have .com. Doesn't mean you should not buy German language domains in .com but research is must. But if you seek my suggestion, I would strongly say to stick with English words in .com and diversify your portfolio once you have gathered good quality along with decent number of domains.

    9) Comparable sales. Oh well... This is seriously useless for me for setting up an asking price for my domains. I do keep checking DnJournal weekly sales report and NameBio but that doesn't mean I set asking prices after going through any comparable sales. Checking those sites keep me updated and helps me while buying domains so that I must not overpay it. But when I valuate my domains, I never check comparable sales because every domain is different. Demand of buyer is different, situation of seller is different and many other factors are involved.

    10) The most important factor in my opinion is that buyer have to have the biggest idea for using the domain they are going to acquire from me. You will hear often from domainers who say that your domain is worth what the buyer is willing to pay. In my opinion, that's utter nonsense and that person giving such shitty advice have no idea about this business. I always valuate and decide the asking price to whatever I want and sell at my own price. If the buyer doesn't want at that price, he must not have the big idea for my domain. I simply pass which is difficult but that's the way you should deal if you are to make fortune and change your life for betterment.

    I would love to see what others think about my way and curious to know how you guys valuate and price your domains ?
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. Skyvisum

    Skyvisum Top Contributor VIP

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    Nice write up Abdulbasit and you hit the nail on the head with most of your points.I think in this business,you must develop a tough skin as to pricing your names right and stick to it or in some cases,make buyer pay some fees and get deals closed when using escrow or thereabout.

    I have stopped looking at years of a domain as long as the words make sense to me and would be of use to buyers need.

    Thanks.
     
  3. Anyanwu Alfred

    Anyanwu Alfred Account Closed (Disallowed)

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    Basit my mentor, i got the lesson. Thanks
     
  4. Arpit131

    Arpit131 Top Member Epik.com Staff VIP

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    A very informative post Abdul!
    Those are some great insights into the valuation process and I am bookmarking it.

    I would like to quote Eric Lyon's comment from the blog, which I believe is informative too, and a lot of members may benefit from it:

    "Good starting point. It may also be beneficial to look at the following areas of a domain (if applicable) since they could also create value:

    1. Pronounceable:
    2. Domain Length:
    3. Premium Letters:
    4. Developed:
    5. Indexed:
    6. Original Content:
    7. Previously Developed:
    8. Development Possibilities:
    9. Revenue:
    10. Target Market(s):
    11. Keyword Value (cpc):
    12. Keyword Competition:
    13. Competing Sites:
    14. Alexa Score:
    15. Dictionary Word:
    16. Language Match Extension:
    17. Backlinks:
    18. Similar Domain Sales:
    19. Trademarked:
    20. Trend:
    21. Age:
    22. Similar Extensions Taken:
    23. Brandable:
    24. Traffic and Sources:"
     
  5. nvdomains

    nvdomains Established Member

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    Good point: Comparable sales -This is seriously useless for me for setting up an asking price for my domains.

    Point I dislike: I don't give much importance to exact searches and CPC of Google Keyword Planner.

    For me, it is much more valuable in setting prices for keyword domains.
     
  6. deez007

    deez007 The More I Learn The Less I "Know" VIP

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  7. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    @Skyvisum
    Thanks for your feedback.
    Almost all the time I make my buyers pay the fee and they never have any problems with it as well...

    @Anyanwu Alfred
    Glad you like it :)

    @Arpit131
    Thanks and I hope this will definitely be helpful for you :)
    Yeah, some nice points by Eric and good you shared here.

    @nvdomains
    Good if it's more valuable to you but I won't suggest you to solely price your domains according to these couple of metrics.

    @deez007
    Thanks bro :)
     
  8. frank-germany

    frank-germany domainer since 2001 / musician VIP

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    thank you Abdul for this brilliant guide
    I agree with you in nearly every aspect

    all the best
    Frank
     
  9. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    Glad you like it, thanks Frank!
     
  10. golan

    golan GolanMedia.com VIP Gold Account

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    Great essay, thanks!
     
  11. Altrell

    Altrell Altrell Owner

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    Found this post useful as I am just now getting into selling many of my domains. I have held onto a lot of them for a long time with intentions to use, but found that I am so focused in on industry that sidetracking myself with other projects was not a good idea. I have struggled with determining value as well.

    One thing I feel is the final determining factor for a domain sale price is going to be what the buyer is willing to pay to complete their vision. When they see a end result to the domain and a financial windfall they are willing to pay a lot more. Most domains become a labor of love and waiting for the right person to come along.
     
  12. DomainPluto

    DomainPluto Dashawn R.

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    Great article my friend. I read this post on your blog but was worth reading again here!
     
  13. DomainVP

    DomainVP Domain Expert VIP

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    Nice writeup, but I will have to disagree with you on this point.

    Take for instance a hypothetical dictionary 1 word .COM

    You may decide the asking price is $40000, an interested buyer may decided the price should be $10000. You negotiate further and each come to the decision that $28000 is a fair amount for the domain.

    The domain was worth what the buyer is willing to pay.

    Let's say that you stand firm at $40000, the buyer walks away and never comes back - no other buyers emerge over a 5-8 year timeframe. To contend that the domain is still worth $40000 would just be based on your own perception of relative metrics.

    Finally, you could price a domain at $40k and the interested user would buy it at that price. Did you leave money on the table? Maybe... The interested party would have paid $70k for it based on their own metrics, so the domain was worth $30k more than your own asking price.

    Overall point being, yes you can price a domain out according to relevant metrics and your own satisfactory price point, and that's fine, but at the end of the day a domain is worth what someone will pay for it.
     
  14. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    @golan
    Thanks yeah :)

    @Altrell
    You will determine the value as the time goes by with test and trials. Reading a lot of other people experiences definitely help. Doesn't mean I know everything and I am eager to learn at every possible step I can. If the domain is of good if not high quality, it will definitely sell at decent price, it's just the matter of time. Some takes 1 day and others 10 years as well if you are looking for the price you want to sell at.

    @DomainPluto
    Thanks! Glad you like it mate :)
     
  15. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    I like it if someone disagrees with me and that makes me think I will be learning something new :)

    Well, keeping the same example you used...

    If I am coming down to 28K for selling my domain, it's ME who has come down to that price and NOT what buyer is willing to pay here. I have the authority to hold the domain, although there is risk of losing the deal but that's part of the business. If I keep on getting scared all the time, there is no point of me doing business and I must do job somewhere :D

    As said earlier, there are possibilities of striking a deal or losing it.

    And if I stick with my first quoted price of 40K and like you said the enduser had made up his mind to pay up to 70K, so the buyer saved 30K but I don't consider that 30K losing it because I was happy with 40K and sold at MY price. On the other hand, I have seen some last few sales of Rick Schwartz to Chinese and now they are up for sale at much higher price. In this case, according to your thinking, Rick left money on table because according to Chinese buyer he will make profit on those numerics because the market is continuously going up. But I think Rick got the best price during the time he sold.

    So in all cases, it's the seller who has upper hand all the time. Now that depends on the seller to bow down and get scared or stay firm.
     
  16. frank-germany

    frank-germany domainer since 2001 / musician VIP

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    in your example
    the buyer was willing to pay 10k

    but thats not the value of the domain,
    as even the same buyer was changing his mind to 28k

    so the idea of "a domain is worth what a buyer is willing to pay for it"
    really is completely BS

    a buyer will never want to pay his max budget initially,
    so its your task to find how much you can squeeze,
    and thats done by negotiating.

    "a domain is worth what a buyer is willing to pay for it"
    is a lazy attitude

    learn to negotiate better
    do your homework
     
  17. wormfood

    wormfood ---- VIP

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    The fact that they have a "max budget" means there is a "max price" that your domain can go for. He was willing to pay 28k so it was worth 28k or maybe more to him. It doesn't matter what the domain is worth to you..(i.e. some random ROI you want from it).. it matters what it is worth to the end users.
    There is a set of buyers who will pay for your domain.
    And each of them has a max budget, even if they don't explicitly think about it.
    Your domain is worth some figure that is within the average buyer's budget.
    Unless you have tons of time, money, and high quantity of quality domains which allows you to wait for ridiculously high offers to come in, at the end of the day, it is the end user who is providing your income.. so you can't just set whatever price you want and call it "sticking to your guns"
    Would you rather sell all 20 of your domains for 1000 each and see many of them be put to use, or be stubborn and sell 2 for 12k to get that extra 4k? meanwhile..alienating the buyers for the other 18
     
  18. DomainVP

    DomainVP Domain Expert VIP

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    What you are saying makes absolutely zero sense.

    It's a hypothetical situation, so you have no clue if the domain is actually worth even $10k.

    It's a hypothetical situation, so you have no clue what it would take to get the buyer to $28k. It may have taken the patient skill set of a master salesman to get the buyer to $28k over 6 to 12 months.

    again... it's a hypothetical situation so the buyer may have opened with $2000 and then settled on a final price of $10k, only to be walked up even more to $28k.

    How is that even remotely "LAZY". There is nothing lazy about it, it is what it is.

    You go ahead a price out all of your domains at $20k and you will quickly find that the reality of Supply and Demand will smack you harder in the face than any lesson you have yet to learn in domaining.

    You also have not considered the other side of the spectrum.

    Most of us purchase domains at a wholesale level and take advantage of the fleeting (evaporated) market inefficiency. So you may pick up a domain for $20 that all other domainers will valuate at $0 or $10.

    So you take a few weeks to so some end user research and you find an end user who will buy it for $1000, after you offered it to them for $4000.

    So YOU bought the domain for $20, your peers vaulted it for less and you end up selling it for $2500 after some negotiations.

    Looks like the price of the domain is what someone was willing to pay for it. :xf.cool:

    The value of a domain is what someone is willing to pay for it; and it's been proven time and time again.

    Do your homework.
     
  19. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    There are thousands of endusers who offers in 3 figs for LLL.com and those are not well educated about the value of LLL.com or have no budget to afford the name. That doesn't mean if 10 endusers knock my door and say my LLL.com is worth max $500 so I go and sell to the person gave me the highest offer. For me, there is no set market for LLL.com or any other domains when it comes to selling. But when I am buying from aftermarket, I will definitely be paying within the current market value.

    Also I would take 12K for 2 domains rather than selling 20 domains for 1K each. With all that, I don't consider myself as flipper.
     
  20. AbdulBasit.com

    AbdulBasit.com DomainsWeb.com AbdulBasit.com PRO VIP ★★★★★★★★★★

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    I do admire Rick Schwartz's sales and his strategies of selling domains. As he himself call the domain king which I accept as well. If I put him in your shoes, he should have sold his domains for pennies and not for millions. He sold some 18 domains in his first 18 years of domain business.

    Think big to achieve big. If you ask $10,000 for your domain and stay firm on it, you may get that 10K. But you will not get $1 extra if you don't ask for it. Doesn't mean one should go and ask for millions for all his domains. Handle it like another business but things are a bit different in this business and one should understand the potential of his domains keeping the future in mind of both himself and the prospects.
     
  21. frank-germany

    frank-germany domainer since 2001 / musician VIP

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    you know what?

    the goose is out
     
  22. DomainVP

    DomainVP Domain Expert VIP

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    As it should be. :xf.grin:
     
  23. DomainVP

    DomainVP Domain Expert VIP

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    Pennies? Let's not be that dramatic! :P

    When you turn down significant offers it sometimes feels like lunacy, and is only admired once a negotiation actually turns into a sale.

    I have turned down significant offers, and I know they will be coming back, and I agree it is certainly an exercise in patience and staying relatively firm.

    Now I say "relatively" because with every negotiation it's almost expected that a buyer sets the price low, and a seller sets the price high. Somewhere in the middle the twain shall meet and everyone will be 'okay' with the outcome.

    This is where 'a domain is worth what someone will pay for it' emerges.

    Rick may have priced a nnn at 4mil and then taken high 6 figures, only to have the buyer then list it for twice that amount based on the 4mil asking price and a very volatile market pricing months ago.

    Sure you can set a price, but that value will only actualize once it's paid for.

    In the end, it was worth what someone was willing to pay for it.
     
  24. frank-germany

    frank-germany domainer since 2001 / musician VIP

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    In the end, it was worth what you were willing to let it go for.
     
  25. DomainVP

    DomainVP Domain Expert VIP

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