How much are domain names really worth?

[The Critic]

I see references to domains being sold for thousands and even tens or hundreds of thousands of dollars and I can't help but think that that's a lot of money to spend on something with no apparent value. I can see an established website that already gets plenty of traffic and is generating steady revenue being sold for that much, but just a domain? What is it that makes these extremely cheap commodities (I got mine for under $2) so valuable?

 

[.X.]

they are worth register fee if they are a new registered domain name...they may sell for more...But reg fee is thier initial value....domain names that sell for thousands of dollars ...are established names...most generate a modest amount of traffic and have good searchengine indexing,Getting a name to that point takes alot of work and effort...In genral...in my opinion...a name will only sell for what someone is willing to pay for it...opinions vary on that subject....end-users look for names that fit thier needs,Most are willing to pay substancially more than a reseller...the end-user has a website development in mind...and the domain name of thier choice is just another start up cost of thier website and long term goal...the value of a name is in they eye of the beholoder imo....a name doesn't have to be developed to have a nice resell value...But for example...most all premuim keyword .coms are registered...The only way for that end-user to get the name they really want is to buy it.

 

[dotnom]

Domain Names is your face at the internet. The most beautiful names gather a lot of attention. Attention makes money

It's the same when you see an expensive painting... it's just some colors and one canvas

 

[netzilla]

It all depends honestly what the keywords and extension is. Just to put it simply...a domain name is only worth what a buyer will pay for it. Just because a name is appraised at $xxx fo example doesn't mean that you are going to get that. Typically you will have better luck developing a website around your domain name and then that will raise the value. Just my 2 cents.

_\|/_

 

[The Critic]

So then it really isn't just about the domain, it's about developing content that draws traffic to the name? I just get the impression that people are going around registering domain names in the hopes that they can get someone who really wants the name to pay a hefty premium on it.

 

[BPmedia David]

they are.

 

[Ichigo91]

I cant believe how they are willing to pay so much for a domain its just a domain!

 

[TestCase]

I cant believe how they are willing to pay so much for a domain its just a domain!

They are not "just domains", they are/can be a "life long":

• calling card for your business

• internet billboard/beacon

• quick 1 to ? word description/summary of your business, your product(s), or what you want to be known for

• advertising

• easy way for you customers to remember where to find you on the internet

• way to be one step ahead of your competitor

• asset that increases in value

You really have to look at things with a broader perspective and long term view. The annualized cost of a $10,000 domain name with an $8 anual renewal fee over 10 years is $1008 a year - less than what you would pay for just one small but decent sized ad in any major newspaper in the US.

When you look at your cost over 20 years, the "annualized" cost drops to $508, over 30 years its about $340, etc, etc, etc... And it will never "wear out".

 

[allroundguy]

If You really want something, You will do(almost) anything to get it.

This is the most intelligent thread I ever crossed on the WWW.
Finally, I found realistic people.

Indeed, things have only value for:
a) The current owner.
b) The people who want to buy it.

Other people may have opinions too.
But the market is (a)+(b).
That's the same for domains.

And even if thousand people agree about a value:
- The sellers will let it go at their price.
- The buyers will pay what they want.

 

[The Critic]

I can understand how an established name can fetch a high price due to the traffic it would already have, but I don't understand why an individual would be willing to pay 10000% or higher markup on a string of words, even if the hit to their bank account lessens over time. If I want to start a business called My Web Hosting, what difference does it really make if I choose mywebhosting.com, myhosting.com, my-web-hosting.com, webhosting.com, my-hosting.com, hostforfree.com, cheapasshosting.com, etc? Even if one or all of those were taken I could pick a name that would work just as well without having to pay a premium on it. It seems to me like promotion is more important than the domain name anyway, as sites like craigslist.com, dmoz.org, and wikipedia.com have names that mean absolutely nothing, yet everyone knows about them anyway. Hell, wikipedia got well over $700K in donations last year.

For a corporation it isn't a big deal because for them $100,000 is pocket change, so $100-10,000 for a domain name is nothing, especially over the long term. It's a cost of doing business (and a handy way to quell dissent, as in the case of Wal-Mart acquiring walmartsucks.com). Even then, however, you have some of them going with discovercard.com rather than discover.com (as an example).

And those are just relevant domains. I see people literally stringing together random letters and numbers and trying to sell those off. That and domains with extensions that most people are unaware actually exist (.info, .jobs, etc). I honestly can't see how any domain other than a top-level domain would have any resale value at all unless it was a country domain and you were marketing locally.

 

[cityforums.com]

I cant believe how they are willing to pay so much for a domain its just a domain!

Wrong its one of the most powerful marketing tool on earth

because its mental real estate.

 

[USERPERU]

I think the Name ( domain name registered) isn´t all , its value can be increased ( like a brand )

The best brands of the world aren´t common names

I recommend you to read the book:

The 11 inmutable laws of internet branding ..by All Ries

Domain names have high values due the speculation

and I agree with :

things have only value for:
a) The current owner.
b) The people who want to buy it.

 

[allroundguy]

There are no silly names ... Some people can easier recall strange and weird names.

For who doesn't understand Russian, Croatian, French, Chinese, etc. etc. their domain names may look freaky.
However, I personally think it would be wrong to believe that what is unpronouncable (or even unthinkable) for English spoken people (and others), is usually difficult to remember.
Some people can easier recall strange and weird names.
I'd bet if people would wear something like "XXX-censored.com" in bright red letters on their T-Shirt that server would crash often.

 

[Beachie]

I see references to domains being sold for thousands and even tens or hundreds of thousands of dollars and I can't help but think that that's a lot of money to spend on something with no apparent value. I can see an established website that already gets plenty of traffic and is generating steady revenue being sold for that much, but just a domain? What is it that makes these extremely cheap commodities (I got mine for under $2) so valuable?

Many of the higher-end sales are for domains that have strong traffic or are industry-defining. Companies pay large amounts of advertising money to drive traffic to their websites using Google AdWords, Overture etc. With that in mind, what is the value of an industry-defining domain (for example, diamond.com) with 1500 unique visitors per day? The going rate for an AdWords visitor for the term "diamond" is over $1. So is the domain worth $1500 per day? No, it's worth more - let's say you make an average profit of $300 on a jewelry sale, and the traffic from your new domain, diamond.com, converts at 1% - that's $1.6 million per year profit, and you already saved $547,500 in AdWords advertising. The name is worth at least $2 million per year. So would you sell it for $2 million? Of course not, you'd want at least 3 or 4 years revenue, probably more.

As a real-life example I paid $30,000 for a domain earlier this year. I parked it and made the $30k back in 6 weeks. Why would I sell it for $2 when it makes me $260,000 per year?

 

[allroundguy]

What is it that makes these extremely cheap commodities so valuable?

... What is it that makes these extremely cheap commodities (I got mine for under $2) so valuable?

They are not all that valuable.
It's a matter of expectations and wishful thinking on the side of both seller and buyer.
Example Scenario (a):
You build a web and advertise at least one product or a service.
If You get 5,000 visitor daily and if You make a sale, and if Your product allows at least a net $10.00 profit, and if You sell at least 25 of those products, then You make at least $250.00 in one single day!
In this scenario, traffic is not enough - It is absolutely necessary to sell something.
But here, we can offer thousands of products as we like.

Example Scenario (b):
You park Your domain with someone else's content.
With Your domain parked somewhere with a $0.01 per visitor You make $50.00 per day without risking or having to do anything!
If You get $0.10 that would make You already $500.00!
Already with just 100 visitors/day at $0.10 per visit You get $10.00 per day!
In this scenario, it is only necessary to have traffic.
But here, we have no control about anything.

The main question is usually: How do we make people to come to our domain?
Putting links everywhere in the hope that people will get curious?
It could work.
We may need to do that anyway in both scenarios.
And there are more scenarios thinkable.

Anyway: There must be indeed some people making good money by parking their domains, otherwise there would be no parking industry.
:imho:

 

[The Critic]

Excellent points. Thanks guys.

 

[Broker]

As a real-life example I paid $30,000 for a domain earlier this year. I parked it and made the $30k back in 6 weeks. Why would I sell it for $2 when it makes me $260,000 per year?[/QUOTE]



Dam thats awesome. If I ever happen to find $30,000 I'm coming to you for advice $260,000 a year? I'd never have to work again, unreal where I come from. Nice............

 

[labrocca]

Let's all take a moment to hate Beachie.

Damn u sir!

hehe

 

[Beachie]

Let's all take a moment to hate Beachie.

Damn u sir!

hehe

:p :hehe:

 

[cache]

a better name is easy to type and easy to remember, which can demand more money