tips Simple Domain Valuation Equation

[BrandPlease]

Hi All,

Been a good week, just had a sale close on BB today, in a good mood & wanted to share:

With so many confused about domain valuation, we figured offering a simple valuation equation would make it much easier for all.:

See below and life will be easy and figuring out your domain value should be a breeze!

Nice and easy now? hahahaha, I shouldn't be giving this secret away.
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The simple domain value equation:

Conceptually, the sales price P of domain i is split into three components:

where SLD and TLD capture the quality of each SLD and TLD. Time dynamics enter the equation through Dt. Differencing transactions that share the same SLD cancels out the SLD component:

which leads to an equation that can be empirically tested in a regression:

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Look up Thies Lindenthal, paper (this is from)called: Valuable Words: The Price Dynamics of Internet Domain Names. interesting stuff to learn.

Enjoy,
Brian

 

[johnnie018]

You need to control for location.

Also must control for the theory being mess and worthless!

 

[BrandPlease]

Glad this got a good discussion going & people were interested.

One thing that always comes to mind & think we all know it's coming - like it or not - AI will be playing a very active role in everything everyone does, in all industries, & in all aspects of life. But, lets just think about marketing for this post. Will AI be evaluating all aspects of branding and marketing and spitting out best ROI action plans - that will be followed blindly by the masses? Maybe? a good guess is probably.

To the point. If you dig deeper into the author behind that paper and the several related projects (Sed o, GD are 2 biggies) you will see what that ecosystem we will have to work within looks like as AI take more of the individual decision making process out of the mix.

These papers will lead you to so much info, including the methodology & metrics applied to the valuation algorithms used by - well just about all of the services, that automate things we investors know shouldn't be - but have to be conscious of & consider (for yourself only) are you more trusted by the customer or is GD on the value of a domain?

This is a real/serious question to ask yourself as it varies greatly: (e.g. known broker selling premium .coms in the 25k+ range (with reference and history) brings something different to the trust table than a new investor with a "white label" portfolio site selling hundreds of $xx & $xxx names.

I do agree formulas are not how "we" can work effectively as an established investor/biz. & hope that my OP showed it was a bit of humor with some interesting info.

But, we cant dismiss what we can see in writing (serious -massive- detailed -multi year - multi company- have to be amazingly expensive research papers) how the biggest players in the space will be playing the game.

So much to plan for, which is why this industry is so exciting.
Brian

 

[Kai W.]

The domain is more like a belief. Because they believe, they will pay.

 

[Kai W.]

So our goal is just to find people with the same faith.

 

[frank-germany]

a domain name is worth to a buyer
related to the enhancement of his future profit
caused by that domain name

so how can you calculate the future profit
of an unknown buyer?

BS

 

[otismo]

a domain name is worth to a buyer
related to the enhancement of his future profit
caused by that domain name

so how can you calculate the future profit
of an unknown buyer?

BS

EXACTLY.

NOW I want a butterfly.net

 

[Dandelion]

Can you translate to English?

LOL... Seriously, English version is urgently needed

 

[Dandelion]

All these Formulas and Equations are BS. No amount of equation can calculate the mind of unknown buyers. So, just give it a rest

 

[Ostrados]

I don't think any mathematical formula will be suitable for domains appraisals, domains are very different from Real Estates in many aspects, one of the biggest differences is that you can find a domain worth a lot and another very close variant worth $0 because of an extra "s", this does not happen in real estates, you can't have a house worth $0 because it has an extra window!

The only way to automate domain appraisals is to feed an AI with all the knowledge of a professional domain investor. After that you will need to train the AI on a huge set of domain appraisal tasks, after many trials the AI will learn from the deviations in the errors and overtime it will become more accurate.

 

[Dandelion]

I don't think any mathematical formula will be suitable for domains appraisals, domains are very different from Real Estates in many aspects, one of the biggest differences is that you can find a domain worth a lot and another very close variant worth $0 because of an extra "s", this does not happen in real estates, you can't have a house worth $0 because it has an extra window!

This really got me

The only way to automate domain appraisals is to feed an AI with all the knowledge of a professional domain investor. After that you will need to train the AI on a huge set of domain appraisal tasks, after many trials the AI will learn from the deviations in the errors and overtime it will become more accurate.

Even at that, you still can't feed the AI with customer's mindsets and needs. These are the greatest factors that influences domain worth.

 

[johnn]

Here is the formula on NP

- One word dictionary name - $500
- LLLL.com pronounceable - $200
- About to expire - $2
- Anything else $10-$20

 

[bobbarato]

SIgh.... OP doesn't define SLD, TLD, or D. And even then, assigning values to these 3 variables are the hard part.

"Not counting the losses, we're ahead!"

 

[NameLlama]

One day AI will be better domainer than all humans

 

[bobbarato]

One day AI will be better domainer than all humans

One day AI will be better <snip> than all humans

 

[Dandelion]

SIgh.... OP doesn't define SLD, TLD, or D. And even then, assigning values to these 3 variables are the hard part.

"Not counting the losses, we're ahead!"

OP's formula is cumbersome and has no Algebraic basis. He is mathematically incompetent

 

[otismo]

One day AI will be better domainer than all humans

Becuz ai get better or becuz humans get worse?

 

[johnnie018]

One day AI will be better domainer than all humans

Canary would be better than most right today!