What makes a domain sellable?
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Rick Latona May 30, 2008
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Many articles have been written about how to value a domain name. This is not
one of those articles.
I sell domains so I’m much more concerned with what names people want to buy
and what they’ll pay then I am about their true value. What I mean by that is,
I’m not one of those guys that thinks that every domain is priceless or needs to
have a huge price tag on it. I try very hard to be realistic when putting
numbers on them.
I have one question that I ask myself that is more important to me than any
other question. What sort of website would be put on the name? When buyers buy a
name from me, more often than not they want the name because they have some sort
of vision for it. What’s the obvious vision?
GEO names like SanJuan.com or SimiValley.com are easy to sell because that
question is easy to answer. Other names that have obvious business models are
directory names. What I refer to as directory names are the category killers
like gastoenterologists.com or skiresorts.com. Those names are simple. Build a
site and charge companies to be listed on the directory. In that way, I suppose
most GEO names are directories themselves like what I”ve done with Baja.com.
Product names can be tricky. I generally look for things that are small
enough to ship cheaply. There is a reason that cameras.com is worth so much
money and furniture.com went bankrupt. It’s not easy to ship furniture. Pets.com
went under back in the day because nobody would pay shipping on a 100 pound bag
of dog food.
The whole LL.com and LLL.com market like AZ.com or PSJ.com doesn’t make any
sense to me. That’s a straight up confession. I deal in them all the time
because they have value and people buy them but I would never buy one myself to
develop. They don’t answer my fundamental question. What would you do with it?
Clearly AZ.com should be about Arizona but it makes no sense that it sold for
that much money. Arizona isn’t a keyword in the name and Google rankings will be
hard to obtain.
Speaking of Google rankings, get them. It’s worth the effort. Sites with
great SERPs (Search Engine Result Pages) make more money and sell for more
money. If you think you are going to want to sell your name I highly suggest you
develop it and go for those rankings. You’ll make less than you would parking it
for a while but in time it’ll catch up and your name will have a greater resale
value.
Revenue helps. Ok, that was an understatement. I find that it isn’t uncommon
to get 20 times earnings on a name. The irony is that the higher the earnings,
the lower the multiple. That’s mainly because there are fewer buyers at high
price points. A name that earns 10,000 dollars or more per year is more likely
to sell at a 10 times multiple. Sin names like adult and gaming domains are more
likely to sell at a 7-8 times multiple. Sure, there are obvious exceptions like
porn.com selling for over 9 million on 600,000 a year in earnings but I can only
speak from my personal experiences. Don’t get me wrong, you often don’t need any
revenue but it certainly helps.
The .com is still the undisputed king but great cctlds can sell well,
especially .co.uk and .de names. In fact, I’m buying if you want to send me
some. Just don’t send me .mobi
names. They aren’t sellable dispite the sales reports. I firmly believe they
are in a bubble and I’m not going to be stuck holding the bag.
I’m going to add to this post over the weekend because there is so much to
say on the subject. For now I just wanted to get my initial thoughts out
there. |