jamesZ
2008-05-15, 07:56 AM
What makes a domain sellable?
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.
You can also read the whole article at
http://www.ricklatona.com/2008/05/09/what-makes-a-domain-sellable/
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.
You can also read the whole article at
http://www.ricklatona.com/2008/05/09/what-makes-a-domain-sellable/