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Valuation of developed domains

Discussion in 'General Domain Discussion' started by Doble Korona, Feb 14, 2019.

  1. Doble Korona

    Doble Korona Membership: Community

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    Hi, I am a newbie in the sale of aftermarket domains. I have come across several articles that say that domains are like virtual real estate and as an intangible asset, they are said to appreciate in value once they are developed. By developed, I assume we are talking about the integration of services such as web design, SEO, SEM, social media, Cloud, phone apps, voice search, etc.

    My question is how do I quantify or prove this new valuation to my customer? If I offer an aftermarket generic domain www.widgets.com.au for $1,000 with the promise of a higher value after it is developed, is there any rule of thumb or formula I could use in order to arrive at this new valuation?
     
  2. snoopy

    snoopy Membership: VIP

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    "they are said to appreciate in value once they are developed"

    That is a nonsense, people like to think this when they register a bad or worthless domain, as though building a site can somehow save it.

    A domain is like a block of land, if the block of land is in the desert it is likely worthless. Spend 500k on a house and you'll end up with a worthless piece of land with a 500k house sitting on it. People probably won't even pay the 500k that it cost to build.
     
    Scott7 likes this.
  3. Scott.L

    Scott.L Membership: Trader

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    auDA Member:
    Yes
    well, unlike a block of land where it takes an hour or so to drive to the block, domain names are instantly accessible to any end user (instantly). Defining the domain name as "keyword centric" or 'memorable' i.e. easy to recognise in the search regardless of its complexity of composition is more likely to ad value to the overall function of the site. it isn't of itself (the domain name) the value driver; the content or functionality of the website to the end user is the value driver.
     
  4. Scott.L

    Scott.L Membership: Trader

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    auDA Member:
    Yes
    No, unless you provide the buyer with 'gateway metrics' for example; widgets.com.au is $1000 plus 12 month gateway milestones achievable may include; traffic, sales, ranking, other SEO variances, or end user functions to increase traffic and conversion rates. How that might look is going to depend on how well you can sell it to your client and your clients budget. I should add, can you make such a promise and achieve it?
     
  5. findtim

    findtim Membership: VIP

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    auDA Member:
    Yes
    whilst I think I have always been the number one advocate for developed domains snoopy has good points re: the desert.

    a sh*%t domain will always be, also a "brandable" is another desert but maybe more like a sump hole !

    Doble research the thread on nuts.com.au , i think you will find it interesting reading.

    my take on nuts ( without any true knowledge) is it was a good domain, developed and much work put into making it profitable, the sold as an ongoing concern but it never went ongoing? and still not. but that doesn't matter to the original owner as they did the right thing.

    just ask yourself what the end user would want? nice design, function, CTA, tracking, rankings, use wordpress and most of that can be monitored and explained to the client.

    have the answer for "but this site is green and my branding is blue"

    tim
     
  6. Data Glasses

    Data Glasses Membership: VIP

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    I tend to think once a name is developed the valuation comes from a business standpoint, etc ..... how much money does it make?
     
  7. snoopy

    snoopy Membership: VIP

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    What did it sell for? Around about the value of the domain or something more?

    Is this like the fish and chip shop which sells for the value of the building? It takes a lot for a business to worth something, most are worth nothing even though they are making a profit. Look at all the signs "business for sale", the business rarely actually sells for anything because working for an income (i.e. a job) has no capital value. Most of the time some new shop opens 6 months later.
     
  8. helloworld

    helloworld Membership: VIP

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    Even after all the years of coming here and selling some domains for low 5s the value i see in most domains is in the website and the traffic and income they generate. For example you buy widgets.com.au and develop a website about widgets which generates traffic which in turn generates revenue, you are then able to sell the domain/website package. This can be anything from 10x to 40x. It depends on who wants to buy it.
     
    Bacon Farmer likes this.
  9. Luke

    Luke Membership: Community

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    You can also put a domain in the doghouse if you don't do your SEO properly either. For example; if you submit your website to a thousand directories and get a bunch of spammy links from low grade websites. I've seen domains respond very poorly to good SEO, because of their shady history, and some have taken years to turn around.

    To answer your question, you can't really sell a domain and promise that it will appreciate in value. Especially the property market atm.