Every day the question “What’s my domain name worth?” get’s asked more times than just about any other in the domain name industry. In fact, I think that is the most frequent request I get; to help place a price on a domain name. My response to that is: If you don’t know what the domain name is worth, why did you buy it? Think about that question; we’ll get back to the answer later. 😉
Being that it’s a tough task to place an accurate price range on a domain name, there have been a plethora of theories, equations, and tools developed to help us better understand this digital real estate of ours.
These tools, equations, and theories will always work better on a generic .com domain name, the further away you stray from that, the less accurate you can expect the data to be. This is not an end-all-be-all post, just one of many reference points on the internet you need to check on your valuation journey. The best thing you can do is train your instincts, and do a ton of research. As always, your results may vary.
In this example, I will be using the domain name FlashGames.com (I randomly picked it from the top 500 reported sales of all time). FlashGames.com sold for $226,950 in 2006 by Moniker. Assuming I owned the domain, and it had not already sold for six figures, the following would be a few of the things I would do to better find out what the domain name is potentially worth.
Train Your Spidey Senses
To hone in on your valuation skills, you will first need to train them. This is the first step, and if you skip this, you can kiss your long-term domaining dreams BUH-BYE.
Overpaying for a domain name is the biggest mistake you can make. Especially if you plan to flip domain names for a living; the money is essentially made on the buy side (more on this in another post).
There are three ways that I will recommend as a starting point to training your domain name valuation instincts.
- The Domain Game: By far the best game, and training tool on domain name valuation. It’s fun, and it’s giving me a far better understanding of domain name sale prices. It’s so much more than a game. You need it.
- DNAcademy: I was lucky enough to work on some of the content in DNAcademy along side Michael Cyger, and I have to say, I was very impressed with how he put it all together. It’s a powerful starting point to learn essential and fundamental information about the domain name industry, including valuation.
- The Ultimate Guide to Developing Valuation Instincts. Read it, study it, obsess over it, apply it, become it.
The Rosener Equation
Go through the comparable sales would ya! Research is KING when it comes to becoming a valuation ninja. “What’s my domain worth?” Well bro, a good place to start would be comparable sales analysis, right? Did anything like your domain name sell? If so, how many? For how much? Just don’t go thinking that if Fund.com sold for millions, that Fund.org.network.tld is worth anything. This is just ONE (very important) part of the valuation process.
Yes, EstiBot, a well built valuation algorithm. “But Ali, what does a robot know?” More than you do if you’re asking “What’s my domain name worth?” But the algorithm is incredibly well made, and it will give you a good idea (better with generic domains) of potential value. Again, with anything, it’s all about collecting data from multiple sources, and comparing the results, thus coming to an educated hypothesis of domain name value.
What’s My Domain Name Worth? (Answered…Kinda)
By now, you are many steps ahead of everyone else. So let’s apply these theories, equations, and tools and see what valuation we end up with on FlashGames.com.
The Rosener Equation Results
FlashGames.com Domain Name Valuation (A x B x C x D)
A = Exact-match monthly search volume for the keywords “Flash Games” (450,000)
B = Average CPC for the keywords “Flash Games” ($0.75 )
C = Average Search Engine Click-Through Rate (.35)
D = Assumed Payback Period (12 months)
FlashGames.com (450,000 x $0.75 x .35 x 12 = $1,417,500)
Okay, so to the perfect end-user, the Rosener Equation gives us ~$1.4M valuation, which seems reasonable given the popularity of flash games. The sale was also way back in 2006, this valuation is from 2016. Given appreciation, I would say it’s a pretty good starting point, but Flash Games aren’t as trendy as they once were (making it potentially less valuable than the $1.4M valuation here), however, they still have a massive search volume. So let’s look at the other data too.
NameBio Comparable Sales Analysis
When I have a two-word domain name, I like to search the first keyword and the second keyword separately. Ensuring that both keywords are searched for in their particular position within the name. The results showed me quite a bit:
- Domains starting with “Flash”: I averaged out the top ten (by price) domain name sales (excluding FlashGames.com) that begin with the keyword “Flash” and the average sale price was ~$39,000.
- Domains ending with “Games”: I averaged out the top ten (by price) domain name sales (excluding FlashGames.com) that end with the keyword “Games” and the average sale price was ~$257,000.
EstiBot values this domain name at $264,000. I believe their algorithm updates when a domain name sells, but I could be wrong. We’ll still use the number in our process.
Now I have four numbers:
- $1.4M (Rosener Equation)
- $39k (Starting with “Flash”)
- $257k (Ending with “Games”)
- $264k (EstiBot Valuation)
They average out to $490,000
The domain sold for: $226,950
I would say, in 2016, as a domain name only sale, that would be a pretty close valuation (given appreciation, +/- for loss of trend) and we found that out with just a little research and a combination of available data. Not bad.
If you look below in the comments, Tony left one that made an impact. So I added this part:
If we were to use only the search and CPC stats from the USA we would get the following results:
FlashGames.com in USA only: (74,000 x $1.32 x .35 x 12 = $410,256)
Average out all the numbers again with the USA stats behind the Rosener Equation:
They average out to $242,564
The domain sold for: $226,950
Pretty scary how close that becomes!
At the end of the day, this is a very basic starting point for generic domain names. The further you stray, the harder it gets to value. As with anything, take it all with a grain of salt. Everything is about timing, and buyer/seller circumstance. Life plays a huge roll, unless you’re a boss and you can sit and wait for the optimal prices, the valuations will vary. You will always have to negotiate no matter what you may find your domain name to be “worth.” Patience, knowledge and data are the way grasshopper.
Furthermore, I think these data points work quite well and although they don’t provide an end-all-be-all valuation, they do give the me a good reference point of sorts to help gauge pricing expectations. There are so many more statistics and data points you can reference when giving a domain name a value, these were just some of the most common and fundamental ways to find out what your domain name might be worth. I hope you find them useful.