Do you REALLY know how much your Domains are worth?

Running a brokerage service is a great way to get a feel for how well people understand domain pricing. As a broker I obviously cannot sell a domain that a buyer has a ridiculous price expectation for. Each week I get somewhere around 30-50 requests from interested brokerage clients. Of those requests I would have to say that just about 75% of the people have completely absurd pricing expectations.

Now it’s okay to dream – and yes, when shown to the right end-user some domains could have a much higher value. However oftentimes people are just confused about how much their domain names are really worth.

You know I love an analogies so here’s a good one. Suppose I was a real estate broker and someone calls me about a house they want to sell that is worth 40 million dollars. I drive over the the neighborhood to visit it and find that there isn’t a single house on the block over a million dollars. Their house doesn’t look much different from the other homes on the block either.

So I ask them, “Why is your house worth 40 million dollars.” They then tell me that for the right buyer it would be worth 40 million dollars, and as a broker I have to find that buyer.

The same thing happens with Domaining but since domain pricing is much more abstract, many new domainers have portfolios with heavily inflated values. Now it’s important to be fair here and not crush anyone’s dreams. I don’t look at a domain and say, “okay, here’s how much it’s worth.” Instead I do the same think house  brokers do – I look at comparable sales.

It’s amazing how many new domainers have no idea that DNJournal exists or that domain selling prices are actually listed online. I was speaking with a potential client this week and he felt rushed because he had to sell his domain before it expired. I asked him why he wouldn’t just renew it if it doesn’t sell. The buyer responded by saying, “I thought you could just buy a domain for a year and if you didn’t sell it within the year that was it.”

Now this may sound ridiculous but this is the reality. Many new Domainers coming-into the industry not only don’t know anything about the industry, they also don’t know anything about domain names. There is nothing wrong with this – but a little bit of education can go a long way!

Over the next few days I’ll be doing a series on domain pricing aimed at the absolute beginner. If you’ve already sold tons of domains and know pricing well you can skip this. If you are new to Domaining though and want to understand how to realistically price your domains this series will definitely be useful for you.

So now is the time to ask yourself…how much are your domains really worth?

{ 2 comments… add one }

  • Gendel October 21, 2009, 10:10 am

    I’m new to domaining, though is not as naive as your study cases. Lol. I’m looking forward to the domain pricing topics you’re gonna post. I hope it would help a lot of people.
    I’m also looking forward to the opportunity, if, by any chances, you’re willing to be my middleman to a set of end-users I plan to offer my domains to.
    Thx alot.

    Reply
  • Rauhbautz October 21, 2009, 11:58 pm

    Morgan, great blog post as always. Lots of inspirational info

    I guesss it’s all expectations Vs reality game. As always.

    The price of anything is how much the buyer (no matter end user or not) is ready to pay for. It’s how much the buyer needs it.

    And it’s up to salesman, quite often, to develope that need. Make buyer think he/she needs it. Although sometimes it’s too manipulative 😉

    My idea of domain evaluation of domain name or website – the price of the DN is what the buyer is ready to for it. You just need to find that buyer (end user, dn investor, etc.)

    Reply

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