Domaining MBA Monday: How Do You Appraise A Brandable Domain Name?

Domaining MBA MondayI was going through some emails this morning and came across a great question from a blog reader. As you might have guessed by the title of this week’s article the question was, “How do you appraise a brandable domain name?” It’s a good question and one that I think many of my readers would be interested in so I thought, why discuss this with a broader group? One of the best things about questions like this is that there is no right answer, all I can do is share my opinion and what’s worked for me based on my own experience.

Based on my experience there is no magic formula you can use to appraise a brandable domain name. Sure, with exact-match and dictionary domains you can look at things like search volume and CPC which can give you some valuable insight into possible domain values, with brandables you’ve got nothing. Or at least you think you might have nothing when in fact you have the same thing that all domain owners have, a completely unique asset with very values that vary depending on who you ask.

Confused yet? Don’t worry, you’re not alone. Many domain owners have a hard time determining what their brandable domains are worth and the people buying these names have the same problem. Luckily this shared problem can actually get you closer to the solution and since domain buyers and sellers both read my blog, I thought I’d look at it from both angles. First let’s look at the sellers.

How Domain Owners Appraise Brandable Domains

Domain owners should not look to “similar” sales to determine the price of their name because there really are no similar sales, every brandable really is unique. Building a brand on Cloudly.com or Cloud.ly are two different things and one buyer may want one much more than the other, or both in many cases. However, you cannot look at what Cloud.com sold for and use this as a comparable sale, it’s too different.

What I tell most domain owners who ask me this question is, “The price of the name has more to do with who the buyer is and what they want to do with it than anything else.” If the buyer is some large Fortune 500 company that wants to use your brandable domain as part of a major multi-million dollar branding campaign, $250,000 may be like chump change to them. However, if the buyer is a small bookstrapped startup $2,500 may be the max.

At the end of the day I always like to sell domains to people that are going to put them to good use. Yes, you need to make money and shouldn’t be selling names at a loss, but you should also be selling names to people that see the same value in the domain that you see. In many cases this might just be one or two people in the world, but it is one of these people that will truly value the asset that you have.

How Domain Buyers Appraise Brandable Domains

As a domain buyer you typically want to buy a domain for the lowest price possible. Sure a domain might be worth $500,000 to your business, but if you could get it for less, the money saved could go towards your bottom line. However, miss the name and go with your second choice and you could pay double that in marketing trying to promote a less-than-ideal domain.

Like most things in life it’s all about balance and compromise. Nobody buys a Hyundai because they think it is a better car than a BMW, they’d take the Bimmer if it was priced the same, they buy the Hyundai because it is cheaper and thus their expectations are lowered. The same is true with domain names, but with brandables you get into uncharted territory.

The truth is as a buyer you want to find a domain owner that sees money on a different scale than you do. You can only hope that the brandable you want is owned by someone who still sees it as valuable, but valuable means something very different to them than to you. While you may have a $500,000 budget for the name, if you can get it for $5,000 and make someone very happy then you both win. Think it doesn’t happen? Think again. I’ve heard many stories of buyers with six-figure budgets that ended-up with their top choice domain for under $10,000, it all depends on what is a meaningful amount of money to the owner.

You might not be happy with the answer but like I said above, there is no magic formula for appraising brandable domains, instead it all comes down to the buyer and the seller. If you are selling a domain, do your homework and really understand who the buyer is. If you are the buyer, get to know the seller, see if you can find what range they typically sell in and make a deal that is meaningful to them.

Last but certainly not least, remember, every deal is different just like every domain is different. You aren’t selling houses. You can’t look at what the median price in a particular neighborhood is because every domain is different. The most valuable thing you can do is really take a deep dive and get to know who you are doing a deal with because at the end of the day it’s all about the people, not the domains.

{ 9 comments… add one }

  • matt February 11, 2013, 1:25 pm

    Interesting post, do you consider >2 word emd’s to have any value still? I think a good followup post would be on how to do the research on the person (buyer or seller) and their background.

    Reply
    • Morgan February 11, 2013, 5:51 pm

      @Matt – 3 and 4 word .COMs still have potential if they are terms with strong search volume and CPC. Domains like AutoInsuranceQuotes.com and similar are still killer names. Good recommendation for an upcoming MBA Monday!

      Reply
  • saal February 12, 2013, 1:08 pm

    cost to replace with a domain of similar quality, plus 10%

    Reply
  • joe February 14, 2013, 5:11 pm

    Hi Morgan!

    Very good you post.

    I do like you, but over the years also believe I entered a market and industry that the big fish eat the smaller ones and this is not the issue.

    We need to change the mindset of a buyer as having lots of money to invest in a domain name that every mess have over 500 visits usurios millnes global and local, must be taken into account that the same after one year gets to have at this rate over 6000 million visits from users who search this keyword, suppose for a moment that the CPC be $ 2.50 at the end of this year only to see your website in the parking Domain 25% of these users 6000 million = 1500 million visits for $ 2.50 = $ 3,759 million domain parking pay 80% = $ 3,000 million dollars, now the question is:

    What buyer be willing to pay for a single domain name TLDs that amount of gross profit?

    If you answer me that Fortune 500 are 10% below those 50 buyers come that they must say how much to deposit in my bank account, stock market shares, among many other possibilities.

    Really if Morgan told the truth, I’m quite a bit or the impunity of these buyers are many times ICANN registrars partners is easy if you’re looking for the impossible and you get surprised that the laws as in all parts of the world are as transparent as a sheet of plastic wrap and put the fish in the freezer, this is so and many of you many years in this market and industry ought to know it, but the best thing is to go every man for himself and advise your subcriptores is welcome to share our opinions, to learn what we can find tomorrow.

    For my part I changed my strategy and I will show you and that is when launching my blog also accompanied an ecommerce marketplace and in the same order to participate you please all who is free to all domainers I do not charge anything to Instead, because we all have an obligation to help our intelligence to be without them.

    Reply
  • Excitemental September 17, 2013, 2:12 am

    Great article.
    I always find it hard to value my brandable domains. I find that if the brandable name has more of a niche than others then its a little easier. ie if it has ‘App’ in the word i would appraise it based on an App industry companies funds.. It gets more difficult when it is a truly universal brand.

    Reply
  • Brandfishing December 2, 2013, 6:07 am

    Hi,
    Thank you so much for this post. I am always at a loss of how to valuate my domains and I cannot know if a buyer is asking for a too low price or not. Also, regarding brandable Domains, what do you think are easy to sell – single word brandables like google or two words like zen cart.
    Thank You

    Reply
  • Amanda February 15, 2014, 11:22 pm

    great info here on brandables!

    valuation is the hardest part for sure but on some of them we see the future potential but its what others see in that domain is what counts of course. We like branding so much we started a new marketplace to sell them and specialize in 5l and 6l mainly.

    one domain we recently sold went for $11k after we had a previous offer for $4k, so price high enough to start with and work down is one obvious tactic for pricing. If no bites then lower price as required until some interest is made, if ever.

    Quality brandable domains certainly have an up side especially the short .coms especially now with all the tlds in play.

    Keep up the great posts ML!

    PS – What about doing a post on 4D tech ?

    Reply
  • Oviah.com August 16, 2015, 3:01 pm

    People tend to over value their names but quite a bit. Brandables are hard to value but if the name sounds good, short, catchy, memorable and makes sense for the target niche then that all helps boost its value.

    For example, FastFetch sounds better than SlowFetch, both in meaning and in feel.

    Reply
  • Nameably March 7, 2016, 3:46 am

    Thanks for this valuable information. Domain names are most important to make a website successful. So choosing a website is much important. You gave such an useful information.

    Reply

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