15 thoughts on “Valuation is in the eye of the beholder.”

1. 

   Jerril

   February 2nd, 2008

   Hi Rick;
   Since 1997 I have had numerous Domains in my Portfolio appraised by”So Called” Professional Appraisal Companies. To date, I have only wasted money for these Appraisals! I totally agree with you that the value of a Domain is in the”Eye of the Beholder”.
   Regards,
   Jerril

   Reply
2. 

   Kevin

   February 2nd, 2008

   I think what this experiment proves more than anything else Rick is that there is no set in stone value that can be placed on any type of domain, be it an ultra high end domain like Candy.com or a lower ranking 2 word domain like DailyVideo.com.
   Here you had 22 of the top folks in the industry, including a couple of us who actually provide appraisal services as a part of our professional business services, and who evaluate domains 24/7, and yet as the numbers clearly show not a single domain had a consensus, and the disparity in opinions was remarkable and significant.
   The other thing that surprised me was that my appraisals (#16’s) appears to be the only one that took into consideration the proven fact that a domain is worth less or more depending on which marketplace you are selling it in, wholesale (i.e. fellow domainers mostly) or retail (i.e. end users or non-industry buyers). There is a distinct pricing difference in play between the two primary markets, and then usually two further distinct subset pricing points within
   the primary ranges which is why I typically do a 4 point evaluation per domain, wholesale level 1, wholesale level 2, retail level 1 and retail level 2.
   Ultimately the conclusion I see from the experiment is that appraisals are useful only for general price guidance and should never be looked at as a precise valuation methodology.
   The old adage has proven itself that a domain, like any other financial asset, is worth whatever someone is willing to pay for it, however more importantly, it’s value is truly most dependent on the selling and marketing abilities of the seller himself or the seller’s broker to realize the highest price possible.
   This also leads to another important point that many domainers have a hard time acknowledging, because I see so many trying to value and sell domains themselves, who don’t have the slightest idea how to really value nor”sell” a domain. Valuing and selling anything for its highest price possible is an artform, it is a science, often more about selling itself than what you are actually selling. People often laugh at salesman, for example, like the kind you see on late night TV pitching used cars for sale, but these guys are pro closers. They know how to work it, and work it good. They understand the psychology of the sale and the buyers. They understand how far they can push a buyer without pushing them off their lots and losing a sale. They understand how to make something common look incredibly special and valueable, how to ask closing questions and how to close a deal.
   So the lesson to be learned is it’s not necessarily the inherent value of the domain itself that is important and the deciding factor of what price a domain is worth, but rather the abilities and skills of the seller to sell, market and get a deal for a domain that will determine its maket value.
   This is why, you, I and others who have done the Million Dollar Domain Deals, have accomplished these not so much for the domains themselves, but due to our strong lifetime learned skills in sales and marketing. And thus we may conclude the real secret is not the old adage”whatever someone is willing to pay for it”, but”whatever someone is ABLE to get someone to pay for it”. That is THE SECRET!

   Reply
3. 

   Sahar Sarid

   February 2nd, 2008

   Domains are”creatively driven”. As such, you can quantify one’s creativity.
   Wrote more about it here:
   http://www.conceptualist.com/?p=1434
   Sahar

   Reply
4. 

   Jeff Schneider

   February 2nd, 2008

   I happen to agree with you Rick Schwartz. The value of a domain name or any letter comprised word is largely due to the emotions they trigger in a buyer. ” Beauty is in the eye of the beholder ”
   There are many different ways that domains can be looked upon when it comes to value. Many three letter words have absolutely no traffic value but are worth lots of money. I get tired of hearing about how traffic is the only way to add value to a domain names worth. Some of the most valuable trademarked names on the planet are not traffic names.
   Take for example my favorite holding USeBiz.com, It has six letters and yet when you take all the letters and break them down this six letter .com name has 8 meanings. which one of those eight meanings will a buyer fall in love with?
   It could be looked at as a geodomain from the stand point that US is definitely a geographical destination, and e-Biz can be the e-business service sector!
   My point being: Words are tremendously complex, and can elicit many meanings and values. I personally think, and always have that words are too complex to fit any valuation formula. Domain names are words followed by an extension.

   Reply
5. 

   We Are Dynasty

   February 2nd, 2008

   Rick,
   In a previous blog post, you said that domain appraisals are”ALL Worthless”. That was a strong stance and personally I love it!
   With this current post, sounds like you have”softened’ up a lot. So what happened from”All Worthless” to”in the eye of the beholder”? That’s quite a change. Why the change of heart?
   Response by RS:
   Thanks for the comment. No change of heart. I said in an earlier post that a real valuation if you could get one would have to be by committee. This was an experiment. My remarks are aimed at those that charge for the service. However Moniker did surprise me with an appraisal that seemed pretty much in line. Bottom line however is that each domain is unique. A unique asset. Therefore the only 2 people that can really set a valuation is the ones selling and the one buying. The question is what is the value to THEM.

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6. 

   YourFan

   February 2nd, 2008

   Almost looks like Moniker knew these appraisals before! I am curiuos to know which one you took first.
   thanks,
   YourFan.

   Reply
7. 

   Alex

   February 2nd, 2008

   Rick said;…..”What does it all mean? I don’t know”
   Exactly, You’re spot on. On one hand it shows that we have an industry developing which is good. On the other hand the lack of precision on the pricing reflects that we are in the early stages of this industry. This is a HUGE positive for domain owners.

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8. 

   Adi

   February 2nd, 2008

   I aggre with you. Yes, domain can have value if purchase. And who really want to purchase. Just like a nostradamus i think.

   Reply
9. 

   Steven Emery

   February 3rd, 2008

   “Failure is my Tuition” famous plumber quote
   I think its great that experts are throwing out some numbers now. So i decided to throw out some of mine. I wait to see the day domain portfolio owners open up there domains for the world to see. The greatest strategic multichannel domain portfolio will instantly rise to the top of the internet food chain. Who owns this portfolio? Does it exist? How many domains do they have? 10-100-1000-200,000? What number do the experts think it would take to have the greatest strategic multichannel domain portfolio? We have yet to see this killer strategic multichannel content distribution network. My guess is it busts out this year.

   Reply
10. 

    Robbie Ferguson

    February 4th, 2008

    Hi Rick,
    Totally agree with you, I own only a few hundred names and have looked at getting them appraised but no matter what they say I shall probally expect more than the valutation. Example – I owned hardrock-cafe.co.uk – I bought it as i thought this has got to be worth at least a thousand dollars and only costing me $10. In the end hardrock threaten to sue me and got it for $500 dollars. When I spoke to an appraisal site they said it would be worth at least five times that. I recently bought recyclemy.tv which I emailed you about and asked your comments recently which where gratly recieved, I’ll be lucky to get $500 for it but if some large corperation thinks about buying this it could be worth millions well in my eyes.
    I know that dotcom is the top reseller and can make lots of cash but it all depends on what there company is willing to pay and how much it means to them i.e. three.co.uk was sold to Hutchenson Telecom for £100,000 GBP around $200,000 US Dollars why because they wanted it.
    Regards Robbie

    Reply
11. 

    Jeff Schneider

    February 4th, 2008

    Hello Steven Emery!
    Interesting you should mention a Multichannel Domain Portfolio! Come to think of it you just gave my website its definition. Thank You I am Gratefull to you Steven Emery.
    Gratefully, Jeff Schneider

    Reply
12. 

    Everett Peacock

    February 4th, 2008

    Is there anyone out there who brokers domains for traffic or sale? Appraisal companies don’t do much, and all the successful types don’t seem to be into that business.

    Reply
13. 

    Farid Mammadov

    February 6th, 2008

    Hi Rick,
    Nice article.
    I have a proposal, which I think will be supported by the most of players.
    If I had done some research and registered the domain name, why have I to sell it for regfee or regfee+some cents. Why do not we value our job?
    My proposal is that if the name registered, its minimum price should be set at 100$ (I mean .com only). Each year of domain will cost another 100$.
    So, if I own 5 years some name.com, its minimum price will be 500$.
    The end price for this name.com will be what the buyer wants to pay plus 500$.
    I would like to get your oppinion on this.

    Reply
14. 

    Successclick

    February 7th, 2008

    Hi Rick,
    I wish you would have contacted me for the appraisals of your domains. After appraising over 30,000 domain names for a variety of well-known domain companies and individuals (for as little as $1 a piece), my eyeballs are pretty good for giving the domain owner an idea of the domain’s POSSIBLE value.
    In other words, I never appraise at the maximum, only the MINIMUM of what not to sell your domain less than. So let’s take Candy.com. I am evaluating it for you right now. It takes me 15 seconds. $2 million minimum value. Do NOT sell this domain for less than that.
    The secret in domain appraisals isn’t in making the domain owner get the fuzzy willies on thinking their domain is worth a ton of money, it’s in giving the domain owner an expectation of its value and not to sell the domain for less than that expectation. There’s a big difference.
    Domain appraisals by me deal with minimums, not maximums, and even though there can be disagreements about those minimums, the reality is that at some point, those minimum priced appraisals will reach maturity at some point in the near future. The big question is”when”.
    Anyway, kudos on a great post and commentary on domain appraisals. (Oh yes, and congrats on your ireport.com sale, you dang lucky domain doggie! You must have a band of domain angels hovering over your head)
    much more success and joy to you,
    Stephen Douglas

    Reply
15. 

    Michael Gilmour

    February 14th, 2008

    Great article!
    I’ve just started exploring the whole valuation myth on my own blog. It’s a relatively new area to me as I have mainly concentrated on traffic domains. The challenge that I find is not valuing a domain like candy.com whichyou end up setting a”mental reserve” price for but trying to value the mass of other domains.
    That’s the direction I’m trying to take right now. This was sparked off by a customer that has over 30,000 reasonable quality domains that they are wanting to sell and they asked me what they are worth. If anyone wants to give me a hand then just let me know :-)

    Reply