domain values - rick schwatrz

stevebrowne · Sep 6, 2008

Interesting comment from Rick Schwartz.

The revenue multipliers used by people to value domains was made up by VCs in order to put A value on domains, based on normal business practice, hence the 5x, 10x etc.

He says, the very least a domain should sell for is LIFETIME earnings. So if you are 35, and will live to 85, then a minimum sale price of 50x annual earnings is where you start.

he has a point...

Juniper · Sep 6, 2008

stevebrowne said:
Interesting comment from Rick Schwartz.

The revenue multipliers used by people to value domains was made up by VCs in order to put A value on domains, based on normal business practice, hence the 5x, 10x etc.

He says, the very least a domain should sell for is LIFETIME earnings. So if you are 35, and will live to 85, then a minimum sale price of 50x annual earnings is where you start.

he has a point...

Why stop at a life time? You can leave a domain to your children who in turn can leave it to theirs etc so in theory, all domains are priceless.

Come on, who is going to pay 50x annual earnings, surely a domain is only worth what people are prepared to pay for it and I can't see many/any end users paying that sort of multiples of earnings.

Plus, do they get a rebate if you are run over by a bus before your 80?

rob · Sep 6, 2008

What a load of nonsense.

have a GREAT day

stevebrowne · Sep 7, 2008

yes, but his point is that if a domain would generate £500 pa with no effort, why would you sell for 5 years or 10 years?

The only reason I can see would be that you wanted a quick sale for cash flow etc.

Agreed 50x may be a bit excessive, as it only then has additional value to people *younger* than you

rob · Sep 7, 2008

It is similar to commercial property rentals, however with those you have a fair number of overheads and potential issues so multiple ought to be more for domains.

Domains have been around a very short time compared to land and some property on it, so perhaps an adjustment there?

What gets me about Rick Schwartz and co is they have not moved on at all, it does not take a genius to register / aquire names in 1998 and hold them for 10 years.

stevebrowne · Sep 7, 2008

Agreed, some of his opinion on how great he is is quite humourous. Yes he was there at the right time, with a way of funding it. I couldn't have funded $100 per name back then, anyway, so even though I was involved with the Internet back then, I couldn't have done what he has.

But if I was sitting on domains that pulled in between $10-$70million a year without doing anything at all, I guess I'd feel quite pleased with myself as well

James · Sep 7, 2008

I think Rick is implying that the domain name system, navigation etc won't change for many decades... personally I have doubts about that.

... but I also think the more you think your domain is worth, the more likely you are to sell it for more... and the more likely you are to inspire others to think it is worth more also, particularly if you have some success behind you.