How do I determine true domain value.

[jonathanza]

Hi,

I own a ccTLD for a two word generic phrase. The site is fully developed and acts as a lead generator for a company I have built a relationship with.

I was recently approached by a company whose full name includes the two word generic phrase. They feel there is confusion in the market place and want to own my domain outright. My offer to lease the domain to them was rejected.

The initial, unsolicited, offer I received from them was for an amount slightly more than the income I generated from the site last month.

My question is, in determining a fair/true value of the domain, how should the existing revenue be factored in?

I should just mention that this domain was never registered to be sold. I saw value in the generic phrase and developed the site accordingly.

Jonathan

 

[suzi]

The million dollar question! But in your case, is there value in the name itself, or just in the name as a lead generator / income producer? Or put another way, could you easily replace it and start again with another domain - albeit it might take a little while to be recognised / indexed etc?

Do you think the new company has a valid claim to the domain that you could lose if they persued it through DRS or whatever?

 

[jonathanza]

Hi Suzi,

The value is in the domain name. I have other domains in this category but they never attracted the same amount of traffic as this site.

I'm very confident that they have no claim over the domain. I've reviewed the domain dispute regulations for this ccTLD and according to their guidelines and the way I have used the domain, this was not an abusive registration.

The domain name is very generic. Two very common English words which are often used together and describe a specific market segment. There is no way someone would be able to copyright or obtain a trademark over these two words.

Jonathan

 

[accelerator]

My question is, in determining a fair/true value of the domain, how should the existing revenue be factored in?

My understanding is a site might sell on 3 or 4 times yearly revenue as a rough rule of thumb.

For domain alone value look for similar sales on domainprices.co.uk.

Also look at PPC ad spend on the term by opening an AdWords account.

Rgds

 

[Edwin]

In this case, I'd break the value into two components:-

A) The value of the "naked" domain name. In other words, if there was nothing on it at all, what's it worth to an end-user?

B) The value of the leads being generated. In this case, the figure of 3x to 4x revenue might be accurate, or it might be need adjusting upwards or downwards

Add A) to B) and you've got the value of the domain/site as it stands.

I would also add a third value, depending on the exact situation:-

C) Replication cost: if the site's old, well-established, and has a ton of backlinks, then how much would it cost you (or your competitor) to bring a brand new 2010 vintage site up to the same level of success? This figure might even be higher than A) + B) if for example the site's been around for many years and has attracted a lot of attention (in the form of incoming links) during that timeframe.

So add A) + B) plus C) and then knock off a bit for the fact that B) is a result that stems in large part from A) + C) i.e. don't double-count, and you have a good idea of what it's all worth.

 

[jonathanza]

Thanks for all these replies. The answers are very much inline with the assumptions I had before asking my question.

Jonathan