How many years of revenue?

[Admin]

What are you using to guage domain sales values on names with a solid revenue stream? I had been made an offer on a name that equates to 2 years revenue (£x,xxx)

Is 2 years revenue a fair amount or should it be more?

Admin

 

[Edwin]

If it's a 100% commercial generic with steady traffic and revenue, 10+ years isn't crazy. Of course, whether you can actually get that much is another question - but it's definitely possible.

 

[retired_member11]

Ten years? The web is an ever accelerating medium and so a ppc/ price ratio calculated today will be outpaced by the market in less time. However, what percentage of investors are today willing to spend on a ten year ROI proposition? Not too many. Such domains would have to be entirely future proof and rock solid 'generics'.

We know Edwin has a large folio and his view is conditioned by the comfort zone it gives him.

What multiple did Edwin pay for searchengine.co.uk? Ten? Probably the average multiple is less than half that.

Talking the market up is fine for selling but we also buy and so there needs to be some balance to this. If I'm selling then 'ten' 'sounds' great (but will I sell at that level?), but if I'm buying then ...no. Schizophrenia rules here.

 

[deconstruction]

I agree with Edwin, if the names an outstanding name then 10 years is possible.

However if its just a good name then 18 months revenue seems to be the standard at the momenent. But there are instances of 60 months revenue.

 

[domaingenius]

What are you using to guage domain sales values on names with a solid revenue stream? I had been made an offer on a name that equates to 2 years revenue (£x,xxx)

Is 2 years revenue a fair amount or should it be more?

Admin

I would look at it much the same as a house. If you were a landlord and owned a house would you sell the house to the tenant for 2 years rental ?.Much better to either be the landlord or sell the domain for a good multiple. At end of the day I reckon it comes down to the pure question "how much do you need the money at the time the offer is made" .If you are rolling in it then you can afford to keep the domain and 2 years down the line you can still carry on earning.If you are not then maybe the money will be more useful in 1 lump

DG

 

[Edwin]

What multiple did Edwin pay for searchengine.co.uk? Ten? Probably the average multiple is less than half that.

Actually, I didn't even ask about revenue or traffic. To date, none of my acquisitions have been on that basis. It's a "gut" feel, I guess, but I am going on "value" in other words what I estimate the name can be worth.

 

[aqls]

Things to consider:

The range of multiple for a traffic domain is from 1 year to 10 years, for just traffic.

Marchex did their big one on 8 years multiple.

Is the domain worth anything outside its current revenue and is the traffic likely to last and build:
Is it a generic typo
Is it a trademark typo
Is it fad or fashion

Does it have development potential

Does it have brand potential

Is it a search term per se or could it be used as a sort of "niche area specialist" domain

What are the close alternatives to it, are they taken, are they also highly trafficked? i.e. is it trafficked perhaps because of what it used to be rather than what it is now.

(not necessarily pimped but may have been "ethically pumped" :smile: )

etcet.etc.

-aqls-

 

[retired_member6]

I'd say five years and not on parking but development. But if parking figures are good, there's your total.

Almost every domain has a value of £1000 per year turnover so that's your basis. I had one offer recently and he wouldn't pay over $2000, I told him £5700 but it stalled, nevermind.

I'm going to develop one or two and put my mouth where the money should be as an example to myself.

 

[rob]

It would be interesting to hear if big (5-10 year) multiples are being achieved on sales or these are hopeful dreams

I know I have not purchased names based on mutliples due to going a similar route to Edwin, and sales of names with traffic are usually based on 2 years + value of name in its own right.

Anyone with 'real world' examples?

 

[retired_member6]

My previous comment is simply my view, as far as being put into practice and being able to ask 'five times' that's only reached negotiating stage so far and probably why it's stalled/ended.

For example, I have a domain which should/is currently giving me £120 a year in Parking revenue, even at five years that's only £600 when in reality I probably won't accept less than £3000 based on the name as well - depending on what mood I'm in and of course the financial situation.

I'll have to test selling items on the domain and see what that could bring in, because again that could increase the value to me.

I think it probably comes down to who you're marketing to. If you're just marketing on the basis of losses and quick turn around, then you're going to flip around the £100 mark. If it's to another Parker then you may sell for 2 years so as to reinvest whilst giving the buyer a noticeable 'recoup' period. But remember, CPC is set by outside forces, it shouldn't denote the value of a domain.

End users, well you can push the boundaries that little bit further simply based on the fact they're developing, running a business/service and will profit greatly. How you figure out an end user will come with practice I suppose, but I treat everyone as an end user as that's who I aim to market to.

Two years, three years or five years, it's personal choice. If you're losing money by selling for two years when you plan on keeping the domain for another ten, what's it worth to you and what's it worth to the buyer? but if you don't want the domain, don't have any plans for it and won't miss it after banking the sale, then two years would probably be acceptable.

 

[retired_member11]

Actually, I didn't even ask about revenue or traffic. To date, none of my acquisitions have been on that basis. It's a "gut" feel, I guess, but I am going on "value" in other words what I estimate the name can be worth.

At the moment you and I, as buyers, it's like comparing apples and oranges.

From what you say your definition of value is from a different dictionary to mine. Perhaps in time I'll go on 'gut' but until then it's got to be pure metrics. I run a tight ship; no room for slack.

No worries

 

[Edwin]

Most end users who have approached me don't ask about traffic. No end user so far has asked about revenue. It's because they aren't going to park the name, but use it and develop it.

As soon as the conversation is about "multiples of revenue" you're leaving a ton of money on the table.

 

[Admin]

Most end users who have approached me don't ask about traffic. No end user so far has asked about revenue. It's because they aren't going to park the name, but use it and develop it.

As soon as the conversation is about "multiples of revenue" you're leaving a ton of money on the table.

Fair comment Edwin, so if earning potential doesn't come into the equation, how else do you set a value on a (2 word generic) name?

Is there a multiple of uniques per day formula that anyone uses?

I know its really "how much they are prepared to pay for it", but most of us ask for "offers" yet when I get asked for a buy now price, it's always a challenge to get it right.

FCdomains, what do you use to set your prices?

 

[Edwin]

Depends. Do you want a lot of cheap sales, or a smaller number of higher priced sales? I have a rule of thumb of never asking less than 2,000 pounds for a domain. That scares off a lot of folks, but it means that those who remain interested will pay at least that much. My logic being that the names I have are generic, and the simple fact that a end-user company has bothered to make the effort to contact me about it (after typing it in) confirms my gut feel that it has value to someone.

 

[paymatters]

A multiple of the revenue is irrelevant. It's the profit the domain may generate for the company buying it that's important?? Most companies are valued at atleast 5 years profit (sometimes 20 plus!).

A compromise between what it's worth to you versus what it's worth to them??

Surely generic domains can only get bigger??

 

[paymatters]

Whenever I do a post my google ad banner (www.loanapplication.co.uk) appears at the bottom of your page!

 

[paymatters]

A good tip could be to look at the indusrty the domain relates to and look at the price earnings ratio for companies in that sector (i.e. how many times their annual profit are they worth)??

 

[Edwin]

Quite honestly, most of that is irrelevant.

Unless the domain has substantial traffic, the value (and the profit) is going to be CREATED by the buyer AFTER buying the domain. So you can't value the domain based on the value of a non-existent business attached to it.

You have to take a slightly different angle. A domain like pressreleases.co.uk (to pick one of mine as an example) might be worth a few grand to a company hoping to compete in the crowded (but lucrative) press release market since they instantly get to appear "bigger" or "more important" than they perhaps are, and of course it's much easier for them to advertise their site in a way that their clients can remember it.

But after say a year or so in business, they might (not just through the domain, of course!) have thousands of clients and millions of pounds in annual revenue. Doesn't make the original domain worth millions of course...

... but if they can see how it will help them get from "A" (the here and now reality of being an unknown company) to "B" (being a successful business) then they should be willing to pay as much as a couple of decent newspaper or magazine ads would cost them in order to secure that domain.

 

[paymatters]

Yes agree. Plus a developed generic will get lots more hits from the search engines than just type in traffic!

 

[paymatters]

If a memorable domain could make an advertising campaign evenly slightly more effective it would bring considerable value to the company using it.

it seems really common these days for companies to come up with a slogan and use that as the domain (probably helps monitor effectiveness of different adverts)