Thought experiment: domain portfolio valuation

[disruptive]

Take the 5 domain sales, chosen to be as representative as possible [no cheating there], average and multiply by the number of names you have in your portfolio. Now this is going to be a huge over estimation of your portfolio worth, but mine is about...

£1.2 million.

Now to get closer to realisation we need to add some factors in here such as time taken to sell the domains, and the fact that those domains were wanted - hence they sold. I know for mine based on traffic and conservative estimation, I'd be happy with £200k.

So who has got the biggest portfolio?

We could collect some ideas for amassing net worth of portfolio...could be an interesting little application.

However at the end of the day - its only worth what somebody will pay.

 

[Pred]

which 5 domain sales?

also we all have sold domains people on here wont pay £20 for but you sell to endusers for mid xxxx

there is no other industry in the world where the disparity between 'reseller' and 'enduser' exists

therefore there is no way of gauging it

i have .coms that are category defining and worth xxx,xxx up, to chosen industries each, and are developed and page 1 google, and would still offer huge value to those industries at that price
however they may never realise that worth. the buyers may never 'get it'

you have provoked thought though. if you were to go through whole portfolio and mark what you thought you could get on an ideal day next to domain, and also bottom reseller price you could get if no bread on table and then tally them up
you would have 2 total prices, obviously a gulf apart but would give some idea

 

[disruptive]

Yes perhaps if we took the average of high and low expectations it would still be wide of the mark. I'm sure we could come up with a game theory inspired pricing strategy if we are not already doing this!

 

[Brassneck]

So, if you have 1000 equally good domains which you think you could sell for £500 at end user prices - over 2 years you might get 50 sales. i.e. £25,000.

The domains cost you £5,000 register and obviously £5,000 to renew (assuming you sell only at reseller prices and ignoring the fact your portfolio is now slightly smaller).

So you make £20,000 over 2 years for a £5,000 investment. Not sure what multiple you would use, but I imagine it would be 3 to 5 times so maximum valuation would be £100,000? It's definitely not 1000 * £500 - i.e. £500,000 as you would never shift all at end-user prices except over several decades.

At reseller prices you might shift all of them at an average of £20 each, i.e. £20,000. They cost you £5,000. So valuation of maximum of £15,000.

In reality, it is somewhere between the two - perhaps half way?

So for those of us with a decent (but not exceptional) names we might be looking at a ball park figure of £50 per domain?

Stephen.

 

[Nigel]

Unfortunately for the UK market there doesn't appear to be many cash rich companies/individuals buying up .uk portfolios at the moment. I don't know why because the .uk market is bouyant with many high level sales (i.e. disrupt.co.uk $10,000 see today's sales and recent NOKTA sales of promocodes.co.uk $30500 and stockcharts.co.uk $48000). I know NOKTA have posted on acorn before. It would be interesting to hear their view on domain valuation and also whether they would ever consider re-investing some of their money by buying up quality portfolios. Until big players come into the market it doesn't matter whether you come to a sum of £1.2m or £2m or whatever as it is simply hypothetical.

We shifted a smallish portfolio some time ago (buyers identity and amount confidential) and it did generate nice amount of funds and the buyer got a bargain. So it is possible that you could slice up a large portfolio and sell in pieces but is it worth the hassle to realise your investment in this way?

We're always seeking to improve the quality of our portfolio of over 4000 descriptive domains and choose domains carefully (they must be able to sell for £500 min), lapse off any poor quality domains, and replenish stock when we sell a nice one. We've got a lot of four and five figure domains and don't think the portfolio could be valued on a multiple basis (particularly as some of the best names haven't been listed for sale for many years). If serious large portfolio buyers did appear in the .uk market then I think you'd have to produce a list with realistic end user prices and apply a large bulk purchase discount across the portfolio (which would be a lot of work). At the end of the day the buyer has to be able to generate profits (from development, sales and parking) from the portfolio but you need to be rewarded for the years of effort in sourcing, buying and registering all those domains.

 

[Edwin]

There are definitely occasional bulk buyers in the UK market, but I've yet to come across a company regularly/methodically bulk buying portfolios. What I've seen is more as-and-when opportunism than a sustained ongoing strategy...