My domain valuation methodology: Part 2 – As a Seller

When pricing domain names for sale, the old rule of “buy low, sell high” applies.

So if you start off with a low acquisition cost, or even hand-registered a domain name, anything above that cost should be considered a fair selling price, right?

Wrong.

Allow me to explain why I don’t share the “flipper” mentality with regards to domains.

Pricing a domain name for sale – or accepting an offer for that particular domain – is based on a combination of parameters, most of which don’t apply when one simply wants to earn a buck or two.

To maximize your return on investment, consider the following:

  • What is the domain’s potential for a business? Could you launch or replicate that potential yourself, all while waiting to sell?
  • Is the term positive, with numerous search engine results? Is it a term that is marketable or does it have type-in traffic?
  • Can you refrain from selling to the first offer – even if it seems sizable – until the perfect storm of an offer comes along?

Quite often, to price a domain accurately for sale you have to dig into records of past sales; this helps gauge potential and to feel more confident about your “gut feeling”. Of course, the saying goes: “Past Performance Is Not an Indication of Future Results” – so be diligent in how you interpret related domain sales.

Old domains, short domains, generic “dictionary” domains – all have an intrinsic value above most others. The same goes for dot com’s versus other TLDs. But don’t let that fool you: there are times when a secondary TLD can perform very well in terms of valuation.

To further gauge potential, I use ZFBot – an invaluable tool for domainers that searches millions of domains for matches against a string. You can use it to find potential buyers, as I’ve done time and again in the past, to send them into an auction frenzy or make cold calls.

Lastly, consider this when getting ready to place a price tag onto your domain: are you leaving money on the table, if you were to sell it without doing research?

That’s why it takes time to price domains and one cannot rely on most automated tools; it’s a gut feeling that one learns to trust with time.

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