A friend contacted me about a great brandable .com domain, pertaining to the ever-busy security industry. It’s a two word amalgam, equal to terms like Verisign, Netflix or Verizon.
His plight, was the arrogant email he received from a party interested in acquiring that domain.
The other party, a professional in the field of security assurance for a major corporation, insinuated that the domain was worth anything from $0 to under $200. His unwillingness to define a decent budget, was self-justified by providing quotes from automatic domain evaluation tools.
After this apparent attempt to downgrade the domain’s value, he made an offer of $300 to take the domain off my friend’s hands. How nice of him!
There is no better response to such silliness than debunking the very tools used to support this logic.
Automated domain evaluation tools fall short of providing an accurate domain value, when the domain is a brandable or an amalgam of terms. Branding is a science dependent on human intelligence; for better or worse, computer software has not reached the ability of the human mind to evaluate artificial terms accurately. Software depends mostly on established terms that are assigned a weight or value; it then spits out a number that may be off by thousands of dollars.
I told my friend to relay all these to his potential buyer, and to describe those tools as severely unqualified for the task for evaluating brands. Hopefully, the other party will appreciate this brutally honest response, and if they are smart and act fast, they will secure the mid $x,xxx price quoted – or the price might go up in the future.
Just because a term does not exist in the dictionary, it doesn’t mean it’s worthless. If that were the case, thousands of companies would have to check their names against a wordlist first.
Very true. Estibot and other special super duper tools are just jokes that comes with non-sense numbers.
Mark – All these tools serve a purpose, however when it comes down to complex composites that only a human brain can analyze, their evaluation is grossly inaccurate. To place an offer on a brandable and claim it’s what the ‘tools’ said, is a display of arrogant ignorance. 😉
Very good suggestion. I hate the offer that contains “Estibot tells me your domain is only worth $10”
A great response is that Valuate tells me that Google.com is worth $0. Facebook.com is worth $0. Verisign.com is worth $0. Yahoo.com is worth $0. It’s a great point to prove how wrong these tools can be with regards to brandable domains!
It’s not new:
Automated valuation tools can only appraise descriptive domains. Invented names have no value other than the one the one who want to purchase it is giving it.
Francois – That’s a dangerous oversimplification about the value of brandables. The fact is, that domain valuation tools are lacking severely in their ability to determine the value of domains outside of simple dictionary words. They are only as good as their programmer.
Automated appraisals are categorically inaccurate and misleading. This was true 10 years ago, 5 years ago, and today as well. I have made posts in past years demonstrating this fact clearly using irrefutable examples. It’s not a subjective point of view, it’s a fact. Automated appraisals cannot reliably assign accurate value to “descriptive” domains because the unique & specific applications for a generic vary greatly depending on variables a mathematical algorithm cannot account for. I just sold a generic for $12,000 that estibot valued at less than $200 a couple years ago.
The problem for the domain industry is that newcomers to domains have no previous education or frame of reference yet for understanding the range of market values for classes of domains. So automated appraisal peddlars try to make a quick buck on naive newcomers with false claims of domain valuation.
@KD
Domain appraisals value domains NOT sites.
@Accro
Yes I simplify because this has been discussed so many times these past years and the subject is so vast… so I go to the point.
@Menius
People tend to confound value and price, that’s why a name that values $200 may be exceptionally sold for $12K (and the inverse happen still more often).
When an Estibot.com appraisal is in your favor, quote it and reinforce the credibility of the appraisal by showing them how it gives important metrics to back up the appraisal. When it’s not in your favor, remain silent. When a buyer quotes it in his favor, simply say there is no real way to appraise a domain name at this time because each domain name is so unique and the domain industry is still in its infancy.
To say that Estibot is totally useless is to simply shoot oneself in the foot. Estibot has many uses for domain investing that a lot of people simply do not understand. These are the people that usually speak negatively about it. This is good for the people who do understand how to use it to their advantage.
Yes, brandable domains are impossible to “appraise”. If a buyer mentions the word “appraisal”, or anything similar, simply move on. This is not the buyer for your brandable domain name. Same thing goes for if they ask for traffic or revenue stats.
A brandable domains value depends on many things, and only at a certain moment in time. At that certain moment in time the two factors are 1) How badly does the buyer want the domain name, and 2) How badly does the seller want to sell the domain name. This is the simple basic truth of how brandable domain(or any other domain name for that matter) find their “value”.
A domain name might be worth $100k on Monday, but only worth $20k a few days later, and that is because the buyer who just had to have it and was willing to pay $100k for it on Monday, found another domain on Tuesday that he decided he liked better. A buyer like that might show up again the following Monday, or not at all. This is the truth about brandable domain names. The amount of inquiries you receive on a domain name will give you a good idea on when/if the next $100k offer will come.
Estibot.com is as good or better than any expert at appraising domain names. People who dismiss Estibot are oblivious to this fact. One day someone will create a contest where they take 10 domain names they’ve sold and ask domainers who say their valuation skills are better than Estibots to guess what they sold for, and compare this to Estibot appraisals. The results will speak for themselves.
Domainers who think domains like yahoo.com, google.com, verisign.com, etc are worth millions are “behind the curve” on domain name investing. These domains values are perceived to be high only because of the websites they’ve become. These sites could have easily been named something else if the initial asking price was too high. This another simple truth of brandable domain names that is often overlooked or ignored.
A lot of money can be made with brandable domain names because of the emotional attachment that a buyer might have to acquiring a domain name that he perceives to be a perfect fit for his new startup. They are also potentially valuable because of their ability to be strongly trademarked (unlike generic domains), but a brandable domain name is very similar to a lottery ticket. You might hit it big, and you might not.
Acro can you please email me the name, I will see if i can buy it.
Anyone who uses domain evaluation tools to value a domain name is an idiot.
I find it amazing that we are still debating the merits (more precisely, the lack thereof) of automated appraisal tools in 2013.
Frankly, they are good for nothing, and definitely not for brandable names.
PS: you can PM me the domain as well – I might like it 😀
Great article. these ‘appraisal’ sites are useless. You really can not trust them. The value of the domain hinges on several factors but in the end boils down to two points. 1) how much are you willing to sell for and 2) how much an end user is willing to pay. 🙂