The story also illustrates another really important point. As far as I can work out no one has really developed a model that can justify the price of a brandable domain name. There have been attempts but as far as I can see it’s largely a case of “who blinks first”, the buyer or the seller.
At the latest TRAFFIC conference there was a panel of domainers that had sold assets for over a million dollars. Without exception, it really boiled down to who had the most patience. None of them needed to do the deal so they patiently waited while the buyers put more money on the table.
I really get frustrated when I hear domain investors tell me that a particular domain is worth a million dollars. My first reaction is, “Great! To whom is it worth that much?” This normally confuses them and my next question can be a little daunting, “Why haven’t you sold it to them yet?”
This is the eighth article in the series on selling domain names and continues directly on from the previous one.
Ninety-nine percent of the time sellers haven’t sold the domain because the valuation came out of thin air. In many cases they haven’t researched who can buy the domain for their million dollar price tag. Saying that you believe something is true doesn’t make it true!
The problem with estimating the price of a domain name is that it’s all about the VALUE to a specific buyer. This means that any valuation service that doesn’t take into account the VALUE to the buyer is fundamentally flawed…..sorry Estibot.
For example, a number of years ago I did a survey what domainers thought that a particular domain was worth. The spectrum of valuations ranged from between $1,000 and $250,000. This survey illustrated a number of things but I would like to highlight two of them.
1. The majority of domain investors don’t know how to value domains and apply very little science behind the rhetoric.
2. They forgot to ask the most important question, “To whom?” Selling a domain is all about this question and domains really can't be valued at all unless you have a specific buyer in mind.
So selling a domain for a million plus dollars is all about VALUE and proving that VALUE to the buyer. If you have a really hot lead of a buyer knocking on your door then in most cases they already have some idea of the value of the domain to them. They’ll still low ball you to try and get a better deal but anyone that is about to spend a chunk of change will have googled the price of recent domain sales. It’s not that hard. Dnjournal and half a dozen blogs publish price lists of domains for heaven’s sake!