First where to buy a new domain name from depends on few factors which we will cover briefly here, but you can find more details on the Registering Domains page.

1. If you already have some domain names it usually pays to keep your domain names with the same register.
2. If you already have multiple registers I would focus on the best price and the easiest to use register.  Pricing can change if they have any special sales or you get a bulk discount.
3. If you are buying an expensive domain name over $1,000 then look to which domain name register has the best security provisions (we talk about this in the Registering Domains section in depth)

  On the other hand you may have to approach someone to purchase a domain name from them because they had the gall to register it before you.  This is a critical juncture because it can make or break your profitability.  You remember in the Choosing Domain Name section we talked about the different goals for registering a domain name.  Depending on your goal should adjust what price you are willing to buy a domain for.  On top of those factors there are several other factors like traffic, revenue, and past sales of the domain or similar domains.  If your looking for a set formula there really isn't one out there.  So let's start by talking about how your goal for the domain affects the price you should be willing to pay for it.   In order to figure out the price you have to figure out what type of revenue you can generate from the domain name, which means you have to have an idea on what your going to use the domain name for.

We'll briefly recap the section here but recommend you review it before deciding on your price.  Decide which option or group of options you hope to use this domain name for:

1. Parking
2. Reselling - Domainers, or End Users
3. Developing & Keeping - Ad revenue, Affiliates, etc.
4. Developing & Sell
5. Fun

   Okay you have an idea and no this doesn't have to be a written in stone plan just a general idea of how you will generate your revenue.  Now here is the tricky part.  You need to estimate the actual money you can make from the domain name unless of course you just want it for fun.  Make sure to take out any costs associated with keeping the domain name.  We will break it down for each type of planned use for the domain name further on for now let's look at common things to look for to determine a price you'll buy a domain name at.

• Try to get access to stats for the domain name for as long as possible and a minimum of last 12 months.  If they won't provide them or say it isn't significant realize you will have to spend time and money to advertise the site to make money from it.
• Set an ROI - Return on Investment Goal usually it should be at least 10%.  This means that for every $100 you expect to make $10 plus have a $100 asset your domain name on a yearly basis.
• Based on your ROI figure out how long it would take you to make your money back and make a profit.  You want to look at under 10 years if possible.
• Are their other reasons to buy - you own all the other domain names in this area but this would complete your dominion on this subject, get customer lists, live forum, etc.  This can increase the price.

Parking

  If you're going to park the domain name then try to get an idea of how much traffic the domain name will receive.  If it's currently parked then ask to see screen shots of the traffic and revenues.  You may be able to increase the revenue just by tweaking the parking.  Also try to get an idea of what the PPC-Pay per click rate will be.  Odds are you won't find steals here very often as the motivation to sell a profitable parked domain is just not there, but people do find deals sometimes.

This is the closest you'll come to a formula for pricing although not everyone follows this.  If it has traffic and revenues the price is usually based around a multiple of the annual revenue.  This range is usually from 7x-12x annual revenue with the higher end for generics like television.com.  Think about this in perspective of the S & P 500 which normally has  PE - Price Earnings or the Price divided by annual earnings at around 18.  You can also look to see what other parked domain names are selling for at sedo.com, bizbuysell.com, moniker.com, etc. 

Also remember that pricing will also be affected by whether it's type-in traffic, typo traffic or just search engine traffic.  For a parked domain search engine traffic can disappear quickly on the other hand type-in traffic is gold, and type maybe copper.

• A multiple of what the domainer's income is AND IF the domainer is receiving a 50% share of the PPC income from the feed sub-provider (domain parking company) AND IF the PPC feed sub-provider is receiving a 70% share of the feed source's (Overture, Google, etc.) income from advertisers THEN as an enduser/beneficiary of domain clicks you would otherwise have to buy you are actually buying a clickstream for about THIRTY PERCENT of the clickstream's near term cost to you. Get it? Using the current inefficient (to sellers) pricing model you are buying clicks at a SIXTY-FIVE PERCENT discount. Sounds like a deal to me.
   
• Simplified math to explain what I just said: Advertiser pays Overture $1.00/click. Overture pays feed subprovider 70% of the advertising dollar or $.70. Feed subprovider "shares" 50% of their $.70 with domainer who parks their domain with subprovider. domain gets 100 clicks/month, making domainer $.35 x 100 or $35/month. You pay domainer based upon domainers revenue X years. 1 year revenue = $420. OTHO, if you had to pay for those 1,200 visitors you would have paid $1,200. Do the math. You pay the domainer 8 years revenue (8 X $420 = $3,360). In 8 years you get clicks that, based upon today's costs, are worth $9,600.
   
• The price of clicks hasn't been going down that much recently, has it? Buying upon a multiple of today's costs locks in your PPC "ad rate". :)
   
• By virtue of buying a "click source" (a type-in domain) you - as the new owner - are virtually removing click fraud from your accounting mix. (Who cares if a future click is bogus? Next . .)
   
• Direct navigation clicks are reputed to be highly filtered - that is, high conversion - traffic.
   

• Is the domain "trendy" (FlashGames.com) or is it one that will stand the test of time? (Money.com)
   
• Is the domain inherently commercial? ("Turbines" versus "jokes")
   
• Is the industry connected to the domain just waking up to PPC? (If so, look for bid values and therefore PPC income to rise. Buy at the bargain.)

Reselling to Domainers or End Users

If you're just planning on reselling the domain name you really need to know what that type domain name is selling for currently.  Try DNSalespric.com to see what similar domain names went for and always check DNJournal.com.  When reselling to domainers you will have to lower your expectations most of these prices are 20-30% under the price you would sell to an End User or Developer.

If your buying the domain name to resell you should already have at least 3 buyers in mind when you begin the process.  Check to make sure they are the type buyers to be able to afford to purchase it at the price you plan to list it.  Once again do your research and check out the sites listed above for pas domain name sales.  Always make sure it's a domain name you aren't afraid to be stuck with if you can't re-sell it.

Developing & Keeping

You just love the domain name and think it will be perfect for a site you have in mind.  The challenge here is if you develop then you can take almost any domain name and develop it into a money making web site it just may take more work.  For example televisions.com is going to get a lot of traffic but if you search for televisions Costco comes up first.  On the other hand that natural traffic or easily remembered name could be just what you're looking for. 

So go through the evaluation:

1. How will I make money from this domain name?  Affiliates, Google ads, subscriptions, etc.
2. What will my costs be? Hosting, Web Site development time & software, Advertising
3. Is this a domain name I will have to spend money advertising?
4. Is there a cheaper alternative?

Once you have those questions answered go back and look up the latest sales price for similar domain names and figure out what price you will at least break even.  Although we recommend that you build in a 20-50% margin in case things don't work out for you.  A lot will depend if the site is already developed if not you should be able to lower your price a bit and get that margin.  On the other hand if your trying to buy televisions.com your going to pay a lot.

 Developing & Selling

Very similiar to what we went through above except you don't care about the revenue at all.  Unless you hold it for a few months to show revenue to sell it for even more.  You are more worried about having a market to sell the domain name in.  Check out to see what the hot markets are for example iphones have been huge lately.  Check out the ebay auctions, latest sedo.com listings with bids, etc.  Remember to look at your costs for hosting and developing is it really worth paying $100 building a site that takes you 8 hours and selling for $150.  Probably not but for you maybe it is.

A. Get access to the accounts for as a long period as possible, but focus on last 12 months
B. Set a target ROI of the investment, let's say 10% p.a.
C. If the site owner/the numbers seem to give a profit of $100,000/year, then:

C1. $100,000 should be the 10% return, so
C2. ... this means the total worth is 100.000/0.1 = $1,000,000

D. If asking price is above $1,000,000 then ROI must be less than 10% -> dont buy
E. Else, buy

This is a very simple approach, but from the buyer's point of view, it all comes down to the return of his investment. Sometimes it's much more complicated than the above, because the ecommerce site might be bought as part of a consolidation effort, for it's DB of info, it's client list, whatever. But for straightforward cases, I use the above formula to guide me.

Btw, this is "Rich Dad, Poor Dad" stuff, in case you are interested.

Type-in traffic domains aren't for parking only. once developed, subject matter domains continue to benefit from type-in traffic.

Some of the best reasons I can think of for owning natural/generic domain names are:

• People DO type in subject matter addresses (MiamiWidgets.com)
   
• Subject matter addresses are easy to remember, even if you don't bookmark them (MiamiWidgets)
   
• A "brand" shares in the concept of branding: Something burned into your mind. In the short run will it will be easier to brand MiamiWidgets as the Source for Miami Widgets OR BlowFooeyGlop = Miami Source for widgets?
   
• Natural addresses have a baseline of traffic detached from search engine love.
   

• Natural URLs will be increasingly developed and the continuing development of natural names will increase the likelihood that websurfers will "go direct" - type in subject matter URLs - MiamiWidgets.com
   
• Browser developers will remove or disable the address bar from web browsers
   
• Search engines (a/k/a advertising and marketing firms: no ad revenue, no search engine) will terminate their contextual advertising business and conclude that domains aren't "contextual".
   
• The WWW will get entirely rewired; no more domain name system; no more GM.com or Congress.gov
   
• Search will be increasingly fractured, with traffic coming form all manner of channels, and that will be seen as a good thing since it avoids a monopoly
   
• PPC costs will decrease as more businesses enter the PPC market and more businesses divert funds from traditional advertising to PPC
   

That's what I told the buyer I wanted, and he accepted, so I
must have been comfortable with setting the value at $12,000.

I have had this domain for a while now, and over the past couple of years I have had offers from $5,000 to $10,000 which I turned down. I am satisfied with the $12,000.

Obviously it was only worth $50.00 to $100.00 to you, which is fine, but the buyer has a specific business plan in mind. Certainly this domain would not be worth $12,000 if you were only going to use it to collect PPC revenue.

I am certain you must already know, transactions with end-users are very different from those with other resellers.

At the end of the day the buyer is happy, and I am happy. I will just enjoy the delight of this sale, and worry about my entire portfolio tomorrow.


Right, that is is because those selling to endusers generally sells a small proportion of their inventory each year. eg buydomains sells about 1% annually and dotcomagency came out with some data a while back showing 3%. The prices people are able to sell small %'s of their portfolio each year sell at doesn't reflect "market value", the seller needs to factor in the domains that don't sell.

This just happened to be the name this particular person wanted to brand his business under.

At the end of the day there is no appraisal nor is there a specific formula to apply to determin how much a buyer is willing to spend on a domain name. I disagree with the poster that said there is no difference between an end-user and a reseller. That is like saying there is no difference between a home-buyer and a realestate investor. There are many variables that go into the formula: How much is the buyers budget, how important is a particular domain for his intended business plan, many considerations including his bottom line of what he is willing to invest in the domain he wants

interesting thread

let me give a shot at some definitions

an "appraisal" is a best estimate of what the sale price of something will be -- based on currently known information

a "sale price" is the actual price for something

the issue here is whether one updates "appraisals" when the "sale price" is known

for my two cents, I think the answer is yes, because the sale price becomes part of the currently known information

for those of you familiar with statistics, this is nothing new

it is called Bayesian statistics

you update your probabilities (appraisal) as new information becomes available

if you wish to not update your appraisals in the light of known sales information, then I think what you are estimating could be called "true value" -- a concept which is different from either "appraisal" or "sales price" -- but also one which can become divorced from markets and empirical evidence

ok... three cents... to long for two

I think there has to be a distinction between a liquid (sell now) value and a value that may be possible at some point in the future if a series of variables are met eg motivated and resourced buyer.

Theres nothing wrong with offering either (or both) as long as its made clear as to which is being offered and the basis in the case of the latter imo.

I recently was asked by multiple buyers to prove my domain had traffic that I claimed. Having screenshot of my stats from a ppc provider did not help me very much, as this guy wanted to know for a fact that domain was generating certain amount of traffic and from which sources it was coming from.

I searched everywhere on the internet, but I only found one company called TrafficTest.Net , actually through a friend that did traffic estimates for a domain. After redirecting my site to them, they captured every request analyzed it through their traffic identificator, then sent the request back to me so I could still serve ads.

I gave buyer the real-time URL he could watch for stats, and after 3 days he bought it. I am very skeptical about domain appraisal, but one thing I do trust is domain traffic, for me traffic sells a name. This is what's worth the most. Ofcourse there are probably lots of people out there with good names but which dont generate traffic.

Anyways feel free to check out the company at http://TrafficTest.Net
A key point to recognise in this spirited discussion is that unlike real-world goods and services, no two domains are alike. For instance Sex.com and Sex.net cannot be valued the same. Examples of houses sold have been given, but the fact is that houses can be identical in some cases based on their design, location, building materials etc. And these criteria can form a basis for valuation.

was being a bit feisty and colorful earlier in this thread to argue some points, but truth be told I think there are good arguments for both sides in this debate. Thought I would try the following as a bit of a consensus document with some definitions and issues –


Definitions:

“Sales Price” is the price at which something sells in an open market, arms length transaction.

“Appraisal” is the expected sales price for something based on best information available.

“Underlying Value” is the inherent worth of something based not only on sales prices, but also other factors that may or may not be based on market data.

Issues:

“Sales Price” issues: Is the transaction arms length? Are there aspects of the transaction which are bundled or not incorporated into the price which might inflate or deflate the apparent price (for example, is there an active website which might inflate the value associated with a “domain” or is part of the reported price based on inflated stock prices instead of cash?)

“Appraisal” issues: To what extent should an appraisal be influenced by recent transactions (e.g. recent sales prices of the actual or comparable items) and/or unusually high or low transactions (e.g. “outliers”)? If you give too little weight to recent sales prices and outliers, then you run the risk of being in your own little world without empirical validation. If you give too much weight to recent sales and outliers, then you run the risk of having no stability in your predictive model and getting caught up into speculative bubbles. In many respects, this is similar to the debate in stock valuation between “fundamental investing” (based on historic PE and other ratios) vs. “momentum investing” (based on most recent market price trends). In real estate markets, governments often update appraised values to sale prices when a property sells; this would be evidence for giving 100% weight to recent sales. However, in finance, net present value is effectively based on a cumulative rolling average of past projects with similar risk; this would be evidence for not giving too much weight to recent sales.

“Underlying Value” issues: Economists have debated for some time whether it makes sense to talk about underlying value apart from market prices. Especially in highly volatile markets, it probably does make sense to talk about underlying value, however it should be realized that this concept can become quite subjective since it is by nature less responsive to market price movements.

Relevance of Statistics:

Many of these concepts relate to statistics. There is a branch of statistics called Bayesian statistics. It relates to the issue of how much to hold onto past views (e.g. expected probabilities, prior expectation model) when you encounter new data and how much to change your views. It gets very deep very quickly, so I will not go into all the details, but it does relate directly to these appraisal issues and the different approaches discussion above.

tHow to price the domain?  Several different techniques and everyone does it differently.

dnjournal.com

afternic sold

sedo sold

dnsalesprice

namebio

review aucitons to see current prices

review domain forum sales - some have lists for certain extensions

All extensions (TLD's) the same when pricing

how long is the domain?  what is the pay per click bids?  rememberable?  sie ahve content?  ask for views, etc.

How do you learn about current market prices? The weekly domain sales report that comes out every Tuesday night at DNJournal.com lists dozens of sales in all extensions that have been completed in the previous seven days. From studying those sales reports (which also inlcude all of the year's top sales) it won't be long before you become familiar with the kind of domains that command premium prices. For example, since you will see 3-letter .coms typically selling for thousands of dollars, no need to write someone and offer them $50 for theirs.

On the other side of the coin, other types of names or particular extensions may be conspicuous by their absence. If the kind of name you have in mind rarely shows up with a high price tag attached, a motivated seller might consider a couple of hundred dollars for it. Unfortunately, when it comes to getting a real handle on domain values there is no substitute for study and experience.

where do you stand on the issue off holding all the tlds

i.e.

example.com/net/biz/org/info etc"

-----

From the standpoint of a Domaineer... if the extension doesn't get any traffic, don't worry about it.

From the standpoint of a Business... I'd buy them to protect your trade name and usage.

For example... the new .mobi ext. Verizon says they HATE it and it isn't worth the electrons it takes to register it. BUT, they have in order to protect their name from others that would capitalize on it.

There are other reasons as well in thier case (hedging their bets for instance) but that pretty much sums up the issue.

Buying up the other tlds is building a fortress around your asset affording you protection and added value.

Again, Domaineers don't buy for that reason though. They buy for TRAFFIC and traffic only. If you happen to have a high traffic domain like cameras.com, the odds that the other tlds are making traffic as well is pretty good so naturally, you might want them as well... but for TRAFFIC, not protection.

So there are some similarities and some differences. There are only perhaps two or three tlds I do not own for the afore mentioned domain I am working with tomorrow. In my case, that is a STRENGTH and a good thing I bought them up. The "package" deal brings more value to the resale.

I bought them not for resale some 10 years ago, I bought them to protect my asset, the dot com. Which I bought for then, my business use. Had I bought the domain for traffic, I wouldn't have bothered.

Another word about focused traffic versus generic and the last post before my response here...

Focusing down doesn't always mean lower revenues or lower value. In fact, typical LLLL dot coms have an asserted value simply because they are four letters. Even more if they are four "premium" letters. Even more still if they form a word or acronym. But even at the highest valuation from a domaineers point of view, it is pennies compared to what the domain physically brought into the business month after month. Up until I sold the business, the product line associated with the domain brought in 6 figure monthly sales... for over 8 years.

FAR more than any domaineer would valuate the domain on the domain alone.

Sedo, Moniker and several independant brokers all concurred the domain to be worth from $250K to $450K based on branding potential and traffic. So what? That was roughly its quaterly earnings selling product.

In short, the traffic alone doesn't represent the value of the domain. The market segment and the product cost/profits can dictate the value of the domain to a savvy buyer. It depends on what that buyer intends to do with it...

A domaineer will never see the retail return on investment so it is not at all hard to understand why they would not see the value in it.