Amazing story where the buyer wanted the name for 3 years from the seller and only now both finally agreed on a price. With a seller having the cohonas to hold out and the buyer having persistence to get what he wanted.

Is this a true story?

No.  but it’s a lesson in valuation for many of you fools. Every time a name sells for something more than what you think its worth the bandwagon starts where many rant and rave why this name can’t be worth that much.

It is quite comical to be honest.

Sure, I will jump on the bandwagon for those names bought BY domainers for sale TO domainers. This never-ending cycle is like the dog wagging the tail where 95% of investors have no idea what makes a good domain let alone what markup is realistic by selling only to domain investors. If you buy a name for $10,000 in auction (where 100 of the same people you are actually hoping to sell it to are in) how much do you really think your profit is going to be when you try and flip the name to the same people a few months later? Find price points lower its gets better but there is a cap for this kind of liquidity and a lot of risk.

End user sales are different – an “end user” here includes corporate buyers and even domain investors who have a real vision for development down the road (not some dream where he has NO experience in development today nor gains any knowledge as every day passes but those who are developing and simply acquiring to add to the to-do list one day). These people are actually end-users but participate in name trading/ selling – domaining would not be their sole activity.

When a domain is sold to an end-user the value only does one thing for most domainers.

It brings interest to the assets we all hold and love dearly.

More interest = More players = More Money = More buyers = More Value

Sometimes the press is great with 7 figure sales like Candy.com and sometimes its just a heartwarming story about how a guy quit his ugly day job to enter this industry. Stories like this help overcome the bad press about cybersquatters and validate the industry and these assets as a respectable way to make a living.

However the actually dollar value of a sale to an end user can not be correlated in value to similar domains.

We have many clients as end users and we never send out emails highlighting the amount of Google results, what names Frank or Kevin own that are similar (who the hell is Frank and Kevin most would ask), why an asking price of $10,000 is ok since Johnny sold one last week close to this.

All of this shit that many of you recycle to sell to one another doesn’t matter.

An end user will pay only what they think its worth to thier business plan.

Nothing more.  Anything less is a deal.

Your only job as a seller is to find a price which you are happy and start there.

That target price should be based on your cost, your loss of value, your need for cash, your alternative outlets for sale and many other variables which are all outside and have no bearing of what Johnny’s similar name sold for last week.

This industry has grown pretty fast over the last few years but we are in an environment where a calculation for logical liquidity is sought after by most domainers, dynamics of what makes a good name is entirely changing with keyword development names finally getting the respect they deserve and parking multiples fading out.

The entire point behind this article is do not look outward for your price points – look within.

Everybody could have made another dollar if they held out 5 minutes longer or picked a 35 instead of 36 in Saturday’s powerball but real business is not made of what ifs – its made of what you do.

Use the sales reported to maybe find ranges if you have no idea what a name is worth to you but if its an end-user buying throw it out the window since 90% of the people you hope to sell this domain to will be domainers and those valuations are less.

We get in deal mode every time but I can tell you the most irritating thing behind any seller is having them quote the number of searches in Google or who owns similar names.

We know how much the name is worth to us to buy or sell.

If Frank, Kevin, Rick, IREIT or any of the industry names own similar – whopdef*ingdo.

Back to the $1miilion info sale.

If it happens (and it will one day for A DEVELOPED site which all you .info lovers will claim credit for having foresight which is crap since the power was in development not the name) then you need to respect the PR received, congratulate the two parties – since (a) the buyer was happy to pay and (b) the seller was happy to sell.

The name was worth that much since both parties walked away happy.

Any sale is a good sale.

Trying to find logical value in this industry if your only client base is domainers is like a dog chasing its tail.

They are all moody as hell and would rather buy in auction then buy direct.

You know it.

You are one.

©2010 Newfound Names LLC. All Rights Reserved.

So is this industry any different than any other industry? Hardly not and I think a lot of the negativity I’ve seen across the blogs lately stems from a combination of things.

First, some domainers have a feeling of self entitlement which is just plain ridiculous. No one is obligated to share information; no one is entitled to pay your asking price for your domain and by no means are the big companies entitled to do you favors. Compare the domain industry to banking. Let’s say you have spent $100,000 on your visa card over the last year making the bank a nice chunk in addition to the annual card fees and the value of having such a good cardholder. Times get tough and you run into a snag asking for a waiver of the late fee. Bank denies the request and you have to pay $35 for a late fee. Many cardholders will become irate about the fee stemming from the same sense of entitlement but wait – the privilege is given by the bank to give you a credit card, they have no obligation to you. Parking companies are the same way, it’s a privlege to be able to earn money from your traffic (as much as many of you will argue that its your traffic.. much like the cardholders complain how its thier money being spent) – these companies are providing a service and I’m sure they are taking care of their top clients but don’t rely on their generosity and complain when they change things up. You’re still parking your names with them right? Still never got around to developing a plan right? Its up to you to advance your business, not the goodwill of others.

Secondly, as many people (such as my favorite Julia Mackenzie’s blog) have posted about in the past domainers are lazy. I’m not saying this to criticize since if money is rolling in and the future is looking bright it is very easy to become complacent and not fix something that isn’t broken. However, is that not why most businesses fail?? – they never expand, they never look for alternative revenue streams and sometimes even outright deny even considering partnerships with service providers to grow their business.

Wait …. Isn’t that what most domainers have done over the last 5 years?

Complacent sounds familiar.

Outside of parking, most have never really looked for other revenue streams (besides a cash sale) and many times ask extremely unreasonable amounts for any partner to open up doors and develop together.

We all compare domains to real estate and it’s a known fact that most developers want nothing to do with landowners except buy your land. Most developers will go to extreme measures – form different corporations, ask trusted associates to buy land in their name, almost any trick – to acquire the land for the cost only.

You want to join the team and partner up? then bring more to the table than a simple asset. Learn how to develop, get a traffic stream going, build content … yes, its the same thing everybody has been telling you for years.

In fact its the same thing people we all admire like the Castello brothers and others have been doing all along – so why haven’t you started?

Are you an Entrepreneur?

Do not kid yourself – most domainers are not.

Ask yourself is your Grandmother an “entrepreneur” since she bought a house in 1990 for $100,000 and now it’s worth $400,000.

Your grandmother decides to hold out for $450,000 and partner with a developer – is she an “entrepreneur” now.

In either case the answer is NO.

There is a HUGE difference between an “entrepreneur” and someone who bought something yesterday that’s worth more today.

Investing in a few assets and reselling down the road is the trait of a simple investor – nothing more.

The person who bought something and then created value for the asset on top of the simple asset value … Now, that person is an entrepreneur.

Without creating value – I’m sorry but you do not deserve the title “entrepreneur”. Even having a fancy blog with some thoughts about an industry is not bringing value to your assets – possibly adding more value to your opinion in the community but by no means adding value to your assets.

As for Mini-Sites. First, they don’t suck.

Companies like AEIOU.com, WhyPark.com and other service providers to domain owners are generally doing a good job but these are not the end all solutions for the next wave of changes in his industry.

Many Domainers (not all) seem to ride the wave of what works right now but never really have a solid plan for the future so if you are creating a mini-site then sit down and create something which can be part of a larger plan, something that can tie in with other projects for cross marketing or something you have interest in building out. The cost of a mini-site is extremely low – in fact, it’s half the cost of a simple logo design through many of the online providers – and most times you can keep the files. If anything, people like Latona are giving first time developers the tools to start online at giveaway prices.

Now, if you just buy a mini-site and do the same old thing that you did with your domain name a few years ago (change the nameservers and log out) … you have no right to complain about losing money when the industry changes or call yourself an “entrepreneur”.

So again, mini-sites do not suck but how many people use them does.

It’s almost like renting a store, putting up a flashy sign then walking away. Your store is developed outside, more people are noticing it every day walking by but hey, there is still nobody inside. We would not do this in real life, so why do it online?

The fact is no other industry provides an opportunity for people to work at home, invest a few bucks for a true brandable platform for your next business and practically create something from nothing marketable to a global community with a little hard work.

Of course, if you are only in this industry to flip domains then most of this article will not apply but for those of you who are sitting on domains for which you have development plans (and claim to have spent thousands on development when asking for a price) then I think a more appropriate question of the day would be to ask yourself…

Do you suck as a Domain Owner?

©2010 Newfound Names LLC. All Rights Reserved.

Great place to see faces, interact, blog and more. Well done.

©2010 Newfound Names LLC. All Rights Reserved.