Sales Price = X times PPC Value = Bad Idea
By Alan on Mar 17, 2008 in Domain Sales, Domain Values, Selling a Domain | 4 Comments
I always find it interesting to view how private domain sale transactions often start with the same question…
How much traffic does the name get?
From my experience (and we own some names with very good traffic) this question is one to avoid if you are a seller and your asking price is fairly low (under $50,000)
Some of you will say – $50,000 – that’s a lot of money. Remember, I am not saying 50k is not a lot of money to you – I’m sure most people would be able to experience some great benefits having this kind of cash but it’s simply just not a lot of money to professional investors, corporations and end users.
Reasons to avoid providing this data are simple
#1) All the daily auction forums – NameJet, SnapNames, Moniker, Sedo (for the most part), Afternic, BuyDomains – almost ALL listings provide no reference to traffic yet domains still command some high prices. If a buyer wants the name they will pay for it.
#2) What incentive is there to provide a seller this information? If they find you are making $1,000 a year from ABC domain but you are asking $30,000 – immediately most buyers will forget all about the keyword value in the name and say…wait….you want 30 years revenue – how about 7 times.
The ONLY time we would recommend providing data is to an END USER or for a sale of signifcant value.
The NUMBER OF VISITORS your domain gets can be a big part of their valuation and end users will generally never equate an asking price to a multiple of PPC earnings – (as they probably don’t even understand the PPC industry to begin with). Their offer will factor in the number of “new customers” walking in through their door if they buy your domain – and believe me, the valuation per head is a hell of a lot more than a PPC ad.
Bottom line, selling a domain name direct should be no different than how the big boys are doing it. The only time to provide user and revenue information is when you feel this data will help command a higher price – anything under $50,000 is simply not worth it.
Sammy Ashouri | Mar 17, 2008 | Reply
Wonderful article. I have the same mentality as well.
Francois | Mar 18, 2008 | Reply
This look likes to going against the general trend of transparency most top domainers would like to “officially” lead domaining this year.
…
On my end until now I have never asked when buying high priced names what was the traffic or revenue of the names.
But I admit this gone change, I’m tired to be the only idiot!
If you look at most of the top domainers you will see they all purchased n years revenue…
admin | Mar 18, 2008 | Reply
I agree with some level of transparency but a seller should have a minimum level where a domain will only be sold for the keyword value alone.
Transparency is a great thing – however until domainers stop using the PPC value as a tool to simply multiply and arrive at a sales price – sellers really need some kind of minimum level to ignore this factor.
From a buyer’s point of view – sure, I would love to see stats but at the end of the day we plan on developing names so the PPC value is of little value in the big picture – unless the price is over $50,000. 50k is a number we have set – everybody’s threshold will be different.
Unfortunately, many domainers are still not developers.
P.S. You’re not the only idiot my friend
)) …. We have over paid for a quite a few domains ourselves.
Damir | Mar 18, 2008 | Reply
The value defined in a domain name can be done in many way’s from the buyer’s / sellers point of fuew.
Some buyers buy domain names due to the online traffic (One word domain names and previously expired domains which already have established links).
Many domain names are bought for the reason of the domain name itself (so traffic and revenue generation of the domain name do NOT matter as once the domain name website is set up which quality content it will generate revenue itself).
To YOUR Domaining SUCCESS
Variety is the spice in life – own a variety of domain names.