For purposes of this article, I am referring to Australian domains – and in particular our premium extension – com.au.

So how does one arrive at a fair value for buying or selling a domain name in the aftermarket?

The answer is that it is almost impossible. Unlike gold nuggets, with domain names, there is no regulated or official pricing mechanism to guide you. It ultimately becomes a totally subjective decision.

Influencing Factors

Comparable sales evidence

To me, this is simply the best guide. Obviously, there are factors within factors. e.g. One word or more; dictionary word or acronym; radio test; popularity; uniqueness, commercialism and search volume. The list goes on.

E.g. a 3 letter domain name like Pay.com.au is going to be worth a lot more than PBL.com.au.

Whilst there are some reported domain sales, the majority are not publicised. Because of this, read blogs like this or go on other forums. Best of all, contact a reputable domain broker who is in the market day in; day out. One suggestion is the publisher of this site. 🙂

Real estate agents use the comparison method to try and arrive at a market price for the properties that they are selling. Though in a sellers market (and in an effort to get a listing), they are also influenced by what their vendor’s expectations are! For mortgagee auctions, banks employ a valuer to ascertain a minimum value based on comparable sales evidence. These values generally tend to be more conservative than those of the real estate agents, because they have to cover their butts!

Demand and Competition

If there are two or more identifiable buyers who want a particular domain name, then fear of loss can greatly increase what a domain may be worth (under normal circumstances). One party simply does not want another to have that domain. This is seller nirvana, but happens rarely. If you don’t feel confident handling a situation like this, then once again, a good domain broker can assist.

Automated Valuations

Any serious buyer or seller of domain names should ignore these. Values can be all over the place. The only time I use them is when they can assist me! 😀 Two major companies that offer these type of valuations are GoDaddy and Estibot. But as you can see from the screenshots below, they are poles apart. So who do you believe?

And now GoDaddy – over $5000 less!

As always, interested in any comments or feedback.

Ned O’Meara – 27th August 2019

45 thoughts on “Valuing Domain Names

  • Avatar
    August 27, 2019 at 11:16 am
    Permalink

    “If there are two or more identifiable buyers who want a particular domain name, then fear of loss can greatly increase what a domain may be worth (under normal circumstances). One party simply does not want another to have that domain. This is seller nirvana, but happens rarely. ”

    That is because most names have very little interest. A really good name will have that, just like a good piece of property will almost always have that. Search out names that have that and think twice about names where you are the obvious buyer!

    99% of names only have domainers as obvious buyers.

    Like
    3 people like this.
    • Neddy
      August 27, 2019 at 4:06 pm
      Permalink

      “99% of names only have domainers as obvious buyers.”

      As someone who has sold a lot of domain names over the past decade, I totally disagree Paul.

      Like
      4 people like this.
    • Avatar
      August 28, 2019 at 11:56 am
      Permalink

      I disagree with Snoopy (Paul Shaw).

      Not sure why someone who hates Australian domain names, and doesn’t own any, wants to spend time hanging out at Australian Domainer?

      • Avatar
        August 28, 2019 at 12:32 pm
        Permalink

        Well Robert, It may shock you to know that some people who think something is a bad investment will actually say so. It isn’t all about sales pitches.

        When was the last time you said anything critical about this extension at all?

  • Scott.L
    August 27, 2019 at 11:49 am
    Permalink

    Another influential criteria for domain valuation which can be often overlooked, originates from the policy conditions set by the Administrator of the domain registration market. Restrictive policies or complex cumbersome rules depreciate domain values, whilst simple open policy rules appreciate domain value, increases competition, and promotes a broader utility. Accordingly, any Administrator which might send mixed messages to the market about the future direction of policy, or otherwise changes its mind to often may negatively impact market sentiment, valuations, and sales. Therefore, good consistent policy conditions gives rise to increased value for both investors and registrars, including the longevity of the Administrator.

    Like
    4 people like this.
    • Neddy
      August 27, 2019 at 3:54 pm
      Permalink

      Now that is a very good point Scott!

      I guess my article was based on a “perfect world”. 🙂

      Like
      Neddy likes this.
      • Scott.L
        August 28, 2019 at 3:08 pm
        Permalink

        Well, a domain is worthless without the right commercial policy conditions to support it’s increasing value.

  • Avatar
    August 27, 2019 at 12:33 pm
    Permalink

    Have sold many .com.au and some .net.au domains for eye-watering sums, often it’s the ones you value least that fetch the biggest premium. Your Pay.com.au vs PBL.com.au comparison is only good for objective (investor) valuation, not subjective (end-user) valuation.

    A domain will not sell unless both buyer AND seller agree. If the buyer needs a domain to protect their brand or launch a marketing campaign, objective valuations go out the window and subjective valuations are much more important. Without the domain, the buyer cannot proceed with their ambitions.

    A good illustration is Fetch TV’s protracted purchase of Fetch.com.au. The market share it lost in the crucial months it protracted the purchase would have cost it far more than the price it ultimately paid for the domain, in my opinion.

    Like
    4 people like this.
    • Avatar
      August 27, 2019 at 2:45 pm
      Permalink

      The name is just a redirect so hardly a big priority, let’s stop putting domains on a pedestal. Most people knew the company as “Fetch TV” and there would have been no real “market share loss”.

      This would have been a nice to have not a must have, that is reflected in the price.

      • Avatar
        August 27, 2019 at 5:05 pm
        Permalink

        Snoopy the eternal .com.au critic who won’t take $200,000 for Shares.com.au so let’s stop the charade

        Walk into any Harvey Norman and you’ll see advertising materials with Fetch.com.au all over it

        Time to get out more mate 😉

        Like
        6 people like this.
        • Avatar
          August 27, 2019 at 8:51 pm
          Permalink

          I’d don’t think I’ve ever been offered over 20k for it so not sure where you are getting the 200k stuff from. Even that was years ago.

          Like
          Anonymous likes this.
          • Avatar
            August 28, 2019 at 5:15 am
            Permalink

            “Offered” is legalese

            Most initial approaches do not take the form of an offer but are expressions of interest.

            Your comment does not deny expressions of interest higher than $20,000 that have been refused.

            And the point still remains, which you have sidestepped: You won’t take $200,000 (in my opinion). Like I said to begin with, for a sale to occur both a buyer AND seller need to agree to a price.

            Like
            5 people like this.
            • Avatar
              August 28, 2019 at 5:20 am
              Permalink

              The point is there is no substitute for Shares.com.au Snoopy, and if you won’t sell for $200,000 then it is for anyone who wants it to move higher.

              Which, like I said, is what makes subjective (end user) valuations much more important than objective (investor) valuations.

              The domain owner has absolute bargaining power. A lot of domain name investors do not appreciate this.

              Like
              3 people like this.
              • Avatar
                August 28, 2019 at 8:04 am
                Permalink

                No I wouldn’t and nobody is likely to offer it either. I spoke with a well known Australian broker and he thought it would get about 30k, that was a several years ago before the .com.au market crumbled.

                The only way to sell .com.au’s is for peanuts. These names sit and rot whilst the .com market does far better year after year. That is why your best example is a huge company paying 100k for a supposedly vital .com.au. They were probably laughing when they wrote that check.

                Good luck to you if you want to keep putting money into .com.au.

                • Avatar
                  August 28, 2019 at 8:48 am
                  Permalink

                  Again, sidestepping the issue Snoopy: In your words, “No I wouldn’t [sell for $200,000]”.

                  Therefore Shares.com.au cannot be bought for $200,000 (or less).

                  Which means its value exceeds $200,000.

                  One person’s opinion about a name being worth X is meaningless especially when that person is a broker and not an end user. He probably wanted it for himself.

                  I have declined at least half a dozen 6 figure offers on .com.au domain names, one of them cost less than $2,000 to acquire. If you haven’t enjoyed similar perhaps you are stuck in the pre-2002 prism of “.com.au is worthless”.

                  Pre-2002, an entity could only own ONE .com.au domain name at a time and a .com.au domain could not be sold separately from a business.

                  Back then, Google did not give preference to .com.au in Australia and 95% of Australian business did not have an online presence.

                  Back then, even .com domain names (average ones) were struggling to achieve 6 figures consistently, with only high-quality names pushing into the 6 figures and higher.

                  And back then, yes, .com.au domains were not the best investment due to the above.

                  However, things changed in 2002 with auDA’s release of generic domains and relaxation of policy that allowed an entity to own more than one domain name.

                  Things again changed in 2008 when auDA again liberalized its policies, removing the prohibition on the sale of .com.au (and .net.au) domain names.

                  In Australia, .com.au is King. Australia’s population has also increased from 19.5m in 2002 to 21.5m in 2008 to 25.5m today.

                  Get with the times mate. A number of investors are doing very well with .com.au. If you haven’t or are not, perhaps a change of attitude is in order.

                  Like
                  7 people like this.
                  • Avatar
                    August 28, 2019 at 8:57 am
                    Permalink

                    Market value is not determined simply by the seller. There is no buyers at the price you are talking.

                    “I have declined at least half a dozen 6 figure offers on .com.au domain names, one of them cost less than $2,000 to acquire. If you haven’t enjoyed similar perhaps you are stuck in the pre-2002 prism of “.com.au is worthless”.”

                    Who cares about these claims? Money actually hitting a bank account is what makes the world go around.

                    The sales are there and they are terrible. Highest .com.au sale on record 400k.

                    • Avatar
                      August 28, 2019 at 9:21 am
                      Permalink

                      If I remember correctly, there was a unverified report that cars.com.au sold for $1,600,000 back in 2008. But either way, whether that’s true or not, if people are paying $2.5 million for a unique car number plate, surely you can find people to pay good money for a good domain name. They either buy it for ego or they buy it because it helps them in business – either way it has value to some people – and in some cases probably more value than you or I could even imagine. 🙂 You just need to find the right person and pitch them the right way.

                      https://www.domain.com.au/news/nsw-licence-plate-no-4-sold-for-record-245-million-to-chinese-billionaire-20170828-gy5g0r/

                      Like
                      Anonymous likes this.
                    • Avatar
                      August 28, 2019 at 9:22 am
                      Permalink

                      “on record” Snoopy.

                      I know a number of private sales that were higher but cannot comment on them unfortunately. Other readers here are aware of some of them also but likewise cannot comment.

                      Cars.com.au was definitely higher and is on the public record at $1.6 million, was bought at 2002 auDA auctions for $141,000.

                      PS. Once again, you have sidestepped the issue. The issue is, if you don’t sell for less than $200,000 then the buyer doesn’t get it. And the point is, ‘market value’ is irrelevant when the asset is distinctive or one-of-a-kind.

                      Each high-quality .com.au domain name IS its own market, as there is no substitute. And when a buyer NEEDS a name, they either pay up or they don’t get it (and quite often, someone else does sooner or later).

                      What are some subjective (end user) means of valuation?

                      (i) Size of their business (capitalization) and annual revenue
                      (ii) Industry, competition, importance of online marketing within the industry
                      (iii) Number of employees
                      (iv) Annual market budget for the business
                      (v) Annual SEO (and/or SEM) budget for the business
                      (vi) Importance of brand positioning and/or brand protection
                      (vii) Once sold to another end user, don’t expect to be able to buy it EVER again

                      Like ‘heritage’ 2-3 digit number plates, .com.au domain names are only increasing in value. Of course, they are much more useful.

                      Like
                      6 people like this.
                    • Avatar
                      August 28, 2019 at 11:04 am
                      Permalink

                      “Cars.com.au was definitely higher and is on the public record at $1.6 million, ”

                      Where is in “on record”. Not verified or reported by anyone, yet another post sorely lacking on fact.

                    • Avatar
                      August 28, 2019 at 12:08 pm
                      Permalink

                      Trusted.com sold for a mere $50k in 2009.

                      Is that what short “.com” domain names are worth today?

                      Their website and business looks to be doing amazing now. Ten years later. But, regardless of their business, the domain name itself is worth a lot more money now.

                      The point is, Australia is basically at the Year 2003, in terms of the value that Australian domain names will be worth in 10 years time… In 20 years time…

                      And you, Paul, have missed the Australian domain name boat, all because auDA took a few names off you many years ago and you’ve been jaded and negative on the Australian domain name market ever since.

                      Instead of getting over it and moving on, you just beat it down every chance you get.

                      We don’t care about your opinion, in regards to Australian domain names.

                      We never have, and never will.

                      GET OVER IT.

                      Like
                      2 people like this.
                    • Avatar
                      August 28, 2019 at 12:10 pm
                      Permalink

                      There are lots of public sales that aren’t even on the Domainer or DNJ.com.au lists at the moment, all .com.au:

                      Poker $100,000
                      Deals $100,000
                      Toys $90,585
                      Basketball $90,000
                      Jobs $300,000
                      Cruises $110,000
                      CarInsurance $250,000
                      CarLoan $200,000
                      Flowers $153,000

                      Rumoured:
                      Cricket $110,000
                      Mortgage $235,000
                      Photocopier $137,000
                      https://www.auda.org.au/pdf/smwg-issues-paper.pdf

                      On the table:
                      Groupon $286,000
                      https://www.ozbargain.com.au/node/381193

                      Property $9 million, domain was everything
                      https://web.archive.org/web/20090411155040/http:/www.netfleet.com.au/index.php?a=news&id=17

                      Wish I could talk about the private high 6 figure sales I’ve heard about and the numerous private low to mid 6 figure offers and sales I’ve heard about.

                      Like I said, you need to get out more 😉

                      Like
                      7 people like this.
                    • Avatar
                      August 28, 2019 at 12:18 pm
                      Permalink

                      “The point is, Australia is basically at the Year 2003, in terms of the value that Australian domain names will be worth in 10 years time… In 20 years time…

                      And you, Paul, have missed the Australian domain name boat, all because auDA took a few names off you many years ago and you’ve been jaded and negative on the Australian domain name market ever since.”

                      Australia has been stuck at 2003 for the last 16 years. The market hasn’t progressed from that time. In 10 or 20 years it will still be a bad market, full of red tape and low demand.

                      What names did auDA take off me? Seems you just make things up now?

                  • Avatar
                    August 28, 2019 at 12:17 pm
                    Permalink

                    Exactly.

                    Certain people moan and groan about an industry. And do nothing. And then ten to twenty years go by and they say, “oh – I didn’t realise while I was being a negative nancy I missed the boat”.

                    No foresight.

                    Like
                    5 people like this.
                    • Avatar
                      August 28, 2019 at 12:21 pm
                      Permalink

                      I didn’t do nothing, I decided to stop investing in .com.au and focus only on .com.

                    • Avatar
                      August 28, 2019 at 12:27 pm
                      Permalink

                      Great.

                      Go and hang out over at your favourite “.com” forums then and leave the rest of us alone.

                      You’re like a Star Trek fanboy hanging out at a Star Wars forum, slinging mud, all on your own.

                      Very lame.

                      Like
                      3 people like this.
                    • Avatar
                      August 28, 2019 at 12:46 pm
                      Permalink

                      The buyers of these names had foresight:

                      https://web.archive.org/web/20021122045135/http:/auda.org.au/about/news/2002020502.html

                      Some 3000 generic .com.au domain names were reserved by auDA’s predecessor because if any one of them was held by an Australian business it would have given an “unfair advantage” to that business online:

                      http://classic.austlii.edu.au/au/journals/ANZCompuLawJl/2002/3.pdf

                      Snoopy’s assumptions like I said date back to the pre-2002 changes. Stale assumptions no doubt shared by the original owner of Sport.com.au, who foolishly offered it for sale for $900 in 2002.

                      https://www.smh.com.au/technology/auda-withdraws-sport-com-au-domain-from-auction-winner-20020816-gdfjp9.html

                      .com.au values increase every year. Today, Sport.com.au is worth more than $1 million.

                      Like
                      3 people like this.
                    • Avatar
                      August 28, 2019 at 12:59 pm
                      Permalink

                      “.com.au values increase every year. Today, Sport.com.au is worth more than $1 million.”

                      You are kidding yourself on values increasing each year.

                      Secondly no sport.com.au is not worth more than $1million. There is no obvious buyer for a name like that other than domainers, nobody calls themselves “sport” and the term has little commercial value. It is also missing an “s” on the end.

                    • Avatar
                      August 28, 2019 at 1:40 pm
                      Permalink

                      Yes, Sport.com.au is worth more than $1 million, Snoopy.

                      And no, the singular is worth much more than the plural.

                      No point arguing it further. Frankly I’m glad you’re not buying in the .com.au space as it leaves more opportunities for me.

                      It’s just funny because you miss the big picture of things, which is that high quality .com.au domain names have been the foundation for many businesses over the years that have sold for millions, with the generic domain name being pivotal to the buying decision eg. CarLoans.com.au (Shaun McGowan sold to Eclipx), Photographers.com.au (David Lye sold to Snappr), Property.com.au (bought by REA for $9 million) several years ago, Travel.com.au (bought by Wotif for $13-14 million several years ago)

                      Like
                      3 people like this.
      • Avatar
        August 28, 2019 at 11:58 am
        Permalink

        Wrong again.

        Everywhere Fetch TV advertise, on the sides of buses, in every Optus Mobile Store, they are known as “Fetch”.

        They got the name for a good price. They get it. Get over it.

        Like
        Anonymous likes this.
        • Avatar
          August 28, 2019 at 12:14 pm
          Permalink

          Blah blah blah. They were always known as “Fetch TV” and this domain would not have been a priority. The is reflected in the price.

          The idea that they were losing a lot of sales without it is garbage. The lack of need is clear from the fact that the *seller* hired a broker to try and sell it.

  • Avatar
    August 27, 2019 at 2:41 pm
    Permalink

    I agree it’s almost impossible to find a solid way to value a domain name.

    Estibot for me gives me a ‘first stab’ at the animal to see if the domain is alive so to speak. Is it going to be in the hundreds, thousands, tens of thousands or hundreds of thousands range.

    I then look Google and see what the industry is paying for google ads. If it’s an exact match domain, what is the CPC for that word or phrase. People are paying Google for that word – maybe they would prefer to rank a site organically and stop paying for those clicks. Once they get their site to the coveted #1 spot (which is easier with an exact match domain) they’ll get 36% of the traffic @ the current CPC rate x 12 months of traffic (which is usually at least 3x to 10x what I would expect to sell it for).

    So OK I’m not selling SEO services with the domain, so I can’t say they will absolutely get that value, but the chance of getting to #1 and saving yourself that in google advertising costs is quite compelling when you’re negotiating.

    There’s also some great articles out there giving the value of a short memorable name as a domain and how much you might need to spend in advertising to get your other name memorised compared to this new bright shiny short domain name.

    But as to finding a value – as a domainer you have to build your case which will include a mixture of brand value, memorability, ad value and then to some degree, comparative sales (or estibot) however when selling a domain I barely ever mention estibot. I usually want to hit a much higher starting point and for selling, estibot only lowers the bar. 🙂

    If I have to bring in some kind of justification or comparison for their due diligence I’ll show them 10 or so domains that have recently sold (and that list has just been made much prettier) – thanks Ned!).

    Like
    3 people like this.
    • Neddy
      August 27, 2019 at 4:00 pm
      Permalink

      I totally understand and respect your methodology Rudy. I know a few people that do it that way.

      I’ve NEVER used that method – I much prefer comparison / sales evidence, and selling the sizzle / potential.

      Ultimately, if you have something that works for you, that’s terrific.

      • Avatar
        August 27, 2019 at 6:12 pm
        Permalink

        I’ve always been taught to sell the sizzle, not the steak.

        In business ‘the potential’ is the sizzle. comparison/evidence is the steak.

        Like
        Anonymous likes this.
  • Avatar
    August 28, 2019 at 7:22 am
    Permalink

    In my experience as domain investor I concur with you, its true domain names prices are subjective and its depends on how much a buyer willing to pay…😊 probably domain names industry need to be regulated.

    Regarding online appraisals of course there will be sort of discrepancy between those tools as they purely driven by algorithms……… last time I have checked GoDaddy have more than 2.4 million domain names under their management so their database is bigger.

  • Avatar
    August 29, 2019 at 6:10 am
    Permalink

    Some of this thread reads like a revivalist religious convention. People speaking in tongues and whipping themselves into a fervour.

    Like
    Anonymous likes this.
      • Avatar
        August 29, 2019 at 9:28 am
        Permalink

        Absolutely pointless talking about developed sites, some of these were major competitors, eg property.com.au which was 2nd biggest to realestate.com.au back years ago.

        Next people will be talking about how valuable harveynorman.com.au is.

        Like
        2 people like this.
        • Avatar
          August 29, 2019 at 9:57 am
          Permalink

          You mean HN.com.au, which Harvey Norman uses in catalogue and magazine advertising because it is short and memorable and allows them to track visitors from those campaigns?

          Wonder how much Emil wants for Dinosaur.com.au

          Like
          2 people like this.
        • Avatar
          August 29, 2019 at 10:35 am
          Permalink

          Travel.com.au was a loss making business at the time!

          • Avatar
            August 29, 2019 at 10:58 am
            Permalink

            To be fair, Amazon.com sold for billions during the time when it was a loss making business in the first few years of it’s existence. Just because a business is making a loss doesn’t mean the business doesn’t have value. So when Travel.com.au sold for the amount it did, it was the business value, not the domain value. Just my 2c. 🙂

            Like
            Anonymous likes this.
            • Avatar
              August 29, 2019 at 11:31 am
              Permalink

              Pages 58 of https://www.asx.com.au/asxpdf/20080827/pdf/31byfgq7h812jz.pdf

              “Trademark & Brand Names” $14,039,000

              “Domain Name” $216,000 for Travel.com.au

              Dont know how you can separate the trademark/brand from the domain name!

              Like
              4 people like this.
              • Avatar
                August 29, 2019 at 12:16 pm
                Permalink

                The highest known .com.au sale is $400k. Almost as bad a new tld thread where people talk about anything other than actual domain selling prices.

                • Avatar
                  August 29, 2019 at 12:27 pm
                  Permalink

                  Most big sales are usually subject to non-disclosure agreements , everyone knows this.

                  And there are more than 20 .com.au domains that have been made public in the 6-figure range.

                  And Cars.com.au $1.6 million, which you are ignoring.

                  Like
                  4 people like this.
                  • Avatar
                    August 29, 2019 at 12:31 pm
                    Permalink

                    Ah…….the old NDA excuse, another favourite when the lack of sales is all too obvious.

Comments are closed.