Follow Up: What's a Domain Really Worth?

Subscribe to Elliot's BlogI read an interesting blog post written by Tim Berry on Entrepreneur Blog Network. Tim discusses a brief email conversation he had with the owner of who had cold-called him regarding the sale of the domain name. It’s interesting to see Tim’s (and his reader’s) perspectives of domain values vs. my own perspectives.   I was going to comment in his post, but it was fairly long and I decided to respond below.
Just wanted to clear up a couple of misconceptions about domain names.   Just because there isn’t a website, doesn’t mean there isn’t traffic as your reply to the domain owner would indicate – “However, you have no traffic. [Ed. note: He doesn’t. The domain is owned, but there’s no site.]” Direct navigation traffic, where people type their keyword and .com, is one of the most powerful forms of traffic.   Before CNN paid $750,000 (yes, $750,000!) for, there was no website, but some people probably typed-in the domain name.   The name sold for such a high amount because CNN needed it and the previous owner didn’t need the money enough to sell it for less.
Domain names are virtual real estate.   I live in Manhattan, and behind my old building on 34th and 6th (Herald Square), there was a parking garage.   If a developer wanted to buy that space to put up a building for condos, he couldn’t tell the garage owner he would pay him based on a parking revenue multiple if the owner didn’t have a desire to sell.   The developer would have to do a ROI calculation to determine how much he could afford to buy the space for depending on his business plan.   The price he could afford and the price the garage owner would sell it for could be vastly different, but if the developer really wanted or needed that space, he would have to spend the money.
A real world real estate example is that of Donald Trump trying to buy Vera Coking’s home in Atlantic City.   Was her home worth what she was asking?   Probably not, but her reluctance to sell caused Donald Trump to alter his development plans.
Even in the tough economy, domain names continue to sell for record amounts of money. While virtually all other types of investments have seen pretty large decreases, domain values have continued to increase.   An unknown lawyer in Iowa owning a name like would get him much more business than simply using
I am not in the travel or real estate business, but owning and gives me a considerable leg up.   Even before I developed them, they had significant traffic, and it has grown since developing.   Yes, some names like wouldn’t get much direct navigation traffic on their own.   However, after owning and developing it, I’ve seen a considerable increase in traffic and return visits.   It’s much easier to remember than a cutesy web 2.0 domain name like or something like that – and I think Google prefers keyword rich domain names.
In any event, domain names are worth what someone will pay.   Knowing the market (and having a MS in Direct & Interactive Marketing), I would pay $5,000 for right now, so that’s the price floor.   I don’t really have a plan for the name right now, but I think it would make a great site for companies to learn how to perform a SWOT analysis. In this day and age, many brick and mortar companies face a huge weakness in that a competitor’s domain name is the industry defining domain name and it’s difficult to overcome.

Elliot Silver
Elliot Silver
About The Author: Elliot Silver is an Internet entrepreneur and publisher of Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn


  1. Two very interesting views here. I think the crazy thing in the owner’s case is this guy is actively selling the site and asking for that much. In my experience it seems like if someone gets an insane price for a name(that’s not a category killer generic), then it’s due to the fact that they sit there year after year turning down offer after offer until they come across somebody that just has to have that domain. Since he is approaching these people himself, I would not expect he’ll get anywhere near what he asks.
    I agree completely, and I find it frustrating when people approach me, take up my time, and then name a ridiculous price.

  2. Elliot, while i agree with your article, i strongly disagree that you should be frustrated. In the case of physical real estate, the market price is set because there are many players (developers, investors, private equity players, etc, etc, etc) It would be a waste of my time if i owned a commercial building such as a garage, and someone came up with an analysis and said it is worth 10k.. (lets assume the real market value is 15 million)
    However, the problem with domain names is that we shouldn’t assume that non-pros have even a vague idea of the market. The or names are often referenced because they have no idea what they are dealing with.
    Until the industry opens up to a variety of players (PE guys, advertising companies, bankers) we shouldn’t really expect these type of offers to flush out. It has been far too incestual for way too long.

  3. HUH? Did Packers say “incestual”? I believe the domain industry is starting to get it when my “complaint phrases” I made three years ago start appearing in comments by other good domainers who understand the goals we all have to strive for.
    So much to do, but if we put some time and a few dollars aside to email and post our comments like Packers did, and send emails to the ICA to ask for below sea-level pricing to membership for all domainers, maybe we’ll see some growth to educating end users.
    I believe that domainers should seriously review their portfolios, set aside domains for resale that don’t fall into certain niche categories they’re building (get focused!), sell those “outside niche” domains, and hunker down and lock up their niche domains, forcing all domain sellers and buyers to pay end user prices. Sell your car, max out your credit cards, but don’t fall to the “sell now for cheap” urges that the traditional investment world is causing with their problems. Lock up your niche. Hold on. Then FORCE the domain auction sites, both online and live, to take your domains at reserve prices that really determine what an end user would pay (or just whatever price you’re fantasizing about).
    This will force all of us to do what we must to educate the end users… because no domainer is going to pay end-user pricing unless they’re prepared to build out the domain. Remember, I may be even cutting my own throat here, but only the rich domainers can afford to lowball you on your premium domain. Think about it.
    good article, Elliot

  4. Why would somebody ever type ireport in a web browser … ?
    Before CNN paid $750,000 (yes, $750,000!) for, there was no website, but some people probably typed-in the domain name.
    Just why? And, if so, surely not enough to pay that money for that reason!
    There is no such thing as Fair Domain Market Value.
    A market is a defined territory where people pay or don’t pay asking prices for what they want.
    Who doesn’t pay the asking price, usually goes home without purchase of the desired item.
    So simple is that.
    Appraisals usually come from the same people that live from commissions.
    They must sell anyhow, so they must keep prices reasonable for buyers.
    Appraisers, imho, are not interested in sellers viewpoint.
    There are no such things as “OverPricing” and “UnderPricing”.
    Only spiteful opinions from frustrated people.
    Let people pay whatever they want to pay.
    It is very naive to believe that people will not buy something that they really want because it is expensive.
    If there is intention, product and budget, third party advice is usually ignored.

  5. The best sales I’ve had are to buyers who have a specific desire and purpose for acquiring a domain.
    A couple years ago I sold a 2 worder for a client that he had been trying to sell on his own to other domainers and was not getting any significant bids whatsoever. Most offers he had were $1K range.
    I did some research and sourced a mid size corporate end user for him in the focused niche of his keyword and got him a deal done at $75,000. He was blown away to put it mildly and didn’t even believe the deal was real until the wire came in.
    The buyer was in the process of expanding their web brands and this domain fit perfect for one of their projects.
    So the immense value was created by the buyer’s need and desire to have it.
    Thus the secret to doing high value sales isn’t just about the domain itself, it’s all about researching the marketplace and finding the high value buyer(s) that could benefit most by acquiring that domain and then putting the buyer in a position of wanting to buy. Most domainers try to sell their domains for enormous prices on their own and end up spinning their wheels because they don’t understand the core process of this secret, that ultimately it’s the buyer selling himself not you.

  6. Well said Kevin!
    I contacted the owner of this name some time ago about broker the name on there behalf and they were looking for $1 mil so at least they have come down in there expectations a little
    The owner actually owns a few good names but didnt have a clue about pricing the domain they own so I offered to help but never heard anything back from them…
    Look like they are trying it on there own instead of using a broker like me or kevin or rick etc to help them along the way.
    There are people out there with cash to spend on names and is a good but times are hard trying to even close end user sales… Also they own which I think is a better name.

  7. Thanks Elliot, I appreciate the additional take on this topic. In the end, as several people have said, like anything else, a domain name is worth what someone will pay for it. As we see here, though, and in my previous post, it’s hardly a clean orderly market. But then again, these days, neither is any of the more traditional markets (as in AMEX, NASCAC, etc.) either. If it works, it works.

  8. The many ways domains, and businesses, are valued is a complex topic. Would you believe that a company I founded that, after 7 years in business, sold for $1.5M even though we were breaking even? It was a property management company that, when combined with a competing property management company, brought an additional $300,000 PLUS net to the bottom line once both operations were combined. Amazing…but the same things are happening in the domain business today…many common deal points. I think Elliot’s example is valid…

  9. What is a tool ( Domain ) worth?
    1 ton of gold boxt in by a high wall but open roof. 10 guys, 10 shovels and 1 crane.
    The shovels are for free.
    What would the crane be worth to you?


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