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Buyers' guide to pricing a domain name |
Domain name prices are all over the place. That's the reality. So the most important thing to consider for a propective domain name buyer is, "what's the domain name worth to me?" Once you've worked that out then you can determine the maximum price that you're willing to pay. Only then should you try to estimate the theoretical market price for the name in order to come up with a reasonable initial offer price.
Determining your value
How much a domain name is worth to you depends on your reason for wanting to own it. Is it for strategic reasons... to launch a new product or website... to profit from type in traffic or existing search engine links... or speculation that you'll be able to sell it again for a higher price?
Buying for strategic reasons
There's no set formula for pricing a domain name on these grounds and a lot of subjective input will be required. Think about the value of added business the domain name could provide or the potential loss of business that could occur if a competitor were to obtain it.
Buying to profit from traffic
Domain names can sell for between 10 months and 10 years worth of PPC income that can be generated from type-ins or existing search engine links. The problem is coming up with a reasonable estimate of the amount of traffic to expect, and where it comes from. If you're able to obtain server logs from the seller then that would definetly help, but don't push your luck! Try searching for traffic statistics of similar domain names in order to get an approximation and estimate the cost-per-click using tools such as Yahoo's View Bids Tool. If you think a doman name is likely to get 1000 hits per month and ads in that industry go for around $40 CPM (cost per thousand impressions) then you'll need to value the domain name at somewhere between $400 and $4800. Investigate:
- number of links in SERPs
- number of searches for related terms
- expected number of type-ins
- general value of PPC clicks for the industry
Buying to sell it on again
Once you've bought the domain name your potential buyers will be end-users looking to develop a new website or other domainers looking to profit from PPC or speculation. Unless you're lucky enough to make your purchase for bargain basement prices, the profit potential of selling to other domainers isn't likely to be very high, meaning that you'll need to look for brandable, marketable names that don't infringe on existing trademarks. Also consider things such as
- the length of the domain name
- the extension (.co.nz or .com are generally much more valuable than other extensions)
- industry strength and growth prospects
- trendiness
Pricing the initial offer
Once you've determined the value to you of the doman name it helps to identify what type of person or company the owner of domain name is before approaching them with an initial offer.
If the owner is an investor/speculator
The owner is likely to know the domaining business and isn't likely to respond to low offers. The good news is that these people are generally looking to sell their domain names so if you're looking to buy as an end-user you should be able to meet at an agreeable price. Start by offering about 1/3 to 1/2 of your maximum price but at least $500 if it's for a .co.nz and at least $1000 if it's short or catchy.
If the owner is an organisation operating business website
You might have trouble getting these people to sell, no matter what your price is. Offer at least 1/2 of your maximum price and preferably do it in a business-like manner or through an accountant.
If the owner is a hobbyist
The owner has likely put in a lot of their own time developing a website under the domain and they aren't likely to be happy about being offered a low price. However since they're probably operating on a low budget it might be possible to convince them to set up on a new domain if you promise to link to their new website, in which case an offer of $500 to $2000 might do the trick.
If the owner is an individual with only a basic website up
Here you've got some more flexibility. Offer between 20% and 50% of your maximum price but at least $200. If you're lucky you'll get a cheap deal, but be prepared to negotiate higher in case they've got an emotional attachment to the domain name.
General pricing remarks
Here are some very general pricing expectations for New Zealand domain names.
- Actual prices may vary by 10% to 1000%!
- Expect to pay more if the domain name has a special meaning or value (e.g. newzealand.co.nz is way off this scale!)
- Expect to pay more if there is an existing successful website or the domain name is in a profitable niche (like finance,
healthcare, travel, etc.)
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