Valuation is in the eye of the beholder.

Morning folks!!


I have been very tough on appraisal services because I don't see
any that are truly qualified. I have blogged about appraisals several times.
And let me say, that appraising a domain and figuring value is a very difficult
thing. It is difficult because each domain is completely unique. Some domains
may be one dimensional while others may have many facets and are adaptable to
many companies, industries or promotions. It is difficult when you don't
know who the actual appraiser is. Do they appraise high? Do they appraise low?
Are they completely educated about domains? So a lot of
'Transparency' needs to happen here as well.


I tried an experiment and had 21 professional domain owners that I
know personally give their best shot on putting a value on 5 of my domains.
From a group of elite individuals like this it is possible to see a
picture develop and market price. I removed the names to protect their privacy.
I provided no stats whatsoever. But the numbers are the numbers and this was
done in a thoughtful manner. When I look at something like this I generally
throw out the high numbers and I throw out the low numbers. I try to focus on
the common numbers. In over 12 years on the net this was the first time I had
ever asked others for a valuation for valuations sake. See if a picture
develops for you.


Appraisal #1
Widgets.com - $350,000 - $500,000
Girls.net - $75,000 - $90,000
Candy.com - $3,000,000 - $4,000,000
Cheapest.com - $100,000 - $150,000
DailyVideo.com - $10,000 - $15,000
Appraisal #2
Widgets.com - $500K. I love this name for dev/branding/web 2.0
Girls.net - $250K. Would want to see what the .com is doing.
Candy.com - $1.5mm. Awesome premium generic. Enough said.
Cheapest.com - $50K. Not a big fan despite one word. Lots of substitutes.
DailyVideo.com - $25K. Same as above.
Appraisal #3
Widgets.com > no idea.
Girls.net > 2% of Girls.com ($4Million) $80,000
Candy.com > $2 Million.
Cheapest.com > $75K.
DailyVideo.com > $10K
Appraisal #4
Widgets.com - $400k
Girls.net - $75k
Candy.com - $3M
Cheapest.com - $60k
DailyVideo.com - $30k
Appraisal #5
Widgets.com - $1M
Girls.net - $50k
Candy.com - $2M
Cheapest.com - $100k
DailyVideo.com - $10k
Appraisal #6
Widgets.com $5,000,000.
Girls.net $ 125,000.
Candy.com $7,500,000.
Cheapest.com $ 200,000.
DailyVideo.com $ 100,000
Appraisal #7
Widgets.com - $150,000
Girls.net - $30,000
Candy.com - $3,000,000
Cheapest.com - $400,000
DailyVideo.com - $10,000
Appraisal #8
Widgets.com - $250,000
Girls.net - $35,000
Candy.com - $1,400,000
Cheapest.com - $3,000
DailyVideo.com - $2,500
Appraisal #9
Widgets.com - $10,000,000
Girls.net - $500,000
Candy.com - $5,000,000
Cheapest.com - $100,000
DailyVideo.com - $100,000
Appraisal #10
Widgets.com $1m
Girls.net $100K
Candy.com $2M
Cheapest.com $150K
DailyVideo.com $20K
Appraisal #11
End User Numbers
Widgets.com $2M
Girls.net $250K
Candy.com $4.5M
Cheapest.com $1M
DailyVideo.com $40K
Appraisal #12
Widgets.com $750,000
Girls.net $185,000
Candy.com $2,500,000
Cheapest.com $275,000
DailyVideo.com $25,000
Appraisal #13
domain - market value-end user value
Widgets.com - $225,000-$250,000
Girls.net - $40,000-$65,000
Candy.com - $800,000-$1,800,000
Cheapest.com - $75,000-$350,000
DailyVideo.com - $12,500-$35,000
Appraisal #14
domain - market value-end user
Widgets.com - $400,000-600,000
Girls.net - $10,000-15,000
Candy.com - $3,000,000-5,000,000
Cheapest.com - $35,000-50,000
DailyVideo.com - $10,000-15,000
Appraisal #15
Widgets.com - $500K
Girls.net - $100K
Candy.com - $5M
Cheapest.com - $350K
DailyVideo.com - $50K
Assumes motivated end user in right place at the right time with the right
resources.
Appraisal #16
Widgets.com
Wholesale Level 1 - $100K - $250K
Wholesale Level 2 - $250K - $500K
Retail Level 1 - $500K - $1M
Retail Level 2 - $1M - $2M 


Girls.net
Wholesale Level 1 - $50K - $75K
Wholesale Level 2 - $75K - $150K
Retail Level 1 - $150K - $250K
Retail Level 2 - $250K - $500K


Candy.com
Wholesale Level 1 - $250K - $500K
Wholesale Level 2 - $500K - $1M
Retail Level 1 - $1M - $2M
Retail Level 2 - $2M - $5M


Cheapest.com
Wholesale Level 1 - $35K - $50K
Wholesale Level 2 - $50K - $100K
Retail Level 1 - $100K - $200K
Retail Level 2 - $200K - $500K
Ultimate Dream - Perfect name for a price comparison site. Strategy would be
the entrepreneur needing a dream style domain for capital tool purposes.
DailyVideo.com
Wholesale Level 1 - $2,500 - $5K
Wholesale Level 2 - $5K - $25K
Retail Level 1 - $25K - $50K
Retail Level 2 - $50K - $75K
Appraisal #17
Widgets.com -- $700,000
Girls.net -- $80,000
Candy.com -- $1,500,000
Cheapest.com -- $50,000
DailyVideo.com -- $15,000
Appraisal #18
Widgets.com 130,000
Girls.net 45,000
Candy.com 1,300,000
Cheapest.com 40,000
DailyVideo.com 10,000
Mostly on the 'Wholesale/Investor' side IMO -
Appraisal #19
Widgets.com - $350K
Girls.net - $50K
Candy.com - $2M
Cheapest.com - $1M
DailyVideo.com - $25K
Appraisal #20
domain - market value-end user
Widgets.com -$550,000- $1,300,000
Girls.net - $70,000- $135,000
Candy.com - $600,000-$1,750,000
Cheapest.com - $95,000-$125,000
DailyVideo.com - $25,000-$45,000
Appraisal #21
Widgets.com -- $1M
Girls.net -- $200k
Candy.com -- $1.2M
Cheapest.com -- $2.8M
DailyVideo.com -- $500k



Moniker professional and paid Appraisal
Widgets.com -- $227,300
Girls.net -- $81,900
Candy.com -- $2,237,400
Cheapest.com -- $146,800
DailyVideo.com -- $23,700


What does it all mean? I don't know. That’s for you to comment on.
While the Moniker appraisals were in line with many of the others, I would not
sell at the appraised levels if I got those offers today.   


Have a GREAT day!
Rick Schwartz


UPDATE. The following numbers have been provided by Bob Connor. Special thanks for taking the time to crunch some interesting numbers:


Here are the averages, medians (mid points), and standard deviations
(measure of how much variability) for appraisals for each of the
domains.


Widgets.com:
Average =      $1,247,348
Median =         $500,000
Std. Dev =     $2,210,824
Girls.net:
Average =        $119,452
Median =          $81,900
Std. Dev =       $105,250
Candy.com:
Average =      $2,580,974
Median =       $2,000,000
Std. Dev =     $1,635,693
Cheapest.com:
Average =        $323,948
Median =         $130,000
Std. Dev =       $589,405
DailyVideo.com:
Average =         $48,670
Median =          $23,700
Std. Dev =        $99,436






15 thoughts on “Valuation is in the eye of the beholder.

  1. Jerril

    Hi Rick;
    Since 1997 I have had numerous Domains in my Portfolio appraised by”So Called” Professional Appraisal Companies. To date, I have only wasted money for these Appraisals! I totally agree with you that the value of a Domain is in the”Eye of the Beholder”.
    Regards,
    Jerril

    Reply
  2. Kevin

    I think what this experiment proves more than anything else Rick is that there is no set in stone value that can be placed on any type of domain, be it an ultra high end domain like Candy.com or a lower ranking 2 word domain like DailyVideo.com.
    Here you had 22 of the top folks in the industry, including a couple of us who actually provide appraisal services as a part of our professional business services, and who evaluate domains 24/7, and yet as the numbers clearly show not a single domain had a consensus, and the disparity in opinions was remarkable and significant.
    The other thing that surprised me was that my appraisals (#16’s) appears to be the only one that took into consideration the proven fact that a domain is worth less or more depending on which marketplace you are selling it in, wholesale (i.e. fellow domainers mostly) or retail (i.e. end users or non-industry buyers). There is a distinct pricing difference in play between the two primary markets, and then usually two further distinct subset pricing points within
    the primary ranges which is why I typically do a 4 point evaluation per domain, wholesale level 1, wholesale level 2, retail level 1 and retail level 2.
    Ultimately the conclusion I see from the experiment is that appraisals are useful only for general price guidance and should never be looked at as a precise valuation methodology.
    The old adage has proven itself that a domain, like any other financial asset, is worth whatever someone is willing to pay for it, however more importantly, it’s value is truly most dependent on the selling and marketing abilities of the seller himself or the seller’s broker to realize the highest price possible.
    This also leads to another important point that many domainers have a hard time acknowledging, because I see so many trying to value and sell domains themselves, who don’t have the slightest idea how to really value nor”sell” a domain. Valuing and selling anything for its highest price possible is an artform, it is a science, often more about selling itself than what you are actually selling. People often laugh at salesman, for example, like the kind you see on late night TV pitching used cars for sale, but these guys are pro closers. They know how to work it, and work it good. They understand the psychology of the sale and the buyers. They understand how far they can push a buyer without pushing them off their lots and losing a sale. They understand how to make something common look incredibly special and valueable, how to ask closing questions and how to close a deal.
    So the lesson to be learned is it’s not necessarily the inherent value of the domain itself that is important and the deciding factor of what price a domain is worth, but rather the abilities and skills of the seller to sell, market and get a deal for a domain that will determine its maket value.
    This is why, you, I and others who have done the Million Dollar Domain Deals, have accomplished these not so much for the domains themselves, but due to our strong lifetime learned skills in sales and marketing. And thus we may conclude the real secret is not the old adage”whatever someone is willing to pay for it”, but”whatever someone is ABLE to get someone to pay for it”. That is THE SECRET!

    Reply
  3. Jeff Schneider

    I happen to agree with you Rick Schwartz. The value of a domain name or any letter comprised word is largely due to the emotions they trigger in a buyer. ” Beauty is in the eye of the beholder ”
    There are many different ways that domains can be looked upon when it comes to value. Many three letter words have absolutely no traffic value but are worth lots of money. I get tired of hearing about how traffic is the only way to add value to a domain names worth. Some of the most valuable trademarked names on the planet are not traffic names.
    Take for example my favorite holding USeBiz.com, It has six letters and yet when you take all the letters and break them down this six letter .com name has 8 meanings. which one of those eight meanings will a buyer fall in love with?
    It could be looked at as a geodomain from the stand point that US is definitely a geographical destination, and e-Biz can be the e-business service sector!
    My point being: Words are tremendously complex, and can elicit many meanings and values. I personally think, and always have that words are too complex to fit any valuation formula. Domain names are words followed by an extension.

    Reply
  4. We Are Dynasty

    Rick,
    In a previous blog post, you said that domain appraisals are”ALL Worthless”. That was a strong stance and personally I love it!
    With this current post, sounds like you have”softened’ up a lot. So what happened from”All Worthless” to”in the eye of the beholder”? That’s quite a change. Why the change of heart?
    Response by RS:
    Thanks for the comment. No change of heart. I said in an earlier post that a real valuation if you could get one would have to be by committee. This was an experiment. My remarks are aimed at those that charge for the service. However Moniker did surprise me with an appraisal that seemed pretty much in line. Bottom line however is that each domain is unique. A unique asset. Therefore the only 2 people that can really set a valuation is the ones selling and the one buying. The question is what is the value to THEM.

    Reply
  5. YourFan

    Almost looks like Moniker knew these appraisals before! I am curiuos to know which one you took first.
    thanks,
    YourFan.

    Reply
  6. Alex

    Rick said;…..”What does it all mean? I don’t know”
    Exactly, You’re spot on. On one hand it shows that we have an industry developing which is good. On the other hand the lack of precision on the pricing reflects that we are in the early stages of this industry. This is a HUGE positive for domain owners.

    Reply
  7. Adi

    I aggre with you. Yes, domain can have value if purchase. And who really want to purchase. Just like a nostradamus i think.

    Reply
  8. Steven Emery

    “Failure is my Tuition” famous plumber quote
    I think its great that experts are throwing out some numbers now. So i decided to throw out some of mine. I wait to see the day domain portfolio owners open up there domains for the world to see. The greatest strategic multichannel domain portfolio will instantly rise to the top of the internet food chain. Who owns this portfolio? Does it exist? How many domains do they have? 10-100-1000-200,000? What number do the experts think it would take to have the greatest strategic multichannel domain portfolio? We have yet to see this killer strategic multichannel content distribution network. My guess is it busts out this year.

    Reply
  9. Robbie Ferguson

    Hi Rick,
    Totally agree with you, I own only a few hundred names and have looked at getting them appraised but no matter what they say I shall probally expect more than the valutation. Example – I owned hardrock-cafe.co.uk – I bought it as i thought this has got to be worth at least a thousand dollars and only costing me $10. In the end hardrock threaten to sue me and got it for $500 dollars. When I spoke to an appraisal site they said it would be worth at least five times that. I recently bought recyclemy.tv which I emailed you about and asked your comments recently which where gratly recieved, I’ll be lucky to get $500 for it but if some large corperation thinks about buying this it could be worth millions well in my eyes.
    I know that dotcom is the top reseller and can make lots of cash but it all depends on what there company is willing to pay and how much it means to them i.e. three.co.uk was sold to Hutchenson Telecom for £100,000 GBP around $200,000 US Dollars why because they wanted it.
    Regards Robbie

    Reply
  10. Jeff Schneider

    Hello Steven Emery!
    Interesting you should mention a Multichannel Domain Portfolio! Come to think of it you just gave my website its definition. Thank You I am Gratefull to you Steven Emery.
    Gratefully, Jeff Schneider

    Reply
  11. Everett Peacock

    Is there anyone out there who brokers domains for traffic or sale? Appraisal companies don’t do much, and all the successful types don’t seem to be into that business.

    Reply
  12. Farid Mammadov

    Hi Rick,
    Nice article.
    I have a proposal, which I think will be supported by the most of players.
    If I had done some research and registered the domain name, why have I to sell it for regfee or regfee+some cents. Why do not we value our job?
    My proposal is that if the name registered, its minimum price should be set at 100$ (I mean .com only). Each year of domain will cost another 100$.
    So, if I own 5 years some name.com, its minimum price will be 500$.
    The end price for this name.com will be what the buyer wants to pay plus 500$.
    I would like to get your oppinion on this.

    Reply
  13. Successclick

    Hi Rick,
    I wish you would have contacted me for the appraisals of your domains. After appraising over 30,000 domain names for a variety of well-known domain companies and individuals (for as little as $1 a piece), my eyeballs are pretty good for giving the domain owner an idea of the domain’s POSSIBLE value.
    In other words, I never appraise at the maximum, only the MINIMUM of what not to sell your domain less than. So let’s take Candy.com. I am evaluating it for you right now. It takes me 15 seconds. $2 million minimum value. Do NOT sell this domain for less than that.
    The secret in domain appraisals isn’t in making the domain owner get the fuzzy willies on thinking their domain is worth a ton of money, it’s in giving the domain owner an expectation of its value and not to sell the domain for less than that expectation. There’s a big difference.
    Domain appraisals by me deal with minimums, not maximums, and even though there can be disagreements about those minimums, the reality is that at some point, those minimum priced appraisals will reach maturity at some point in the near future. The big question is”when”.
    Anyway, kudos on a great post and commentary on domain appraisals. (Oh yes, and congrats on your ireport.com sale, you dang lucky domain doggie! You must have a band of domain angels hovering over your head)
    much more success and joy to you,
    Stephen Douglas

    Reply
  14. Michael Gilmour

    Great article!
    I’ve just started exploring the whole valuation myth on my own blog. It’s a relatively new area to me as I have mainly concentrated on traffic domains. The challenge that I find is not valuing a domain like candy.com whichyou end up setting a”mental reserve” price for but trying to value the mass of other domains.
    That’s the direction I’m trying to take right now. This was sparked off by a customer that has over 30,000 reasonable quality domains that they are wanting to sell and they asked me what they are worth. If anyone wants to give me a hand then just let me know :-)

    Reply

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