So now everyone can clearly see that valuating domains by ppc earnings was silly at best. There was NEVER any correlation though many correlated them anyway. Made no sense then and I wrote about it time and time again. Now it is clear what I meant.
So if you bought a domain on a flawed equation, you have to recalibrate that and find something to base it on that is constant. Or at least in tune with reality.
So folks always ask how do you valuate a domain name? My answer is always at a bare minimum, compare to real world costs. That is a basis. That is a starting point. That is a foundation. That is before you even get to the domain name itself. It does not matter what the domain is, if somebody else wants it, it has value and ost sell way short of what the buyer is willing to pay.
After 15 years of being told I am wrong on everything up and down the line let’s start by saying it was just not understood. Or it was just a little early for the masses to get their heads around. Or maybe I was just right all along and had to be patient for 20 years for everyone to clearly see it.
You decide to open a small store in your town. Every town has different rents and housing prices. If you have prime domains then compare to prime retail space in a big city. If it is off the beaten path, then find out what rents are in a more rural area.
So rent is only the FIRST basis. Then you need at least one employee besides yourself. Even if part time. So let’s say 20 hours a week. You need insurance. You need electric. You need garbage pickup. You’ll need a burglar alarm. You will need to buy shelves and decorate the space so it is useable. You may even have to buy inventory to put on those shelves. (Pictures are much cheaper)
You will need a cleaning service. You will need lots of other “Stuff” that all costs money. Permits, fees, taxes, inspectors, where does it stop?
So a domain is only worth the idea behind the offer. Small idea, small price. Big idea, big price. So while everyone is looking a million ways to valuation, to me, this is where you start. This direction. The discussion.
In “The Social Network” there were some really good scenes. But one I like was the story about 14 trout or one gigantic fish and which one do you get your picture taken with or something like that. With the exception of the “Sting” and the “Cuckoos Nest” and maybe a handful of others, I don’t go to see a movie twice. I will for this one. The trick is to get into the minds of those watching and be a part of their dream.
When I grew up you went to Harvard to become a Doctor or a Lawyer. Are those days over? I believe they are to the degree that the website dream is in forefront of all their other dreams and ambitions. I believe this movie changes the game.
Today, no matter where you are going to school and in nearly every sector, these folks are all thinking what they can develop on the web that will revolutionize their industry, their hobby, their product and they can make a lot of money. This movie not only reinforces that, it gives you a pathway to get there even if it is a loose outline.
The movie the Social Network is simple and powerful. Everything starts with a domain name. And when you get big, it is okay to buy the better domain.
Have a GREAT Day!