How Do You Assess The Value Of A Geo Domain?

Posted by Steve under Domain Appraisals, General on Sunday, January 20th, 2008 1:15 am

***UPDATED***
This has been posted in the Geo Forum for your interaction.

Is it possible for domain industry services to give legit appraisals on domain names? Yesterday, Rick Schwartz went on a tangent about his iReport.com sale, domain valuations, and domain appraisals. This is what he had to say:

(via Rick’s Blog)

Maybe this will blow the lid off all the appraisals services. They are ALL WORTHLESS. Absolutely worthless. Not a single one has a clue. Not a one and SCAM is usually the first thing that comes to mind when I read a worthless appraisal that somebody actually paid for.

I believe it is possible to assess domain values, so long as historical sales have occured in each category or niche that can be used as a measuring tool. Realestate appraisers have been using this same concept for years when giving a valuation to a property. These past sales will help establish an approximate value of a domain name in a category or niche. However, in the end, the price a name sells for will be determined by the end users need and want for the domain. Supply and demand will increase the value of a domain overnight, as experienced with iReport.com.

So how do we assess the value of a Geo domain? These are different than regular domains once you truly understand the impact they have, if developed. I have started to build a historical Geo Tracker for sales that have occured to help determine geo values as the industry matures. I would like to publish some sort of standard for geopreneurs to use to assess the value of their Geo domains.

What do you think are the essential fundamentals to assess an approximate value on a Geo domain? I need your help to establish a living valuation tool to assist geopreneurs as the industry matures.

Please submit your comments on this subject, good or bad. You will not be judged on your opinions.

Thanks!

9 Responses to “How Do You Assess The Value Of A Geo Domain?”

David J Castello Says:
January 20th, 2008 at 04:23 am
The most important factor in determining the value of an undeveloped name is the number of type-in traffic (Direct Navigation). Nothing is more important.

Rick’s iReport.com was an exception to the rule because CNN needed the name for an already successful show. In other words, buying names like iReport.com is like gambling on an unseen poker hand. In Rick’s case, he pulled a Royal Flush.

The most important factor in determining the value of a developed name is a mixture of revenue generation (present and potential) and traffic.

One of the worst measures of value is the length of the domain name (how many letters). According to that mentality, our Eel.com would be worth more than our Nashville.com. I assure you it is not.
Rich Says:
January 20th, 2008 at 08:11 am
Wow – such a complex question…

For example, lets assume there is the domain, east.com.

it’s short, easy to type, remember – massively brandable, enormously generic… where do you begin with a name like east.com?

What would that be worth compared to say west.com, or north.com…

I’d say east.com is worth more than porn.com – another 4 letter generic, but long term – east.com has virtually unlimited appeal?

… or is that just my way of thinking?

east, west, porn… They’re certainly not all worth the same. And what about east.net? I think east.org is better – but how do you asses that?

And how does that relate to newyork.com – which is better? east.com (shorter, more generic – unlimited appeal) or newyork.com? fully targetted.

What about Californiahomes.com? That’s another category altogether, or texasaccountant, or ….

Where do you begin?

It’s a big question mate – I think step one would be to break it down, like locality.com is different to localityprofession.com

Taking locality as a factor… we then need a metric to estimate the value of that locality – like GDP * (GNP*Local Population/National Population) … for example??

Then some estimate of the value of that profession – like number of local businesses? ….

… also tourism is a major factor…

… are there any economists listening???

I think this could be a great topic to get people engaged in the forum???

Excellent question. I don’t know???

-rich
Charles Says:
January 20th, 2008 at 09:05 am
Population, primary language, per capita income of inhabitants, tourist numbers and political situation are probably the main deciding factors on the worth of Geo domains.

For instance, Zimbabwe.com sold recently – a whole country GEO domain which sold for less than the worth of some USA city domains.

I think Geo domains are some of the easiest to put a price on as there are more objective properties attached to them, whereas a lot of domains are far too subjective, which is why appraisal firms basically appear as scammers.

A historic database of geo domain sales/purchases would be good. It should let you filter (or be separate tables) between those which are country (e.g. france.com), city/town (e.g. glasgow.com) and “thing-in-city” (e.g. newyorkdentists.com).

- Charles
David J Castello Says:
January 20th, 2008 at 13:41 pm
Unlike traditional media that catered mostly to the locals, local population is (presently) not the deciding factor in determining the value of a GeoDomain. PalmSprings.com only has 47,000 people, but the name Palm Springs” is known worldwide and that is why it generates so much revenue and type-in traffic. Presently, public positive recognition of a city, town, state or country has much more value.

However, as GeoDomain owners learn to better monetize local traffic the population factor will become much more relevant.
MarkP Says:
January 20th, 2008 at 13:42 pm
Steve,
A timely question – this weekend I’m working on pricing my inventory of domains.

My strategy is to build a pricing matrix that takes into account the information listed below. This is easier said than done.

Detailed market and demographic data can be purchased for every city, town, state, business, market, industry, etc. But, compiling that data and running domains against a complex set of ‘pricing rules’ is complicated and expensive.

Another important factor – how motivated are the buyer and/or seller? I’m sure Rick Schwartz could have sold ireport.com many times in the last decade, but he was extremely patient and waited for the “perfect storm” to create “a pretty big payday”. The motivation of the parties is critical, but it is difficult to factor motivation in to a pricing formula.

Assuming we are working with a high quality, geo (city) + keyword, .com, no numbers or symbols, this is what I’m looking at:

1. Population – Taking into account that some smaller cities are suburbs of larger cities and should be priced in accordance with the larger city.

2. Transaction and lead value – In industries where new customers are worth more, the domain is worth more. BostonRealEstate.com is worth a lot more than BostonTan.com – simply put, there is a lot more money in real estate than tanning.

3. Type-in traffic – See David’s comments above.

4. Domain length – This is important, but I think slightly less so than we see in traditional domain valuations. Geo domains, by their nature, are longer than non geo domains and some big city names are longer than some small city names. I’m looking at word count more than at letter count – the fewer words the better. Assuming no excess descriptive words, population and transaction value trump length.

5. Comparables – Comparables are important, but difficult. There are a limited number of reported geo sales and the data is likely skewed by the fact that DNJournal reports primarily sales above $2,000. Watching the drops and buying my own domains, I know that this doesn’t cover the vast majority of geo/keyword domain sales. More importantly, we don’t know enough about the transactions that are reported. Have the buyers been end users, or domainers? BoiseIdaho.com sold last year to a real estate broker for $175,000 – how much would you or I have paid?

These five factors are the key things I’m looking at in trying to establish my pricing matrix. It certainly isn’t a perfect science. On one hand, I don’t want to be too low and leave money on the table. On the other hand, I don’t want to scare off potential customers with prices that are over the top. I DO want to sell some domains to end user every month.

I look forward to seeing Geo Tracker develop. Thanks for the blog, I’m reading and lurking everyday.

Enough, I need to go pack for DOMAINfest, my flight leaves at 6:00 am!

Mark Powell
GeoBroker.com
tim davids Says:
January 21st, 2008 at 09:59 am
marks pretty much nails it…I always give extra credit for tourism which can outweigh local population many times
jeff schneider Says:
January 21st, 2008 at 22:28 pm
I happen to agree with Rick Schwartz. The value of a domain name or any letter comprised word is 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.
Tommy Butler Says:
January 22nd, 2008 at 04:00 am
Yes i agree with what Rick said
I have never had a name valued in my life.
in other words your the expert and what you do and your going to allow someone else to value your name there own system.
Bollocks. people who value your names dont have a clue as to what they are doing.

You have to remember that every name is unique.
and every geo name is special to its own field.
now lets see as sample
our now Glasgowshops.co.uk you would value that name lets say $300 if your lucky. Yes i know its a .co.uk.
now here is the stats for that site for last year.
glasgowshops.co.uk ip addresses 16559 page views 2284792
now after looking at the stats what price would you put on it now.
names like denverrealestate.com and denverdoctors will always get natural traffic if you have google addwords and even one business paying you say $40.00 a month you have covered your costs 1000 times over and rest profit
Mark Hoult Says:
November 27th, 2008 at 07:34 am
Many common geo names are shared by many places all over the world, as well as companies – examples like Avon, Aberdeen, Bedford, Berkshire, Borders, Brighton etc etc. In cases like this the geo.com is being used for a non-geo purpose and is unlikely to be resold.

I think in such circumstances pure place name geos with non .com extensions have an improved chance of succeeding in search #once developed#.

The .net .org .us or .co.uk has a good chance of competing in such circumstances – maybe even .infos in the future too.

So the competition and existing use of similar geo names should also be a factor in long term valuation.

Thoughts, anyone?

About

Welcome to the Official Geo Domain Industry Blog. My name is Steve Morales and I am the Founder and CEO of the SimplyGeo.com LLC Network. Our goal is to develop a premier Geo Network for professionals to learn and build their geo domain assets into profitable platforms.