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APPRAISING YOUR BRAND DOMAINS

Domainers are always wondering if a domain they bought will be the “killer brand” for some major venture capital project or even a new product or service of a large corporation. A domainer with a “common brand attractor” prefix or suffix, like “super” or “smart” or “power” and other well-known magnet terms before their domain subjects hope that some company, somewhere, will knock on their door and offer them a million dollars for the domain.

Without going into the reverse-hijacking problem, let’s talk about buying domain names by brand or generic description. If you buy a domain name that has a “brandable” identity, (let’s take one of my domains, “superdryer.com”) and try to place a value on it, you’ll be stuck until you get a viable offer from a powerful entity that needs the domain. The questions you have to ask yourself about evaluating the domain BEFORE that happens are as follows:

1) How badly does the company need your domain to complete their marketing control of their product/service online?

2) Even though the domain gets little or no traffic now, how can you evaluate the domain UNTIL you get an inquiry by a feasible corporate buyer that needs the domain? If direct navigation (name direction) isn’t pimping out the cash on the domain, then you should get rid of it at any profit margin, right?

3) How should you consider the fact that you may be hanging on to the domain for a long time until another buyer comes along? Wouldn’t it just be better to sell at whatever the interested party is offering and be done with it?

What to do? Should you just list the domain everywhere as “Make Offer”? What if you want to put the domain up for auction, although clearly the domain is a brand that needs to be marketable and doesn’t stand on its traffic revenue for its value?

The answers lie somewhere in the middle. First, you need to keep track on any interested offers. How many are you getting per year? You need to assess each of the potential buyers. How big is their company? How many other companies can compete and will compete with them to obtain this domain? How strongly does the domain name describe the product/service that the buyer is selling? The most important decision about selling a brandable domain that combines a description of a product/service is assessing the overall financial capabilities of the buyer, then making a BIN offer to them, leaving a “make an offer” caveat so they can tell you what amount they are thinking.

You should consider making the sale for at least 75% of your BIN or four times their offer (if their first offer is at least 20% of your BIN). It’s a hard call to make, but consider how many other buyers you anticipate in the next year or two, how big the offer is, and what you can do with that solid cash in your hand from one domain. Remember, that domain was a property you really had no idea how much it was worth until someone interested in that property MADE an offer for it. Since the appraisal equation is incomplete on “brandable” domains until someone makes an offer (or more than one company make an offer), it’s best to list the domain as a “make offer” and not put it up for auction, unless you need money and you put up a significant reserve amount, in the $25k - $50k range.

The logic in selling a branding domain is based entirely on NEED, the ASSESSMENT of that NEED, and the FINANCIAL RESOURCES available to satisfy that NEED by purchasing the domain. Remember that. So if you own a funny weird domain name that is easily pronounced and whimsical, such as “Klood.com” (sorry, I’m pumping my own domains here), it’s best to wait until someone contacts you with an offer. Find out who the person is and who they represent, and what the domain will be used for. Then counter with a slam bang amount if they have a new product/service coming out that your domain represents. Be careful of reverse hijacking attempts.

Appraising a domain name that is considered more of a brand, not a big traffic generator, but has that “it” factor is a topsy turvy process that takes focused analysis and smart consideration of what that domain is going to sell for your potential buyer.