Determining value of domain names and/or websites or web businesses is really not that difficult. As the old saying goes, “price is determined by what a willing, informed buyer is willing to pay and what a willing informed seller is willing to sell for. Other factors to consider include; demand, supply, estimated income, risk, and desirability. A recent example of determining value is the discussion of the sale of the Los Angeles Clippers basketball team. One firm estimated the value at $500 million, another stated $750 million and because of demand the price could go over $1 billion. A general rule of thumb to determine value for domain names and websites is to estimate the annual revenues x 1.5.
Determine last 12 months of revenues x 3
How much is a domain name worth?
Realistically a domain name can be worth any amount but most quality domain names sell for around $5,000 to $20,000 – premium domains, category killers and short domains however can easily command $100,000 or millions depending on a wide number of reasons. But let’s not talk about the value of individual domains per se but how a domain name compares to the cost and value of traditional media. Let’s put a $10,000 domain in perspective to traditional media.
Billboard Advertising
Billboard Advertising is some of the most expensive advertising around. In New York City, for example, a rotary bulletin can cost you anywhere from $35,000 to over $600,000 a WEEK according to Clear Channel’s online rate card.
Mobile Advertising
You know that advertising billboard which is essentially carried around on the back of a truck and drives around all day? $20,000 a month if you want to advertise in the Atlanta Market (although fuel cost is included)
Radio Advertising
Even radio ads can cost around $200 average per spot and you need at least a handful a day to make any dent in attracting business… total monthly estimated cost $30,000 or more.
Now the question is what do you own after the 30 day period for the traditional media sources above?
Nothing.
If you spend $10,000 on a domain name your only future expenses are the $8 a year in registration fees – not even $8 a month … actually less than $1 a month.
Of course there are other expenses such as building a website and SEO but all of these expenses are costs which go directly to building value to something you own – not airtime or billboard space you are leasing!
There are also intangible factors like authority which domain names have that traditional media can never compare to. Imagine owning a domain like govote.com or compareautoinsurance.com – Domains like these are intuitive by description and define your role as an authority on the subject and domains like this are commonly available instead of spending millions of dollars on the super premiums like vote.com or autoinsurance.com
Many domains can command $1,000,000 or more even in a fire sale however the amount of great domains still available at cost well below annual traditional media cost for only a SINGLE portion of your overall marketing plan is practically unlimited.
The real question is not how much a domain name costs but how much value the right domain name can bring to your business.