Pricing a domain for sale

RJM62

RJM62

Touchdown! Greaser!
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Geek on the Hill
I have a site that generates about $4,000.00 a year in ad revenues, and increases a bit every year. The domain name was appraised at (I think) $4,300.00 about five years ago, by a company that's no longer in business.

This morning I received an email from a broker who wants the domain and is willing to pay "50 to 65 percent of valuation" by Sedo (with whom I have an account) or some other outfit (with whom I don't).

I replied by telling him that the domain is active, and site sitting on the domain consistently makes money. So although I'd be happy to have it reappraised by Sedo if he likes, my offer would be based on its revenue history and anticipated earnings rather than the valuation.

So tell me, does anyone have any thoughts about how to price a domain that's active and making money? (He's not interested in the site, only the name.)

Thanks,

Rich
 
RJM62 said:
I have a site that generates about $4,000.00 a year in ad revenues, and increases a bit every year. The domain name was appraised at (I think) $4,300.00 about five years ago, by a company that's no longer in business.

This morning I received an email from a broker who wants the domain and is willing to pay "50 to 65 percent of valuation" by Sedo (with whom I have an account) or some other outfit (with whom I don't).

I replied by telling him that the domain is active, and site sitting on the domain consistently makes money. So although I'd be happy to have it reappraised by Sedo if he likes, my offer would be based on its revenue history and anticipated earnings rather than the valuation.

So tell me, does anyone have any thoughts about how to price a domain that's active and making money? (He's not interested in the site, only the name.)

Thanks,

Rich
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Personally, I would take the yearly income from the site, multiply it by 5 (the likely amount of years you'd have left before the money started to decline), and knock off a few thousand, just to make it marketable.

If they really want the domain, they'll do it.
 
I don't have any experience but the way I would look at it is:

I have a site that is set up and bring in a constant income stream. If I sell the domain name, my choices are to shut it down, or move it to another domain and build its traffic back up.

Now if he has a prominent link on the new site to your site it would help.

I would value the domain name based on the income I would expect to loose and the work it would take to rebuild it. I know just changing the domain name is not much work.

Joe
 
Areeda said:
I don't have any experience but the way I would look at it is:

I have a site that is set up and bring in a constant income stream. If I sell the domain name, my choices are to shut it down, or move it to another domain and build its traffic back up.

Now if he has a prominent link on the new site to your site it would help.

I would value the domain name based on the income I would expect to loose and the work it would take to rebuild it. I know just changing the domain name is not much work.

Joe
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It is possible that the ad revenue is because of the domain name -- and losing that domain might lose the revenue forever.
 
RJM62 said:
So tell me, does anyone have any thoughts about how to price a domain? (He's not interested in the site, only the name.)

Thanks,

Rich
Click to expand...

Funny story but fits the thread:

Back around 2003 I secured www.DistinctiveViews.com from GoDaddy. I didn't do much with it during the mustering-out period(and after) of selling my camera store. Some time in 2004 I received a telephone call from a fellow who wanted to know if I'd be interested in selling my domain. Not aware of such transactions I screened the call by being "just an employee of its owner, so you'll have to call back and talk to him."

The danger part was that my domain had pretty much expired(notification had arrived of 'pending') and I hadn't done anything about it. So I called GoDaddy and re-upped it for several years.

Then I learned that there's an old and successful company which is well-known in Texas, Distinctive Views. If there's anything to do with window treatments, they do it. Apparently, the owners had decided it was time to have a Web site built; hence, get a domain. Naturally, www.DistinctiveViews.com would be applicable. But it was already taken.
If one is to look at http://www.DistinctiveView.com (note the singular Distinctive) it's quite the operation.

Addendum, after my 2 edits: Information used to be that the windows company went back some 30 years. Now it appears to be a small organization. Perhaps the original company sold out to one of the "Blinds" organizations with national franchises. When I brought up the referenced URL it notes it as being "Parked." I just don't know about these cyber happenings. :o)

A Web designer whose office was just across the corridor from my camera store told me that I was lucky because the timing of my pending expiration
could have been such that the Texas company would have secured it. I have it locked for about another six years.

HR

EDIT: My URL now has printroom between the . and com. The DistinctiveViews.com will process as not recognizable by itself.

EDIT #2: Upon trying the Texas firm's URL it would appear that the domain has been changed to something else. ???????
 
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Rich, if the domain is generating $4k/annum in revenue, and it does not require significant expense to maintain, then no way it's worth just $4,300.00. Were the folks who gave you that appraisal, by any chance, also brokers or buyers of website URLs?

I admit I do not know what a URL is worth, but I guarantee you that a positive cash-flow business is worth multiple of revenues.
 
Two thoughts: (1) Why does the other party want it? The revenue you generate now might be a pittance compared to the money the other party is anticipating. You could wrap that into what you think the name is worth. (2) If the domain name is significantly similar to the other party's name/trademarks, you could end up legally obligated to turn it over. You didn't mention those kinds of facts, but I'm referring to "cybersquatting" (covered in the Anticybersquatting Consumer Protection Act). So what I'm saying is, if this could be construed as a cybersquatting situation, then you might want to consider taking the offer rather than being sued.
 
I have a friend who is a programmer/electronics designer and a huge Star Wars fan. His original domain name was empire.com. Somebody offered him $5K for it, and he flatly refused. The site was just a tool to him and generated no income. A year later they returned with a $22K offer, and it was theirs. He just used empiredi.com.
This was 10 years ago. Thee are people out there willing to pay $$$ for the right domain.
 
"Cybersquatting" is not automatic simply because your name matches another company's; if you have a legitimate basis for use of the uRL, the fact that the other guy is bigger and better known (assuming same) is no reason for them to be "entitled" to it.

Of course, there is a cost in defending if someone wants to throw-down on you.

My cousin has a URL for a company he started about ten years back; the company is shut down, but he sees no reason to change the em ail address he has been using for all this time.

So another company, same name, contacts him (through a "make an offer" deal, I think it was administered by GoDaddy), offering him a couple grand for it, and he replied, "thanks, no."

So they came back with a modestly increased offer, and he responds with, "thanks, not for sale."

Then they come back with a pretty smart-a'd response, something like "In order to have a good-faith negotiation, we have to have a legitimate response from you." Really ticked him off, since (remember) we did not advertise the fool thing for sale in the first place. So we told them we'd take something like a hundred grand for it.

Then they stopped bugging us.
 
Hi. Out working in the field using client's pc. Busy day.

The domain is http://www.scarafaggio.com/ . Scarafaggio is the Italian word for cockroach, so I doubt it can be trademarked. I suspect the broker wants to resell it to an Italian pest control company. I'll know more later, I guess.

My other thought was to register scarafaggio on another TLD, move the whole site over to the new domain, and refer everything via the .htaccess file. Give it some time for the search engines to index the change, and then sell scarafaggio.com. Referring it from the old domain for a few weeks should help avoid a copy penalty.

TTYL.

-Rich
 
Okay, I registered http://www.scarafaggio.us, updated the site's internal links and graphics, and uploaded the files. After a little while to give the domain time to propagate through DNS, I'll put the following lines in .htaccess in scarafaggio.com:

Code: 
RewriteEngine ON
RewriteRule ^(.*)$ http://www.scarafaggio.us/$1 [R=301,L]
and let it sit for a few weeks. Then I'll close out the scarafaggio.com account on the server, park scarafaggio.com on top of scarafaggio.us, and add the following code to .htaccess to open any requests for scarafaggio.com on scarafaggio.us:

Code: 
RewriteEngine ON
RewriteCond %{HTTP_HOST} scarafaggio.com$ [NC]
RewriteRule ^(.*) http://www.scarafaggio.us/$1 [L,R=301]
This way I get to keep the site and the revenue, the search engines will update their indices, requests to the old domain will be redirected to the new one, and I can offer the .com domain to the prospective buyer at a more palatable price.

-Rich
 
What kind of ads are generating $400/mo on an italian cockroach site? Does Italy have some sort of infestation? :D Or is there a popular "scarpaggio.it" that everyone is assuming is a dotcom domain?

Not a fan of the latter situation, but I'm neutral on the ethics of it. Money talks, and you found a little goldmine. I say 5x cash flow definitely as a minimum, 10x if you can sell it to the domain-holder everyone *thinks* you are. 20x if you can figure out who their main competitor is and sell it to *them* instead ;)
 
schmookeeg said:
What kind of ads are generating $400/mo on an italian cockroach site? Does Italy have some sort of infestation? :D Or is there a popular "scarpaggio.it" that everyone is assuming is a dotcom domain?

Not a fan of the latter situation, but I'm neutral on the ethics of it. Money talks, and you found a little goldmine. I say 5x cash flow definitely as a minimum, 10x if you can sell it to the domain-holder everyone *thinks* you are. 20x if you can figure out who their main competitor is and sell it to *them* instead ;)
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I must say I like your style.

The site provides pest control information, primarily for DIY-types. The traffic is highly seasonal: During the spring and summer, the site gets about 8,000 - 10,000 unique visitors a month; in the winter, maybe 1,800 - 2,200 a month. There is a little spike around October, when the rats and mice start moving in, and then it gets slow until about February. So right now is probably the ideal time to move it: The redirects will keep the traffic coming for a few weeks, and then I have the winter to work on re-optimizing it.

The domain scarafaggio.it seems to be being squatted. Scarafaggio.net seems to be a malicious, malware-infested site of some sort. Most of the remaining scarafaggio TLDs are unregistered.

The vast bulk of my traffic comes from search engines, so I don't think changing the TLD will make much of a difference. I doubt most of my visitors even know how to spell Scarafaggio. I started the site as a joke years ago. Most of my early Web design work was for exterminating companies, and I always said, "The next bug site I build is going to be my own!" I registered scarafaggio.com as a goof, and I think I originally wrote it in the first person, in the role of someone named Scarafaggio.

Amazingly, the original site (which was horribly ugly; I've since rebuilt it a couple of times) started getting great search rankings, so I decided to put ads on it. In fact, it was the first site that I monetized. The first month I put Adsense on it it made about a hundred bucks. Man, I thought I'd struck gold. Free money!

And it's remained a consistent, if modest, money-maker. Scarafaggio generates between $200 - $300 a month from Adsense, about $75 - $100 a month from Amazon, and the rest from affiliate ads (mainly outdoorsy stuff and tools). I'd say about a third of the Amazon revenue comes from moth traps, and another third from electric rat electrocuters. (Really.) The Amazon Omakase ads (which take both site content and the visitor's habits into account) also perform pretty well.

-Rich
 
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SCCutler said:
Rich, if the domain is generating $4k/annum in revenue, and it does not require significant expense to maintain, then no way it's worth just $4,300.00. Were the folks who gave you that appraisal, by any chance, also brokers or buyers of website URLs?

I admit I do not know what a URL is worth, but I guarantee you that a positive cash-flow business is worth multiple of revenues.
Click to expand...

The people who did the appraisals were a bunch of scam artists, in my opinion. They did broker domains, as well; but most of their business was valuations and classifed-style listings. I think the name was Domain Second Hand.

I personally thought they were a bunch of crooks. But their valuations tended to be respected, for some bizarre reason. I had several buyers specifically ask for this particular company to do the appraisals. Go figger.

-Rich
 
RJM62 said:
The people who did the appraisals were a bunch of scam artists, in my opinion. They did broker domains, as well; but most of their business was valuations and classifed-style listings. I think the name was Domain Second Hand.

I personally thought they were a bunch of crooks. But their valuations tended to be respected, for some bizarre reason. I had several buyers specifically ask for this particular company to do the appraisals. Go figger.

-Rich
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Wow.

Appraisal's unusually low. Buyer's want you to use 'em.

Hmmmm.
 
RJM62 said:
Amazingly, the original site (which was horribly ugly; I've since rebuilt it a couple of times) started getting great search rankings, so I decided to put ads on it. In fact, it was the first site that I monetized. The first month I put Adsense on it it made about a hundred bucks. Man, I thought I'd struck gold. Free money!
Click to expand...

Wanna see how ugly it was? ;-) Your web skills have come a long way, Rich!!

http://web.archive.org/web/*/http://scarafaggio.com
 
SCCutler said:
Wow.

Appraisal's unusually low. Buyer's want you to use 'em.

Hmmmm.
Click to expand...

Actually, they tended to appraise somewhat higher than companies like Sedo or Afternic. They advertised "human" rather than "machine" appraisals, but they routinely missed things like whether a domain was similar to a registered trademark (which other appraisers consider to lower its value, unless the person who owns the domain also owns the trademark), whether there's an unsavory site of the same name on another TLD, etc.

It was very strange, in my opinion, that buyers would specify an appraiser who tended to appraise on the high side. But they sometimes did. Then one day I tried to log onto their site, and * poof *, they were gone.

-Rich
 
(Chuckle)

The SonicWall content rating service blocks this website, calling it "sex education."
 
Probably more like a multiple of EBIT-DA, but you'd have to know the details. I've noticed that the domain-name furor seems to have subsided, and with all the options now available companies can find something that works without spending a ton of dough.

SCCutler said:
Rich, if the domain is generating $4k/annum in revenue, and it does not require significant expense to maintain, then no way it's worth just $4,300.00. Were the folks who gave you that appraisal, by any chance, also brokers or buyers of website URLs?

I admit I do not know what a URL is worth, but I guarantee you that a positive cash-flow business is worth multiple of revenues.
Click to expand...
 
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