What’s a domain name worth? I have reason to write about that today, because of e-mail correspondence. Today I have somebody trying to sell me swot.com for $600,000. Yes, you read right, that’s $600,000, as in six hundred thousand dollars.
There was a predictable thread:
- He had chosen me because of my work, his first e-mail said. I write about and post about SWOT sometimes, so I guess I’d shown up in a search.
- I bit, answered his e-mail and asked him how much.
- He answered: $600,000. (Not just that, it was a normal, polite e-mail message.)
- Noting that his English wasn’t native, I thought maybe he and I were confused about comma usage and currency formatting. I e-mailed back asking him if he really meant six hundred thousand U.S. dollars.
Just in case you’ve never been in the domain market, they do get bought and sold. A few years ago somebody paid $1 $7.5 million for “business.com,” or so the reporting said. I knew a University of Oregon student who supported himself five years ago by buying and selling domain names. I personally own more than a dozen, including some vital (to me and mine), names such as the domain for this and several other blogs. I own domain names for some of my children, those whose names were available as domains. I registered all of them myself, didn’t buy them. Palo Alto Software, my company, owns about a hundred domain names, many of them (bplans.com, for example, and bizplans.com) names I registered first, early in 1995.
So here’s the (edited for spelling and grammar only) second-to-last e-mail in the thread, from him to me:
Yes it’s true, this is the price.
I think you are surprised because you are not from this market, but i can tell you that every year the price will go up. This swot.com is one of the best .com names in the market and I have many offer on this name. If you know of any business that needs a name like this, I will be more than happy to do business with you.
I was going to just ignore this e-mail. That price is literally three orders of magnitude too high. I would pay $600. So there was no point in me even responding. But then I thought my response might make a decent blog post and could possibly be helpful to you. So here goes:
I don’t know what you mean by “not from this market.” I am of course not from [country name omitted here], but I have been on the web for 13 years now, I own a dozen domain names personally, and my company owns more than 100. We’ve bought them several times and turned down offers more times than we’ve bought them.
Just last month we were invited to participate in an auction for “[domain name omitted],” which you’d think would be a good domain name for a company that sells business plan software. An hour before the close, the bid was less than $2,500. Fewer than 10 bids had been made. We didn’t even bid. Why? Because by the time you have an established domain that is already working–we get close to a million visitors per month to our website network–a new domain is much less interesting. It is very hard to take it on without diluting your marketing effort.
Sometimes there are special values. For example, after bplans.com was well-established, somebody offered us bplan.com, which they owned, and was picking up traffic intended for bplans.com. We did buy that one. For $2,000. And we bought paloalto.com in 1998, and we paid several thousand for that, because our company name is Palo Alto Software.
With swot.com, you have two, possibly three, advantages: 1.) only four letters; 2.) business meaning (the SWOT analysis) and, maybe, 3.) hard to misspell. I say maybe for the third, because swat is also a very common term.
However, you have no traffic. [Ed. note: He doesn't. The domain is owned, but there's no site.] Existing traffic is far and away the best way to create value in a domain name. Look at any of the well-publicized domain name transactions of recent years, and you’ll see traffic already there.
There might be somebody who will pay you more than I will for swot.com. Maybe, just maybe, there is some consulting company with an emphasis on SWOT analysis that has no domain name or a bad domain name and can therefore justify the expense. If I were you I’d do a Google search on “swot consulting” and see who in the results has a bad name, turns up with very bad placement or looks like it might have reason to invest more than I would. Out of curiosity I just did that, and if it were me I’d look into the people who have swot-consulting.com, swotmanagement.com, and abarisconsulting.com. They have marketing on SWOT already set up and related–but much poorer–domain names.
Why do I tell you that? My job description these days includes giving advice to entrepreneurs, and I think this is worth a blog post to share with others, so you get the benefit of free advice. And don’t think I’m trying to negotiate . . . in fact, I’m sure you’d get way more from the three companies I just mentioned than from me. And best of luck to you.
So there. That’s a real case. All I’ve omitted are some names that would just embarrass people.
This entry was posted on Tuesday, October 14th, 2008 at 5:14 am and is filed under startup advice, technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.17 Responses to “What’s a Domain Name Worth?”
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October 14th, 2008 at 7:01 am
Hie Tim,
I was pleased to read this blogs on domain name worth. Wow! $600 000 for this swot.com. I would give him maybe $500 not more. Anyway this has help me value my business domain.
Anyway thanks for the advice.
Michel Richer
hombyz.com
October 14th, 2008 at 8:48 am
Just because it isn’t worth much to you doesn’t really say anything about it’s potential worth. Around 2000, a friend of mine accepted an offer of $25,000 for a domain name he was using for a simple personal website and personal e-mail. It happened to be the name of another company’s product. With that money, he spent about $5,000 to buy the domain name he’d always actually wanted, which somebody was squatting on and refused to sell for any lower price (and it was actually a pretty good one, I suspect one day he’ll unload it for quite a bit more).
Similarly, my own company was pursuing a certain domain name (which happens to be our company name) and we couldn’t figure out why the owner wouldn’t sell it to us for a relatively comfortable offer (a few thousand). It turns out he also had those masters of annoying TV ads, Free Credit Report.com, on the hook for a whole lot more money — and the annoying thing is that they bought it purely as a “cover your bases” domain name. It isn’t their name or really anything anyone is too likely to associate with them, but now it points to their site.
That’s how it goes.
But I have a hard time seeing what this post is supposed to teach anybody. Like anything else, it’s worth whatever somebody will pay for it.
October 14th, 2008 at 12:33 pm
Well, I did an analysis on the domain name and I certainly think it has great potential. I looked at the frequency on Google and Yahoo which I must say I’m impressed. I did a few free appriasals as well and I believe this domain name could pull some premium digits.
October 14th, 2008 at 12:44 pm
[...] read an interesting blog post written by Tim Berry on Entrepreneur Blog Network. Tim discusses a brief email conversation he had with the owner of SWOT.com who had cold-called him [...]
October 14th, 2008 at 12:44 pm
What would you ask for entrepreneur.com , I bet its well over $600,000
Perhaps getting in the real domain world might help, try http://www.dnjournal.com/ytd-sales-charts.htm & historic sales on http://www.dnjournal.com/archive/domainsales-archive.htm
Offering $600 is almost as insulting as asking $600,000 – the true value is somewhere in the middle.
October 14th, 2008 at 12:46 pm
Hi Tim,
I am a full time domain investor and developer, and I have a domain industry blog. I responded to your post on my blog as it became fairly lengthy. If you have any questions or want to chat on/off line, drop me a note.
http://www.elliotsblog.com/index.php/follow-up-whats-a-domain-really-worth/
Regards,
Elliot
October 14th, 2008 at 1:03 pm
Stupid domainers, they make all of the money for nothing.
It’s not fair.
muah muah…
DoMongrel.
October 14th, 2008 at 1:34 pm
What a domain name worth is a very interesting question to consider…
I would encourage anyone who reads this blog to take a quick look at http://www.dnjournal.com to see sales reports from a current and historical perspective.
You will be amazed at the prices that domains are selling for! With a little further research, you will understand the myriad of reasons that someone might pay 6, 7 or even 8 figures for a domain name.
Domains are the real estate of today and the future. Finding out why someone is willing to pay this kind of money for something might be a lesson you want to learn now as opposed to later.
Owning the keyword domains for the products and services that your business sells can save you tens of thousands, or millions of dollars in the long run – depending on the business you are in…
October 14th, 2008 at 4:31 pm
$600k may be too pricey but then you go leap off the other end of the scale. $600? You have got to be kidding me. Oh, and buying an additional domain name doesn’t have to “dilute your marketing effort”, if it’s a good name you just redirect it to your existing site. No harm, no foul.
$500 says a guy who owns “hombyz.com”, LMFAO. I hope you didn’t pay any more then $7 for that one cause it isn’t even worth that.
Then Mac, who seems to have some common sense, refers to the guy his buddy bought a name from as a “squatter”.
C’mon guys, this is the 21st century here! Are people who OWN real estate but don’t develop it “squatters”? No. They’re *speculators*. Squatters don’t pay for the land they’re on. Big difference. And if you’re referring to “cybersquatting” then you should know that only applies when trademark infringement is involved.
Otherwise you can pass judgments on your perceived soundness of his investment and even whether you think he’s asking too much, but for the free market’s sake lay off the misinformation huh?
October 14th, 2008 at 5:21 pm
We had someone offer us $500 for our domain name. We very politely rejected the offer. For us, selling our domain name would be like shutting down the company and starting over. Just to test the waters, we told the gentleman who expressed interest in our domain that we would not even consider an offer below 6-7 figures. He swiftly went away.
Scan Monkeys is not the largest of it’s kind by far, but we regularly entertain 5 figure projects and value our domain a lot more than 500 bucks. Not to suggest we’re on the same level as Google, but I would venture to say that google would not sell its domain for $500, $600,000, or even $2B.
I guess that I would agree with Mac that it’s worth whatever someone will pay for it. Not only that, but it may be worth more than someone would pay for it if the domain brings added value for the owner, such as in Google’s case.
October 14th, 2008 at 9:23 pm
And to be fair, since I started the $600 thread, I would have paid 2-3 times that for SWOT.com, although not much more; and in respect to those of you who say it could be more, that’s what I said too, but only for the right buyer.
I actually have paid five figures for a domain name, once, and I’ve always regretted turning down businessplan.com for $65,000; I should have said yes to that one.
Interesting discussion, thanks for adding so much…
Tim
October 15th, 2008 at 12:58 am
Very interesting perspective Tim. I have been to some of your sites (bplans is great btw). Domain names certainly have an immediate need associated with them. Your company is established, but if you were going to move into swot analysis consulting you might consider it I would think. I think that is one of the biggest disconnects between people selling domains and companies buying. Companies buy for purpose at a specific moment in time, an exact need; while domainers try and sell pretty much all day long.
October 15th, 2008 at 5:03 am
Tim,
What’s the background behind the BusinessPlan.com deal? Were you approached by the owner? Did you know the owner before?
October 15th, 2008 at 10:00 am
Business.com sold for $7.5 Million, not $1 Million.
October 16th, 2008 at 9:58 am
Hi Tim,
Interesting post. I actually work in the domain industry as a broker so I have considerable experience appraising, buying and selling domains.
I’m not certain the owner could get 600K but what I can say for sure is almost any pronounceable 4 letter .com would likely fetch at least $2,000. Add on that swot is meaningful and related to education, business and consulting (services that can be bought and paid for over the web); it makes the name considerably more valuable.
I wouldn’t put a maximum on what the domain could fetch. It’s definitely worth more to some than others. But I’d speculate that the liquidation value would be around $15,000 – $20,000.
The domain market, on the whole, is actually quite competitive. Again, I’m not sure the owner of swot.com can get $600K but if he does it definitely wouldn’t be the first time I’ve seen that kind of pricing.
BTW, if you guys are ever looking to move bizplans.com let me know. I’ve got lots of buyers who’d be interested : )
Jay Finnan
Sedo.com
jay@sedo.com
October 23rd, 2008 at 1:34 am
[...] at 9:44 pm under Articles Print This Post I read an interesting blog post written by Tim Berry on Entrepreneur Blog Network. Tim discusses a brief email conversation he had with the owner of SWOT.com who had cold-called him [...]
March 2nd, 2009 at 7:22 pm
commenting usually isnt my thing, but ive spent an hour on the site, so thanks for the info