Value of your domain name

How much is it worth

There are three broad categories of reasons to buy a domain-name: business and communication address, investment, and vanity. For some domain-names all three reasons can apply.

1. Business & Communication: buy vs. lease

An online business has two sources of value: its Domain Name and its content (developed Web site). It is safe to assume that businesses exist to make money. Thus, a business should compare the following two sources of value creation: (1) profit from buying an already registered "good" domain-name, say, for $25,000 in addition to the domain registration fees; and (2) creating their own domain-name for the registration fees, and, say, spending $25,000 in advertising. If profit from the former is expected to be greater, the company should choose that option. Thus, to value a name, think about how much additional profits a company can generate as a result of using the name. Other things being equal, this should be the maximum price a company would be willing to pay to acquire the name.

Therefore, when you are selling a domain-name to be used as a business address, think in terms of how much value it can potentially create for a buyer.

An alternative to buying a domain-name is leasing. One advantage of a lease, similar to that on a car, is that you do not need to come up with a large sum of up front cash. The terms, amount, and length of the lease is negotiable. Moreover, your lease can also stipulate your right, but not your obligation, to buy the domain-name at some point in the future.

Some domain-names are being used primarily as personalized e-mail addresses. Thus, the value of such a domain name would depend on the value of its lease and the number of people interested in having such domain name in their email address.

2.Investment

As an investment vehicle, it becomes harder to estimate how much someone else would be willing to pay for an Internet domain-name. But that's one of the reasons why markets exist: to provide information about what a domain name might be worth to different people.

3.Vanity

Estimating the value of a vanity domain name is like estimating the value of "art." It is in the eyes of the beholder. Once again, the existence of markets become very important in determining "fair" values.

Unlike a business address, for a name under this category its value depends on how much you are willing to give it up for, as it is impossible to determine how much someone else would be willing to pay for it. Auctions are probably the best mechanism to sell such assets.

Current Status of the Market

There are many domain appraisal and auction companies that provide a mechanism to bring buyers and sellers together and facilitates the transfer of ownership. However, you should keep in mind that the market is still in its infancy. Thus, it is not surprising to see it currently composed mostly of sellers who have and are still acquiring domain names as an investment instrument. However, there is great value potential in this market for all parties involved.

Bill Gates, CEO & Chairman of Microsoft, has confirmed that domain names can be valuable. According to him, "it's not uncommon for really good names to fetch $5,000 or more. A media company paid $7,000 for search.com and $15,000 for tv.com. Every once in a while, a name sells for much more; business.com reportedly sold for $150,000."

What factors influence the selling price?

You should keep in mind that how much you can get for it at any given point in time depends on its worth, your negotiation skills, and how deep the buyer's pockets are.

Accepting an offer depends on how much you need the offered money immediately, and whether you are willing to wait for someone to whom the name might be more valuable.

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