These are my thoughts pertaining to premium (top-tier) domain names only.
A category-leading domain name has a great amount of value. We all agree to that. Historical sales, traffic value, SEO potential and common sense lead people to realize that there is value in owning a premium domain name and using it for your banding strategies.
However, something that’s gone on for a while now — and irritates me — is the thought of people making offers based on a revenue multiple.
Let’s say, for instance, I own Computer.com (which I don’t). We can all agree that Computer.com has a lot of value, perhaps $1MM. Let’s say it IS worth $1MM, for round figures. Computer.com is worth $1MM, for the name only, sitting dormant, waiting on a company to use it.
Now, if you visit Computer.com today, you will find a parked page with advertising links - and a for sale banner at the top of the screen. Let’s assume Computer.com brings in $1500 per month, as-is, with the parked page.
A buyer comes along and says “What is the price for Computer.com?”
The seller replies with: “$1MM.
The buyer then says: “How much revenue does it make?”
The seller says: “$1500 per month, or, $18,000 per year.”
Then, it never fails, the buyers next response is: “That’s 55 years of revenue! The name is overpriced.”
Negotiations usually end there – because this type of buyer will never move past the fact that the reneuve of Computer.com – at this point – may be irrlevant to its value.
WHY do I think this?
We are selling assets, not businesses. Premium domains are assets that happen to have the ability to make passive income. Similar to a coveted beach front lot in California — the value is in the asset itself. If I own a beach front lot in California, and I charge people $10 to park on my lot – the value of my real estate is independent from the minimal revenue it produces.
The value of the lot (and the domain name) are based on metrics other than current revenue. They are assets – not business – for sale.
That beach front lot in California, worth $5MM, won’t be sold on a multiple of parking income. That is not what the value is based off of. It’s just common sense.
Based on the “revenue multiple logic” — would the beach front lot and Computer.com both DECREASE in value if they weren’t monetized… and earned $0? As a seller, you can’t win either way. Either it produces too little revenue, or no revenue, and the value drops accordingly.
So I guess the value of Computer.com and any other premium domain name DROPS when you park the URL and make some incremental income? NO. That doesn’t make sense. But that is the logic that some buyers follow. Computer.com was worth $1MM when it was unused – but now the value plummets because the parking earnings aren’t substantial.
I suppose it’s time to STOP sharing revenue information with potential buyers. Many have taken this step – I’ll probably follow their lead.
Should we get to this stage?
Any domain name that someone inquires about (whether developed, parked or dormant) will not come with revenue figures.
Does parking a domain name, and sharing the revenue figures, hurt the value of a premium domain name?
I understand that buyers want to know the “earning potential” of a domain — but parking isn’t an accurate gauge of the development/earning potential of a top-tier .com.
I’m curious to hear if you share parking stats… do you ask for them… have you based any purchases and sales off of revenue?
I want in on the action of buying premium domains on a multiple of parking revenues… 
- Aron
