Recently I was involved in the negotiations for a domain name. The buyer had already contacted the seller however she, the buyer, was not willing to shell out the $10,000+ and wanted me to negotiate a more favorable price.
The buyer owns a ecommerce site which is successful. She sells “widgets” in a variety of styles and this particular domain name was a very popular, generic “widget” name. For example, “BlueWidgets.com”.
I contacted the seller and to make a long story short, after viewing the stats and earnings I concluded that the domain was receiving 80 type ins per day and over 100 unique visitors per day. Bluewidgets.com was earning more than $1500 per year from a half optimized parking page.
Upon the start of negotiations I was told flat out that the price was firm. The asking price was equal to 7 years revenue or approximately $10,500.
I told my client to write the check as fast as she could!
How did I come to this conclusion?
I had a little more information form my client. I knew she was spending approximately $7,000 per month on PPC search engines. Of that budget I knew she was spending about 9% for the keyword “blue widgets” or $630 per month. This produced an average of 550 monthly clicks which equates to $1.15 per click. We know that “bluewidgets.com” is generating more than 100 unique visitors per day with 80+ being direct type ins for a total of about 3000 unique visitors per month.
Based in what my client was paying for PPC click throughs the domain was worth far more than the asking price even if the conversion rate was a fraction of that of her PPC.
This is a perfect example of how valuable a generic domain name is even if it is niche targeted.
So the next time you see a domain sell for $xxx,xxx even if it seems like a ridiculously high price remember this post.
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