Valuations: Get It Right You’ll Be A Multimillionaire, Get It Wrong You’ll Go Broke
Mike wrote the following post in October of 2009, while it deals with other asset classes as well, here was the part on domain names.
Domains like any other asset are going through a constant revaluation process.
For domainers, your ability to correctly value a domain is going to be a huge factor in determining your ultimate financial success in this business.
As a buyer if you overvalue a domain name, you’re going to overpay for it and put yourself in a bad situation.
Your going to be faced with the choice of either recognizing the mistake, selling the domain at a loss, or holding on to the domain, tying up capital you could have used for another investments, hoping the market revalues the domain higher in coming years, to fully recoup your investment, or at least cut your loss.
Do this frequently, and your going to face substantial financial problems and maybe financial ruin.
As a Seller if you overvalue your asset, your simply not going to sell it; undervalue it and you’ll have the pleasure of watching sell it for more, maybe substantially more, down the road.
No, its not easy.
You’re not always going to be right.
You are going to spend more on a domain than you should have.
You are going to sell a domain for less than you could have gotten for it (well everyone but Rick).
Bottom line, when it comes to valuation, you going to have to be right a lot more than your wrong to be successful in your financial life.
In reading a lot of discussions on forums it seems some would be smart to try to have more of a detailed plan when it comes to valuing their names. Some are asking millions for new gtlds, possibly as a publicity stunt, but either way having realistic valuations is what will keep you in the game.
In a way this advise is good ,but when we watch domain shows and the pros are pricing and supposedly getting mid 5 figure prices for a couple notches above hand reg names,we ask ourselves what are we doing wrong.I would really like to see some live videos of the pros in action ,everyone talks a big game but no one gives live feed,even looking at some of the outbound pitches would be great.
I’d say the key thing is to learn more about valuation. Usually the problem is people overvalue bad domain and undervalue good domains, not really knowing the difference between the two. Nobody is going to hold your hand with it though, you’ll need to do every bit of reading you can.
Why are you worried about bad domain valuation? …Because if you like the domain and you want it, then it is not a bad domain (almost for you)…Who has the magic valuation formula?…reseller 1,2, buyer 1 , 2 , Godaddy ?!
Just for you eyes, Good domains sold below their price are really the problem
The valuation formula is sitting in your inbox, if a portfolio gets lots of inquiries it is good. If it doesn’t it is bad.
total jibbersih , rambling on and on
this isnt a usless greek mythology college class.
IF IF IF …. wth lol its not rocket science its just BABOON MATH = i have. you want. give me XXX,XXX amount of bananas or else!
#UnretireMikeBerkens, industry needs you
What I loved about mike was no matter who you were pro or novice ,always took your call and welcomed any new news on the domain market such as Domain numbers and patterns being bought up and fully subscribed ,thats why he always had the freshest reliable news,and before reporting he always confirmed its accuracy that’s what made him great. Yes it would be nice to see some reporting again or I’d love to see him on domainsherpa again it’s been a while.