I bought the domain name table.com for my then-fledgling company Round Table Group way back in 1995.  roundtable.com was already in use, and roundtablegroup.com seemed too long, but table.com was still available.  Over the years, we used both table.com and a subdomain round.table.com.  Eventually we decided to switch to just roundtablegroup.com (because that's what our clients were typing in), so we haven't used table.com in several years.  Sort of a shame, since table.com is so short and sweet!

We didn't have a particular plan to sell the domain, but we didn't have a real plan for the domain either, and unsolicited inquiries kept coming in.  At first, because most of the notes weren't tangible (for example, "I'd like to buy your domain name.  Are you interested?"), I thought they were a new kind of spam!  As it turns out, there is a nifty feature on networksolutions.com (as well as on the sites of other domain brokers) that allows you to send a note to the owner of a domain making an offer.

Eventually, someone offered me $50,000 for table.com, and I paid attention.  It seemed like a lot of money, and would have been a good return on investment for us (the puchase and maintenance on the domain over a decade probably came to only a couple hundred dollars), but was $50,000 was a good price or not?  It was hard to say.  How could I find out?

This blog (which can be read historically through the monthly archive) is the story of an accidental domainer, the true story of selling a domain name.

In Domaining for Amateurs, I'm going to write about my experiences, from evaluating our options (should we sell to an unsolicited offer, hire a domain broker, or enter table.com in one of many various auction systems?) to (hopefully) selling table.com. I'll try to share some of the good information I've found and advice I've received.  I'll also describe my thinking, and my interpretation of the data and alternatives, and the consequences.

I will limit myself to information of use to people coming newly to the world of selling domains.  So, while I may occasionally allude to the world of pay-per-click, I will not write about the potentially profitable world of domain farming.

I talked with my business partners about whether to sell table.com to the individual who emailed me with the offer.  We didn't have any real way to evaluate whether $50,000 was an appropriate price for the domain, so we decided to spend some time looking into the other alternatives.

Some of the possibilities we thought about were auctions, listing services, soliciting potential buyers ourselves or using a broker, but we didn't know enough about any of these (yet) to make an informed decision.  Maybe we shouldn't sell the domain at all...  The number of people online grows every day, so perhaps it would be worth more at a later date?

There is much research ahead, so I will keep notes here.

One of the goals of sharing this information is to help other non-domainers who need to sell their own domain names, so everyone doesn't have to start from scratch like I did.  I am, after all, a beginner, so the information may not be complete.  So, if you have any other advice for someone in a similar situation, please share your insight by commenting on these pages. 

I will keep posting (at least) until we sell the domain name, so in the end I hope this will be an end-to-end domain sale case study.  By the way, here is the current status of the table.com.

And, of course, if you want to buy table.com, let me know!

The first question: Was $50,000 a reasonable price for table.com?  

Since domain names are unique, there wasn't going to be an exact calculation which could tell us the answer, but there were several strategies I decided to pursue to help us make an evaluation:

• Creating a list of comparable domains which were recently sold.  If I could identify the most similar recent sales, I would probably have a pretty reasonable number.  But, could I collect enough data about premium domain sales?  Would their be enough very similar single word generic names from which to draw conclusions?
• Availing myself of some of the many valuation services out there.  While "the experts" tend to be skeptical of these evaluation services, it seemed like a worthwhile exercise, both to better understand the factors that go into their ratings, and to generate a range of data.  And, I'm curious...  How accurate are these evaluations?
• Asking some of "the experts": I was going to ask absolutely everybody their opinion.

I'll delve into the details of each of these in a separate posting. 

But, while you're here...  What do you think is an appropriate price for table.com?  Enter our contest!

When you try to sell something, I think it's useful to understand what motivates buyers.

So... why would someone buy a domain name?  Is it fun? 

Well, a little fun, maybe, but the reasons appear to fall into three categories: immediate profit, branding (including vanity), or speculation.

Immediate Profit

One can make money from a good domain name without a lot of work by placing targeted advertising, sponsorsorships, etc. on your web page.  Because of folks like Google, simply by putting some good links on your page, you can make money when your visitors click on these links.  The amount you can make is a combination of the following:

How many people come your way? 

You can only make money based on the actions of people who are on your web page, so the important factors tend to be things like how many people type in searches which bring them to your web page.  Those searches could be directly entering your domain (typing table.com into the URL bar of their web browser) or brand name, or entering a search for which you rank well because of some content on or links to your site, or following links from other places. 

The collective unconscious of searching generates a certain set of search opportunities, and your domain's content, link acquisition, search engine optimization, and so forth will determine to some extent how many of these opportunities you can see.  One crucial relevant point: Google and other engines positively weigh the occurance of a search keyword in the URL, so if you want to rank well for tables, owning table.com could be very helpful. 

How expensive (or more accurately, how profitable) are the items you're selling?  How likely are the sellers to be able to sell what they're advertising to your audience (called the conversion rate)?  Together, this implies how much money someone might be willing to pay for a targeted "click."  If the item being sold is inexpensive, you need a very high quality audience.  If the item being sold is more costly (like, say, a yacht), someone may be willing to pay a lot per click even if the conversion rate is quite low.

Because of folks like Google, it's pretty easy to get into this business.  It's like owning a rental apartment, but with a much, much lower cost of entry.  You can buy a domain name for a few hundred dollars, and turn it into a recurring revenue stream. 

Branding

A second reason to want a domain name is to include it as part of a longer-term branding strategy.  In this case, the domain buyer is betting that over time they'll be able to make more money by having a recognizable brand/domain name which will increase their core business.  Unlike the advertising play, brand folks are interested only in domains relevant to their business.  This interest could have to do with a particular product launch (usually not a generic name) or as a place to showcase industry leadership (where a generic name could be very good).  Or the strategy could be purely defensive, to keep competitors from nibbling at their business by buying up good generic names.

Branding works for a lot of the same reasons we've already discussed.  People tend to type in the names of brands more than they would type in other similar phrases, which gives the owner the chance to monetize the traffic.  Though it may not be immediately obvious, in the long run this strategy is the same as the advertising strategy, because the brandholder will use the brand equity to sell a product, perhaps one or more items of its own manufacture.

The value of a brand is not as tangible as direct monetization, but the parties involved tend to be better funded than most individual domainers, and they have a lot more to gain or lose since they're in their business for the long term, and they can't easily diversify their portfolio of opportunities.

Vanity Domains

Of course, what you want brand may be yourself, and you may never intend to make money with your domain...  it may be just a clever joke among friends.  There is a market for such domain names, just like there is for vanity license plates.  For instance, I own such a domain based on my last name.  Since there isn't really a profit motive, my guess is that the prices for these tend to be relatively modest.

Speculation

If you think that a domain is mis-priced, you might be interested in buying it, holding it for awhile (perhaps making a little money while you own it via the advertising strategy), and then reselling it at a more auspicious time to a more appropriate market.  The proper price probably comes from one of the previous two strategies, since your buyer (or someone down the line, at least) will be a non-speculator with the need to make money from the domain.

Domains are each unique and special (or not special) in their own way, so there is little in the way of generic pricing advice.  One interesting tidbit comes from domain listing service Alpha Names (which also provides appraisals and commission-based brokerage services), which offers this concise summary of value ranges for various domains as part of their sales procedure.

If you've ever bought or sold a house, you (or your real estate agent) probably put together a list of comparable houses which sold recently in the same neighborhood, as a way of helping you understand typical pricing in your local market.  This information (combined with your knowledge about the difference between your house and your neighbors') allows you to set an appropriate price.

Similarly, I hoped to find enough similar recent domain sales to get at least a ballpark estimate of the premium domain market.  In this case "in the same neighborhood" (which is key, because I don't care about the price people are getting for xgadfga3.tv) meant short english word names... which I was hoping sold for more.

It took me awhile to find such a list (long enough that I began to gather the data by hand).  The online auction sites don't seem to like to share their own sale prices, but Domain Name Journal lists the biggest sales of the year.  This was very helpful. 

Our domain didn't seem as marketable as they year's top seller porn.com ($9 million) or seniors.com ($1.8 million) but it did seem very comparable to clock.com ($175,000, Moniker, 7/3/07), pottery.com ($150,000, Sedo, 7/3/07), fountain.com ($95,000, Moniker, 7/3/07), and cushion.com ($75,000, Private, 7/10/07).  All are singular, generic, single word English nouns.

Bingo.org!

Several other lists I found useful for comparison, were Zetetic's list of all-time top domain sales (for some very high numbers), as well as two searchable databases of domain sale data, DNSalePrice.com and NameBio.com.  I found NameBio.com a little more helpful, but apparently, DNSalePrice.com contains more information about private sales, so consider checking both. 

I wanted to try out some of the valuation services I'd seen online.  Some of these are completely automated, like Leapfish or SwiftAppraisal.com. Other firms, like GoDaddy.com and Sedo.com, have a team of valuation experts who make a (more educated?) guess.  In this post, I'll talk about the automated valuation services, and their results.

Leapfish

Leapfish's automated system asks you a series of multiple choice questions.  At the end, you get a domain valuation estimate.  Some of the choices were hard for me (Was table.com's marketability "good" or "great"?), but relatively conservative and plausible answers implied a valuation of $36,783.00.

SwiftAppraisal

SwiftAppraisal.com's more automated system gave the following assessment:

Domain: table.com
Marketability: very good
Clarity: very good
Memorability: very good
Link popularity: 47%
Extension: excellent
Word Count: excellent
Hyphens: not present
Numerals: not present
Substitutions: not present
Abbreviations: not present

Estimated value: $92,000 - $140,000.

Part of the process of interpreting comparables is understanding how relevant they are.  Changes in the domain market will affect how much faith we can put in similar sales.  If the market has become less good, we may be less likely to get a formerly reasonable amount.  If the market has become more frothy, our outlook may have improved.

On its website, Leapfish.com writes about about how big domain sales are less frequent than they once were.  "During the good old days of the Internet boom 'rags to riches' type stories of cheap domain names resold for hundreds of thousands of dollars [were] possible.  However, things have slowed down considerably since then and it is very rare to hear of a domain name sold for more than $10,000."

Of course, the infrastructure for buying and selling domains (online auctions like Sedo.com, real-world auctions like Moniker, certified offer services from domain registrars) and the ability to monetize purchased domains (Google ads, for instance), are clearly much improved from the boom.  There are newsletters and conferences for domain arbitrageurs. 

Domain Name Journal's Ron Jackson says "...As this industry continues to grow at an exponential rate, competition is heating up in every sector including registration and parking services, aftermarket platforms, media outlets, trade shows, and everything in between."

Domains Magazine says "the market for generic domain names is booming."  Research and appraisal services firm Zetetic reports that the domain name aftermarket broke the $100 million mark in 2006.  Domain broker Sedo claims that resold domain transactions sold for about twice the number of 2005, and quadruple the deal volume of 2004.  GoDaddy is now apparently adding 1 million new domains a month, which works out to one every 1.3 seconds... five times faster than five years ago according to GoDaddy founder Bob Parsons. 

This Zetetic press release claims that the average sale price during 2005 (nearly $5,000) was 8.5% higher than the previous year, while the median sale ($900) was 24% higher, as well as that the total dollar sales volume and the number of sales above $100,000 had nearly doubled.  In 2006, the average domain name resale price grew 13% to $5,582.

The valuations imply that while table.com is not worth a huge amount to me, it is worth a lot of money to a certain special someone out there.  But, who is that right somebody?

One way to get some insight into the world's collective unconscious is to look at the results of Overture's Keyword Selector Tool.  While Yahoo gets considerably less traffic than Google, Yahoo does one thing which is very nice.  It provides a quantitative list of recent searches that include a specified term -- and best of all -- how often someone searched on that phrase!  So, in addition to knowing which searches are the most frequent, it tells you how many people did that search on Yahoo. 

With a bit of simple math, and knowledge of the the relative search engine market shares, you can tease out of this data how many searches like this probably happened elsewhere (including Google, Microsoft and Ask).  Assuming that people generally search for the same things on Yahoo as on Google (They don't, exactly, but it probably suffices for an approximation.), and and combining your numbers with how the search engine market is divided amongst the various engines, you can estimate the likely search numbers for each engine, and for the search market in total.

I typed table into the box, and reviewed the top 100 results.   The top 10 were table (110,988), periodic table (102,570), pool table (94,340), coffee table (49,307), contact myspace table (45,558), poker table (44,113), periodic table of elements (38,289), multiplication table (29,531), table lamp (29,314), and table saw (28,568).

There's a bit of a long tail.  The top 10 searches happened a lot... over 570,000 times, but the top 100 searches occured even more often -- nearly 1.5 million searches.  Entry #100 -- poker table top -- still was getting over 4,000 searches/month, according to Overture.  Assuming that Yahoo has about 20% of the search market these days (Google has ~60%), that implies that 20,000 searches are happening every month for #100 alone!

To better interpret the data, I tried to categorize each of the keyword phrases.  How did it break down?  Several of the top phrases (7 in the top 100) were references to the periodic table (probably not very monetizable), and there were almost as many to tax tables (maybe a little better).  But nearly 60 of the searches had to do with furniture and/or games, which sounds good.  Furniture is a sizable industry that deals with lots of consumers, where a branded URL might be valuable.

So, if I had to make a guess about who would find the most value in owning table.com, I would probably choose someone in the furniture industry.  Of course, it doesn't mean that these entities will turn out to be most interested, just that it seems like a good fit.  And, I haven't yet addressed the question of how one might go about reaching out to these potential buyers... 

There have been live auctions of high-value merchandise for over two thousand years, but the somewhat counter-intuitive idea of selling a bunch of online items offline is a relatively recent.

Domain registrar Moniker is the oldest and biggest player in the offline domain auction space, running regular domain name auctions at industry events, like T.R.A.F.F.I.C.  Moniker accounts for the majority of the top sales listed on the DN Journal list.

DomainTools is about to get into the business of real world domain aftermarket auctions, with a nifty imrpovement.  They are going to combine a real-time live auctioneer at the Seattle Domain Roundtable Conference (attending the auction is free of charge) with a simultaneous online auction.  You can bid either at the conference in Seattle, or while logged into their online system.

Both have upcoming auctions.  The Domain RoundTable auction is literally just around the corner -- it's scheduled for August 15th.  Moniker's next "Premium Domain" auction isn't until October, but its deadline for submissions is even earlier! 

Time is moving too quickly again.

I'm starting to think that we may be able to get more than $50,000 for table.com (though I'd still like some more reliable data), and that we should pursue a different strategy, but I still haven't had much time to figure out what that strategy should be. 

I've only just begun to investigate, when I discover that two of the more promising candidates -- Moniker's T.R.A.F.F.I.C. auction and Domain Roundtable's auction, which I will describe presently -- both have urgently impending deadlines.  The submission deadline for Domain Roundtable's 8/15 auction is 8/6.  The deadline for Moniker's October Miami auction is even earlier -- 8/1 -- though they've offered me a couple of days extension, since Moniker's staff is all going to be busy at another big auction.

Still, since I hadn't even really considered getting into an auction until just a few days ago, this all seems to be moving a bit fast!

Several registrars and other firms do hand-appraisals of domains.  They do some statistical analysis on the domain name (is it .com or something else, how many characters is it, is it spelled properly), as well as a less precise assessment of how likable the domain is, which typically includes the sort of "comparable" search that I'd done (possibly with better data). 

None are free, but I wanted someone with a more educated opinion to give me some guidance.  I tried two of the services, GoDaddy.com and Sedo.com and will post the results when they come in.