Part 6 - What should I pay?

Part 6 - What should I pay?

In the previous parts I've discussed a number of domain characteristics that I look at prior to a purchase. I'm now going to attempt to provide some guidelines for what you may expect to pay for traffic domains. Before I begin I would like to stress that they are guidelines only and that every domain deal needs to be treated on a case by case basis.

Since domains are valued in multiples of revenue what you should always look for is a consistent revenue line. Without a consistent line you are unlikely to make a return on your investment. This may seem obvious but many people get caught up in the deal and forget why they are making it.

The more inconsistent the revenue line the great the discount for the buyer so that they can hedge some of the risk. If you are selling your domains then you are essentially selling a trailing revenue stream so the more work that you can do on your domains to ensure that it's consistent the higher the price.

The second risk facing a purchaser is legal. For example, if the domain name is trademark infringing then the potential new owner not only has to factor in the risk that the domain may be taken off them by the trademark owner but they also may get a damages case. All of this reduces the price.

I'm really going to stick my neck out here and state some revenue multiple ranges for different types of domains. For the purposes of this example let's imagine that roysfood.com has a trademark and is a small business in Utah.

Type of domain	Example	No. Months
Direct TM infringing from heavy TM defending company	microsoftword.com	0-3
Direct TM infringing from non-defending company	roysfood.com	6-12
TM typo of heavy defending company	micorsaft.com	3-9
TM typo of non-defending company	rosyfod.com	12-18
Typo of a generic multi-word	domainperking.com	36-48
Typo of a generic single-word	domain.com	48-60
Generic multi-word	domainparking.com	60-72
Generic single-word	domain.com	72+

Now for all of the disclaimers. These revenue multiple estimations are that, estimations and will vary on a domain by domain basis. The domains are ONLY valued by their traffic and not from the brand ability of the domain. So please don't tell me that boat.com is worth a lot more than I'm suggesting.

Remember that if you have a TM domain name that you are taking on considerable risk that is sometimes not just financial but can be classified as a business risk. Be very careful in heading in this direction and DO NOT read the above table as an endorsement of that type of activity.

For .net's discount the above by 30% and for .org extensions by 50%. ccTLD's are really in a category to themselves and their value depends upon the country. For instance co.uk domains are worth a lot more than .za.

I know that I'm sticking my neck out there but I hope that it gives some of you a bit of a guide. I'm sure that I will get a lot of feedback on this article.....which is great! The more of us that contribute the more accurate the figures will become.