Domain name appraisal
OK, I’m stuck on this theme for now, talking about stuff for which there’s definitely NOT a market yet. But there will be, and it should be just as lucrative and competitive as the current marketplace for real property. Yes I think online properties need experts to appraise their worth sometimes. If you’re pitching a business plan that is a web-based venture, you need to estimate many domain-related costs,including how much money it’ll take to acquire your first choice of names. How much should you pay? How do you know if you’ve overpaid? How many names should you buy? How will your portfolio of names perform over time?
Any good online venture should plan to acquire collateral names as well. Yes I know what you’re probably thinking - this guy sells domain names so of course he thinks you should build a portfolio of names.
Well it turns out that just as in the world of real property, sensible appraisal techniques exist for virtual property. Mortgage appraisers use comps, comparing similar properties that have sold recently and adjusting the perceived value of the property based on features, relative to the comparable properties that were sold. This analogy should hold up well in the online world, although more data is needed to give more reliable results. Similar domain names that have sold recently provide a basis, which can be adjusted up or down based on valuable traits like the number of characters in the name, or the number of words concatenated to make up the name, etc.
One real appraisal technique that does not translate well to the virtual space is the insurance-oriented method of calculating a replacement value. When the market stabilizes perhaps it will be easy to predict a range of values you would likely pay to get an equivalent name, but for now it’s hard to determine just how interchangeable two names may be.
Still for all we don’t yet know about future appreciation rates of various domain names, there are a lot of questions that we do know. How much of a premium should .com names command? Will that premium increase in the years to come, or shrink? Domain appraisal firms aim to provide their best guesses, but tools and techniques will need to improve considerably before cost/benefit analyses can be done.
