- What a buyer is willing to pay
- What a seller is willing to sell for
No, I’m not being glib. We’re in an early stage emerging market with thin capitalization, little liquidity and few participants. Some sellers need money or want a fast buck, others are sitting and waiting for those strong market characteristics to appear.
Buyers, on the other hand, are split between speculators (domainers) and those who require domains for business purposes. We’re also seeing the emergence of an investor class with the recent pools of capital moving into Oversee and Moniker, etc., who can buy portfolios and manage those portfolios.
IMHO, these two factors, the sellers and the buyers’ motivations, are the only measurable appraisal metrics. We don’t have reliable multiples of traffic, revenue, etc. because the use of domains is so fragmented. I may sell a domain for $10k because it does not fit in with my development priorities. The buyer may see this as a steal because she has very specific business plans for this domain. Who made the right decision? Both did and the value is $10k but only for a moment.
Another factor is visibility- there is very little. Now that domains are selling in open auctions visibility is improving and awareness is growing of value. The person who bought my domain for $10k may get offers immediately from others who never saw the original opportunity.
These situations mean that there is no such thing as an informed domain appraisal right now. We’re in a wildly inflationary market that is creating itself in front of our eyes. That’s a very cool place to be, don’t you think?