There has been a lot of talk over which valuation tool is the best and what factors are used in generating the value of a domain name. One of the, if not the, most important factors in determining the value of a domain name is the buyer and that cannot be predetermined. Let’s take a closer look at a simple analogy to discover what I’m talking about with regard to value.
Product to use for analogy: 1 liter of bottled tap water
Buyer #1 offer: $1
Buyer #2 offer: $1,000
When looking at these offers for a mere bottle of tap water they seem ridiculous. Why would Buyer #1 only be willing to offer $1 when Buyer #2 is offering $1,000? Does Buyer #2 know some information about the bottle the tap water is stored in? Is the bottle 400 years old and worth $100,000? Let’s assume that the bottle containing the simple tap water is only worthless plastic that is recyclable. Why is the liter of bottled tap water worth $1,000 now to Buyer #2?
Location of Buyer #1: Backyard swimming pool floating on a raft.
Location of Buyer #2: Middle of the desert.
There is no tool and will never be a tool that assesses value of a domain name that can gauge the true value as it cannot determine the motive of the buyer. I recently sold a domain name that I had valued at $5,000 for only $2,000 and most domainers would not have given me $50 for it. If you are selling a domain name, my advice is to first know the vertical market and secondly know the buyer and speculate a motive.
