Hello, TGIM, and welcome to MBA Monday! Today I wanted to talk about a topic that I think I’ve only mentioned in passing once or twice on my blog but really needs a bit more attention. What I’m talking about is the Myth of the Similar Domain Sale.
Two of the hardest lessons for me to learn in the Domaining space have been that:
- Every domain name is unique – there are not two of any domain name and cool.com and cool.net are two completely unique domains that could sell for two completely different prices.
- Every buyer is different – if someone is willing to pay $500,000 for Cool.com, they might not even shell out $5 for Cool.net or Cool.org.
Like many Domainers I get a few emails a day from people saying, “I have this domain for sale, which is similar to a domain you own.” or another one of my favorites “I have this domain for sale, which is similar to this domain which sold for $50,000.”
I hate to break it to you but if I have a one or two-word .COM domain, the exact same keywords in .NET or .ORG (or even both) is really not as similar as you would think. The same is true for geo-targeted domains, if I buy LosAngelesHotels.com, that doesn’t mean I’m going to want to buy LosAngelesRestaurants.com and the two names really aren’t as similar as you think.
I have seen this happen over and over again to buyers of six-figure names. They buy one name and then everyone assumes they are going to want the .NET, .ORG, .INFO, and .BIZ equivalent of the domain, and assume for some reason they’ll pay big bucks for it because they shelled-out good money for the .COM.
What many new investors miss is that the guy who just spent hundreds of thousands of dollars on the .COM, doesn’t want to buy any more domains, and, already having the .COM, isn’t prepared to spend much at all on the other TLDs.
The same is true for so-called similar domains, or domains that don’t exactly match a particular keyword, but are similar to names that sold. Let’s suppose that NewTelevisions.com sold for $50,000, thinking that BrandNewTelevisions.com would sell for $25,000+ is not realistic.
Suppose Blue.com sold for $5M, does that mean Green.com is also worth $5M? No! You see, these names are not similar, yes they are both colors but other than that they are completely different domains, with completely different buyers. The person who paid $5M for Blue.com might not want to spend a penny on Green.com.
As domain investors it is so important for all of us to understand that just like we are all different, so are buyers. When you’re scanning through lists of domain sales, finding ones that are similar to names you own really isn’t going to make much of a case for why you think your domain is worth what it is.
At the end of the day, if you are trying to sell a domain to someone, it is understanding that person and the value your domain would have to them, not understanding how your domain might be similar to another domain that sold for boku bucks. Remember, every domain is unique, and so is every buyer, just like you, and every other domain investor is also different.
So next time you buy a name just because someone bought something similar, think to yourself about the value your domain has if that one specific buyer doesn’t buy your domain. If you can think of dozens of other people who would be interested, great, but if not, then you might want to think twice about buying the domain in the first place.