DOMAIN VALUATION

A domain must perform one function, attract new customers.  The most appropriate domain valuation method involves the Lifetime Value of a New Customer.  The formula is as follows:


Domain Value = (Lifetime Value of a New Customer) x (New Customers Per Day) x (365 Days) x (Years)

 

Example

Lifetime Value = $1,000

New Customers Per Day = 1

Years = 20

Domain Value = $7.3 million

 

A domain's valuation can be determined by several other methods, including the following:


  • the value of the idea
  • the profit margins, when applicable
  • the gross sales, when applicable
  • the cost of a sign that can be seen worldwide, even from outer space
  • the cost of an employee who works 24/7/365
  • the cost of digital marketing (ex. Google/Facebook ads & SEO) for having a weak domain name


The benefit should be calculated over a 20 year period, minimum.  If the domain purchase is financed over time, it should more than pay for itself each month.


Sources:  Rick Schwartz and Michael Saylor