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 advertising (ex. Facebook, Google, etc.) for having a weak domain name
  

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

Sources:  Rick Schwartz and Michael Saylor