In order to profit we need to buy low and sell high. Sounds simple. But it’s not. Especially in the domain industry. Why? Because there’s no standardized and regulated repository for valuations, acquisitions and sales. In other words, no measuring stick. This leads to a lot of frustration for domainers, especially those that are new. One of the main scapegoats for our buy/sell pricing conundrum are the estimated pricing tools. Oh how we love to trash talk Estibot and their ilk!
So let’s take a look at these evil things.
There are three appraisal services that I’m aware of: Estibot, GoDaddy and DomainIndex. On the surface it appears that they have no idea what they’re doing. Just look at the sales history and appraised valuations for these ten domains.
There’s no rhyme or reason to these prices. They’re all over the place. Go Daddy’s total valuation for these 10 domains is 5 times their 2018 sale price.
So why, in this day and age of algorithms and computer intelligence, is this the best we can do? The answer is the raw data that these tools are based on is either missing or flawed.
- Google search data is changing and does not take into account the fickle cultural and marketing trends, not to mention the personal preferences of end users.
- Namebio and other sale aggregators make no distinction between wholesale and retail price history.
- Pricing tools can’t compute the value of creative, invented brands such as Juul, Lyft, Pintrest, Google, Yahoo, Accenture, Deliveroo, Quora, Reddit, Airbnb and Zenefits.
To my eye Estibot’s valuations are weighted towards Google search while GoDaddy’s tool gives emphasis to sales history. The problem is that Google search demand often doesn’t have a direct correlation to end user demand and value. Likewise with GoDaddy. Their pricing seems to fall in a narrow range. Usually between one and two thousand dollars. GoDaddy pricing appears to be the result of averaging together all prior sales both wholesale and retail. So every price seems rather mealy mouthed and middle of the road in my view.
OK but here’s the twist.
I use these tools all the time. Not to determine valuations for buying low or selling high but as an indicator of potential value.
Namepros user, Ategy, puts it like this:
I pass all the domains from my daily lists through Estibot .. it’s a great tool for getting search data and other info. As for the actual estimated value .. it’s still helpful .. but you absolutely need to take it with a grain of salt and be smart enough to know it’s impossible for even a complex algorithm to fully understand the intricate complexity of language and keywords/terms and how they apply to end user demand for domains……
Where Estibot shines is relativity. Meaning that if you have a bunch of similar type names that give a certain value .. then you have another domain much higher or lower it sends a red flag for you to manually do a quick google check or something to see if you missed something good about it .. or on the other side if it spits out a $0 value it can often save you from buying a typo.
Seriously, Estibot is a fantastic tool if you’re realistic with what is actually possible and know how to use it .. and most certainly that is not the case when people just use it for one random domain (particularly brandables) and only look at the “Estimated value” .. there is a ton of useful data that comes with Estibot .. and it’s an absolutely fantastic tool .. particularly if you understand what is and isn’t logically possible to estimate when it comes to algorithms and how they could ever pertain to domains…….It’s important to see that the number that Estibot pops out is END USER pricing ….
Domainers also need to wake up to the fact that the biggest factor significantly more than anything else when it comes to domaining is LUCK .. pure and simple. Even the best domainers only sell a tiny fraction of their domains a year ...
Where Estibot can truly help is helping you figure out domains relative to one an other .. and combined with very essential good judgement .. can maybe help you take your sales rate up from 2% to 2.5% .. or 3% to 4% .. and even more importantly .. it can often help you avoid domains that you shouldn’t buy .. which can be very valuable in the long term
The bottom line here is not to push you towards an Estibot subscription (I have no affiliation with them by the way) but to widen your perspective and keep you from a knee jerk reaction and following the herd. Maybe Estibot isn’t for you. No worries. But everything in domaining (and life) has value and in this hyper competitive and speculative industry of ours it pays to keep our eyes open for things that other domainers are not using or doing. We should always be on the look out for anything that might give us an edge over our competition.
And, by the way, in case you don’t know it, our competition is each other 🙂
May all your sales be to end users!