Value depends on the name itself, on what it would cost you to move, and on who is asking. Automated appraisals are unreliable, and for a domain your business uses the switching cost usually exceeds any offer.

Two different questions

They get conflated and they have different answers.

What is this domain worth on the open market. A question about the name: its length, its extension, whether it is a real word, whether it is memorable, and whether anybody is searching for it.

What is it worth to me. A question about your business: what you have built on it, what it would cost to move, and what you would lose in the process.

For a domain you actively use, the second number is nearly always larger, and it is the one that should decide.

What actually drives market value

In rough order.

That last one is decisive and frequently ignored. A domain is worth what somebody will pay, and most domains have no buyer at any price.

Hyphens, numbers, unusual spellings and long phrases reduce value sharply, for the same reasons they make a poor business address.

Automated appraisals

Treat them as a rough signal rather than a number.

They work from patterns in past sales, and past sales are a small and unrepresentative sample dominated by unusual transactions.

The result is that they overvalue keyword-heavy names nobody wants and undervalue short brandable ones that sell well.

Useful for a sense of order of magnitude. Not useful as a negotiating position, and quoting one back to a buyer signals that you have not sold a domain before.

The switching cost, calculated properly

The number most owners never work out.

If you moved off the domain: every printed item reprinted, vehicle signage redone, every listing and profile updated, email addresses changed for everybody, every inbound link from anybody else now pointing at a redirect you have to maintain indefinitely, and the accumulated search position rebuilt.

Plus the customers who type the old address, find nothing, and go elsewhere. That loss continues for years and is impossible to measure.

For an established local business, that total is frequently well beyond what a domain buyer would offer, which resolves most unsolicited approaches immediately.

Reading the offer

Who is asking tells you something.

A broker who will not name their client usually means an end user rather than an investor, and end users pay more. It also means the buyer has a specific reason to want it.

A lowball offer with urgency is a standard opening. A short deadline in a first approach is a tactic rather than a constraint.

An offer mentioning your business by name means they know what it is worth to you, which changes the negotiation.

What not to do: name a price first, or reveal that you would consider selling at any price, before you have decided what your number is.

Replying that you are not currently looking to sell but would consider a serious offer is a complete answer and gives nothing away.

If you are genuinely selling

For a domain you are not using.

Decide your floor before responding, and hold it. Most negotiations settle above the first offer and below the first ask.

Use escrow rather than direct payment, which protects both sides and is standard for anything above a small amount.

Be clear about what is included: the domain, and whether any content, email history or accounts go with it. Usually they do not, and saying so prevents a dispute after transfer.

Check tax treatment with your accountant, since proceeds from selling an asset are not the same as ordinary revenue.

The position worth holding

For the domain your business runs on, the answer to an unsolicited offer is almost always no, and the calculation above is why rather than sentiment.

For domains you accumulated and do not use, an offer is a reason to work out what you hold and why, which most businesses have never done.

The mechanics of transferring one safely are covered in buying a domain someone already owns, from the other side of the same transaction.

Frequently asked questions

What are the two valuation questions?

What the domain is worth on the open market, which is about the name, and what it is worth to you, which is about switching cost. The second is usually larger.

What drives market value?

The extension, length and memorability, whether it is a real phrase, commercial intent, and above all whether anybody else actually wants it.

Are automated appraisals reliable?

As a rough order of magnitude only. They overvalue keyword-heavy names nobody wants and undervalue short brandable ones that sell well.

What is in the switching cost?

Reprinting, signage, every listing and profile, email addresses, inbound links needing permanent redirects, rebuilt search position, and customers who type the old address.

What does the approach tell me?

A broker withholding their client usually means an end user, who pays more. Urgency in a first offer is a tactic. Naming your business means they know its value to you.

What if I do sell?

Set a floor before responding, use escrow, state clearly what is and is not included, and check the tax treatment with your accountant.

West Coast Media Solutions Inc. provides web design, web development, hosting, digital marketing, and business consulting to organisations across Canada, drawing on more than twenty-five years in the field.

Offer arrived for a domain you actually use?

We work out the switching cost, which is usually the number that answers it.

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