John Andrews is a Competitive Webmaster and Search Engine Optimization Consultant in Seattle, Washington. This is John Andrews blog on issues of interest to the SEO community and competitive webmasters. Want to know more?

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Hey SEO: Raise Your Rates, You’re Worth More!

I’m at the Domain Roundtable event here in Seattle, already having fun and meeting good people. I just listened to a fun speech by Mike “Zappy” Zapolin, from InternetRealEstate.com. Mike is the guy who bought beer.com from a bunch of drinking buddies for $80,000 and then sold it for $7 million. Oh, and he owns chocolate.com and software.com and “a few more”.

Of course success stories are always fun, but the news is that domainers like Mike are developing their properties big time right now. It’s not so much about the generic domain name as the generic domain name that has a site on it. The reason? The sales of generic domain name-based businesses are at 20-25 earnings multiples, sometimes despite low profits. So a domain like genericdomain.com by itself has obvious value as a generic domain name, but a business operating on genericdomain.com with $10 million in revenues can sell for $200 million.  A business on a domain name is obviously valuable, but that same business on a strong generic domain name for that industry has much more perceived value to the customer. A credit card site doing $10 million per year on BestCreditCardsForYou.com (for example) is worth much less than a credit card business doing $10 milion per year on CreditCards.com, because of the perceived value and trust granted to the generic domain name CreditCards.com. Less than 10x multiple vs 20 or 25x, according to Mike (who used to own CreditCards.com by the way).
So the game is get the sites built and busy, to raise the revenues, to raise the cash out potential alot. Domainers are hiring CEOs to build those businesses, banking on them being worth so-much-more because of their generic domain names. And you all know that one core tool for doing that is SEO.

So all you SEOs out there, consider that when setting your fees. To the extent that you help build a business that will cash out at 20-25x earnings vs 10x or less, what is the SEO effort worth? Think about it. Everybody else is.

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6 Responses to “Hey SEO: Raise Your Rates, You’re Worth More!”

  1. Stuart Says:

    It’s an interesting way to set your price range and a coder alerted me to it a couple of years ago.

    He sets his prices based on what he sees his client making from the use of his script. Since he gave up charging an hourly rate he’s never been short of work … or cash.

  2. Judd Says:

    As long as you can structure a contract appropriately, taking out a cut is a brilliant way to ensure recurring revenue. If you’re THAT good, it will out, and you will cash in.

    Heh, I’m not there yet though. Someday maybe.

  3. OOM Says:

    Never really understood how domainers choose their “products”, now this makes sense.

  4. RWS Says:

    I have been thinking about this for a long time, and wondered why more domainers were not doing this. I am glad to hear that they are. Very insightful post :-)

  5. Brian Says:

    Wow, I didn’t think there was still a lot of money to be made in domain names…

    Anyway, as far as the SEO pricing, I came from a large agency that would sign success fee based agreements from time to time. Usually it would still involve a flat fee but at a discounted rate, and the commission would be in addition to that.

    Even if you’re good at Internet marketing, it’s still a risk if it’s a new site or product. No matter how good you are, if people don’t like their product or they’re not at a good price point, you won’t be raking in any commission.

  6. Krunal Chauhan Says:

    Welll I have been always bad in domaining market.. The best domain i ever sold was i think Ozhu.com for $400 and theshoppings.com for about $440 in 2005 .. since then i have had always bad luck with these domaining