How do I value a domain name that has ceased trading?

[Chabrenas]

A month or so ago, a competitor ceased trading, and offered to sell us his remaining stock, the domain name, and the goodwill associated with the site.

We made an offer for the stock, to purchase items that were in our own range, and a revenue-sharing deal for any of the stuff unique to his site where he originated the sale (retail or wholesale). We also made a small offer for the value of the domain name. He rejected the offer (it was about 1/4 up front of what he wanted, but held out the prospect that he'd get a reasonable share of any sales we made through a site using his domain name). He has now come back willing to accept an offer with 25% more up front than our proposal. However, I don't like the deal on any terms:

- to get anything out of the stock unique to his brand, we would have to create a website selling a competing brand
- the domain has pointed to cPanel on his host for a month or more. G hasn't really noticed yet, but the 'site' is beginning to drop a bit in the SERPS

Am I wrong? What do Experienced People think?

[KenW3]

The only reason I can see for purchasing the domain name is to prevent someone from using it to compete with you, but it is possible to gain market share by competing with yourself.

held out the prospect that he'd get a reasonable share of any sales we made through a site using his domain name

There is no reason to share profits for any sales from a web site that has been purchased for your business. Does this person expect to partner with you, or sell to you?

I have developed competing web sites with the same products, different business names, phones, hosts, etc. If there is currently no site on the name, and the site is dropping in the SERPs, it doesn't have value for anything other than the goodwill attached to the brand, backlinks it has developed, and unique content provided. If you won't be building nor maintaining the brand, then there isn't much reason to bother with the name.

[Chabrenas]

There is no reason to share profits for any sales from a web site that has been purchased for your business. Does this person expect to partner with you, or sell to you?

Thanks, Ken. The shared revenue deal was a way of offering him something for stock which had no value to us - mostly one premium line which he had failed to sell. We offered to try to sell it, and pay a commission for any sales that came via him. If he made no effort, we had the stock for free, but it would take effort on our part to add it to our own site's range and to promote it. Since he had failed to sell the product, we were not prepared to assign any value to it for adding to our own stock.

I understand the concept of running competing businesses with the same or overlapping products, but I would have to believe that the extra sales would justify the overheads of running two companies. I reckon we have identified ways to make a better return on the outlay.