Domain names have proven their resale value and more and more people are getting involved in domain trading every day. Necessarily the “science” of valuing domains has been becoming a big business. Appraising can be described as the process of evaluating a domain name and determining its market value. There are already dozens of appraisal firms on the scene and many more appearing. But is it really worth your money to get a professional appraisal? I doubt that. Most of the time you’ll need just an approximate value of a domain and you can figure it out on your own with a little research.
Since the domain name appraisal industry is so young, perhaps we could compare it to some other industries. Real estate maybe? I have heard many people describing domain names as “virtual real estate”. However these two concepts are absolutely different. You can register a new domain for cca 10 bucks in 5 minutes flat so there’s essentially no physical value. Therefor domain names are perfect example of an intellectual property in its purest form.
Important Appraising Factors
When determining a value of domains you should take into considerations various factors including its length, keyword recognition, clarity, range of potential uses and many more. I’m going to divide these factors into three categories: Structure, Impact and Marketability.
Dot Value is the most important. Domains with .com extension are the most valuable. The problem is that most good .com names are already taken. The second best extension is .net followed by .org. Although .org seems to be somehow connected with non-profit websites so it isn’t very suitable for commercial projects.
Initial i-, e-, or v-. I have come across an opinion from DomainIQ.com. It claims that domains beginning with i-, e- or v- are of lower value. Moreover, names including “the”, “and”, “-est”, or “-ing” are worth less than those without.
Length. This one is quite simple. The fewer letters the better. Names over 15 characters long are less valuable.
Hyphens and Numbers lessen the perceived value of the domain, too.
Recognition is one of the most significant factors. Domains like Business.com, Monster.com or Baseball.com have high recognition. Google.com or Yahoo.com wouldn’t fetch a high price under normal circumstances. Their value has arised from an extremely clever marketing. The ways words are crunched together also affects recognition. If the domain name consists of more words it has a greater value if the words are in a correct word order.
Industry Relevance. If the domain name would immediately tell a customer what products or services are being offers, it increases in value. For instance, Phone.com, Garden.com or Art.com would score very high on this criterion as they are relevant and very brandable for certain types of industries.
Clarity adds a value, too. Is the domain name completely clear? Can it be spelled in more ways? For example, There.com might be confused with Their.com if you hear it on the radio (though it’s still amazing domain name).
There are also other factors that fall into this category but they are not so crucial. Positive tone, memorability and many others.
Flexibility. This one is probably the number 1 factor that determines whether you’ll be able to sell the domain for a good price. A really flexible could possibly be used for many different projects. For example Beyond.com is indeed flexible. There are almost endless possibilities for this domain name – it’s suitable for almost any kind of website. On the other hand, flexibility is not always desired. Many people will need a distinct domain that will be closely related to their business or company name. To sum it up, flexibility usually makes the domain more valuable but there are situations where it can lower the overall price.
Trademark Conflicts. Be very careful when pursaching a domain. The name might infringe on trademarks or be involved in trademark conflicts. That would dramatically reduce the value.
Current Traffic and Revenue. If the domain name points to an existing website, how much traffic does it get? How many backlinks? Any revenue? All of these factors are a great plus to the final price.
Similar domains. Look for similar names for sale in various auctions. You can also look at what websites are built around similar domains and whether they are popular and important players in the field. This can give you a better idea about an average value of your domain.
There are certainly many more factors that go into determining a domain name’s value on the open market. Appraisals, even from professional appraisal companies, can fluctuate widely. The true value of any domain is mostly just a matter of opinion and cannot be precisely measured. The real price is always dependant on how much an owner of domain is asking or how much a potential buyer is willing to pay.
There are various tools around the internet that can calculate average value of your domain. Estibot.com is one of them. Dnscoop.com is another useful tool. It calculates average value of the whole website taking into consideration traffic, number of backlinks etc.