How to Determine Domain Value
You are likely familiar with the term appraisal. Perhaps you’ve had your home, jewelry, or car professionally assessed. Did you know you can also have a domain name appraised? The valuation of domains may be a new concept for you, but it works similarly to real estate appraisals. If you would like to learn more about how the process works and why you would want an appraisal, you’ve come to the right place.
Domain prices range from less than $1 to tens of millions of dollars. With so much variation, it’s smart to get a domain appraisal. The appraisal can be used to show buyers and sellers the suggested price range before doing any transactions. There are websites where you can get a quick appraisal done. However, manual appraisals will be much more accurate. A broker can look into all relevant, recent data to get a detailed analysis of price. They will factor in how long the domain has existed, what the extension is, keyword associations, recent sales, and more.
Who Should Get an Appraisal?
A few groups will benefit from having a domain name appraisal done. The first group is new business owners. If you are just starting, you will want to establish a strong internet base. An appraisal will spell out which names are most valuable and prevent you from overpaying. Businesses that are established can also benefit by using an appraisal. They can price out related domains. For example, the company could already have a domain for their full name but want to acquire a matching domain for their abbreviation. The third group that can use an appraisal is investors. Compare them to real estate flippers. Investors may hold domain names that they don’t need and sell them for a profit. Depending on how they took possession of the name, the investor may not have an idea of its value.
What Makes a Domain Worth More?
You may be wondering why there is such a widespread in domain values. There are quite a few variables that cumulatively contribute to the estimated cost.
Shorter domain names tend to be worth more. They’re easier to remember and to type into your browser. Every month many names with four letters or less are sold.
Good search engine optimization can give your domain a higher value. That means if the keyword users are searching is in your name, your website may come up higher in the results. For instance, hotels.com is in the top results when you search “hotel”.
The more well-known a name is, the better. The name itself will automatically bring more traffic to your page, so you will pay a higher cost. Keep in mind that existing traffic may be temporary if established users aren’t impressed with the change in ownership.
It should come as no surprise that names associated with famous brands are more expensive. Apple’s acquisition of icloud.com is a prime example. The owners were able to sell exorbitantly higher due to the brand’s desire to own the name.
You will dish out more money for a more memorable domain. Short or catchy names will stick in your client’s heads. If people can’t remember your name, they sure won’t be visiting your site. It is also valuable to have a name that’s easy to spell. Homonyms and plays on words may have a lower value.
Whether you are buying or selling domains, remember that they are an asset. Pricing them is complex. If you want to avoid overpaying or leaving money on the table, look into domain name appraisals.