How To Calculate Your Domain Name’s Value
The value of a domain name can range anywhere from a few dollars to numbers in the six or even seven figure range. In many ways it is like the real estate market of the web; those who can spot a great opportunity can purchase a domain that will eventually be invaluable to the right buyer.
The challenge is how to calculate the real value of a particular domain name. There are reports all the time about some company paying $200,000 for a domain name that’s highly relevant to their business, but how was that number reached? And what makes it worth that high initial investment when the domain’s renewal costs will be $15/year?
Ultimately, a domain name is worth whatever a buyer is willing to pay for it. Determining this price is an artform unto itself, with a myriad of contributing factors including length, language, trends and demographics. There’s no single method of arriving at the perfect asking price, and it takes a lot of trial and error to get good at it.
Here’s a look at some of the most tried and true techniques for appraising a domain name in your portfolio.
Research Recent Domain Sales
The best way to get started in the world of domain name sales is to become familiar with it. Take a look at recent sales and see what types of domains are being purchased and for what amount.
DNJournal regularly updates this domain sales report to show how much domain names have recently sold for at different premium domain services. Keep your domain in mind and see how it compares to the listed sales. Pay close attention to length, similar keywords, and other related factors to narrow down a range that your domain would likely fit within.
An important note here is that only a small number of domain sales get reported, so this is by no means a comprehensive list; however, there are still a lot of domains to look at that will help you better understand how much various types of domain names have successfully been sold for.
Use Appraisal Services
A domain appraisal service will allow you to enter your domain name and see what they suggest your asking price should be. For example EstiBot.
Appraisals like these are determined automatically based on SEO-related factors like keywords, the number of searches, Alexa rank, monthly searches and cost per click. Though these are important, there are also many important factors to consider that cannot be calculated by algorithms.
This won’t be the end of your journey, but it can be another useful step in arriving at a ballpark range for your domain. Since estimates can vary from service to service, get estimates from several different sources. Some other ones to check out are WebsiteOutlook and URL Appraisal.
Signs You Have A Sellable Domain Name
After doing your research and closely examining all of the recent domain sales, it’s now time to take a good look at your domain and decide whether there are people who will actually want to buy it.
Good Top-Level Domain
Though we offer over 400 great domain extensions to end your domain name with, most people have their hearts set on .com. It’s certainly possible to sell a domain name with an alternative TLD, but you’ll get a much higher amount if it’s a .com. In many cases, a regional TLD like .ca or .uk can ask for high figures, but it will be harder to attain because the pool of potential buyers will be significantly smaller.
Short domains are difficult to find, so the shorter your domain is, the higher its asking price can be.
Passes the Radio Test
Domain names were invented to make it easier for people to access websites, so it’s important that your domain is easily understandable. Does the domain sound good? Will people know how to spell it after hearing it? Is it easy to remember? Any confusion that your domain causes will negatively impact how much others are willing to shell out.
If you want high figures for your domain, then it needs to be the spelled properly. No one is going to have their sights set on sportsdawkter.com. The same can be said about using 4 instead of four, u instead of you or other spelling variations. That’s not to say that you can’t sell alternate spellings at all, just that the asking price will be much, much lower.
In-demand keywords will increase the value of your domain. There has to be a balance here, though; more keywords does not equal more money. People won’t want hockeybasketballsoccerdoctor.com as much as sportsdoctor.com.
Here’s how to gauge the interest in your domain’s keywords using free tools from Google.
Google Trends will help determine whether interest in your keyword is rising or declining, as well as compare how it stacks up against similar keywords.
First, enter your keyword and look at the results.
In this case, our keyword has remained relatively the same over the last 12 years, so charging a premium that capitalizes on a rising trend is not an option.
To gauge popularity, enter your search term as well as a few comparative terms to see how yours measures up. This comparison will give you a good sense of how popular your name is.
Here we can see that although “sports doctor” is significantly lower in popularity than “sports medicine,” it is also more popular than a more specialized term like “sports physiotherapist.” Determining the right related keywords will help you understand how your term fits within its niche and how much of a premium your domain can earn accordingly.
Google AdWords Keyword Planner
Using Google AdWords‘ Keyword Planner tool will show you how popular your keywords are and how much advertisers are paying for that traffic.
Create an AdWords account if you don’t have one already and head over to the Keywords Planner section.
You’ll then see your keywords along with a few other key pieces of information.
The main things to take a look at are Average Monthly Searches, Competition and Suggested Bid (cost-per-click). A highly sought domain name will have a lot of monthly searches, high competition, and an expensive suggested bid. If people are already paying a lot to attract traffic with the keywords that are in your domain, then it’s likely that they will pay a lot to acquire your domain name as well.
Using our sportsdoctor.com example, competition may be small, but there are a decent suggested bid and a fair number of monthly searches for the term. These figures indicate that many people are searching for this term and advertisers are devoting a substantial budget towards attracting this traffic, so the domain will be able to have a significant asking price.
A premium domain name needs to sound great. You can have highly-sought keywords in your domain, but if it looks awkward, then you’ll have a harder time finding a buyer. New companies have even been known to name themselves based on available domain names rather than paying whatever cost required getting their first choice.
In this sense, you don’t need only to worry about having high-ranking keywords. In fact, you can even have a domain that is a made up word. If it sounds great and it would be well suited to a certain industry, business or idea, then a domain with great brandability can impact its value as well.
Has Been Around For A While
An older domain name has had more time to be indexed and ranked by Google, making it better for SEO than a recently-registered domain. Plus, you are likely more attached to a domain you’ve had for eleven years than one that you’ve had for eleven days. Both of these can be helpful as leverage during negotiations.
Already Generates Traffic
A domain that currently gets traffic is incredibly useful in upping its value. You will be losing whatever revenue your site generates from ads, signups or other forms of monetization, and so parting with your domain will need to be more beneficial than whatever you will be losing.
Additionally, pre-existing traffic will help the new domain owner with discoverability. Since people are already visiting the domain, there is clear value in acquiring a domain name that has an audience bundled with it.
Think Art, Not Science
If you’re looking for a predetermined formula to calculate exactly what your domain is worth then, unfortunately, you’re out of luck. Appraisal services can churn out a number based on a complex set of criteria, but there’s much more to domain names than algorithms and search rankings. A domain exists in the wider context of the online and offline worlds, and all of their complexities and nuances will play a part in how much interest there will be in your domain.
To figure out your domain’s value, you ultimately need to understand who your potential buyers are. What industry are they in? Is a website important for their business? How relevant is your domain? A domain is only as valuable as someone is willing to pay for it, so knowing what related domains are priced at, how sought after your domain is, and how much to reasonably expect a buyer to pay will help you arrive at the right number.