First of all, there is no single correct answer to the question of domain name value for a specific domain. It is slightly more realistic to determine a range of values based on considering any number of criteria and expect a competitive marketplace to reflect a value in-line with that range. You should also be aware that the value determined by applying that set of criteria could change as a function of time as market conditions change and therefore the weighting of specific criteria may change. Assuming the domain is not tied to or required by some other business you own, the domain is either worth what someone else will pay for it or by the net income stream it can produce for you.
Domain Name Valuation Tools
There are a number of publicly available domain name valuation tools including estibot, GoDaddy, and Domainindex. Each of them considers a set of criteria and a valuation is determined by an automated software system. There is a rough consensus on criteria to be used but it is unlikely that any two independently designed valuation tools would use exactly the same set of criteria and weighting. Each of the tools divulges a few of the criteria it uses to determine the domain name value but none of them discloses their entire algorithm. By examining the predicted values for a few example domain names below you can quickly see the variation on predicted values. With such variation in predicted domain name value it is probably not wise to accept the prediction of any single tool. One should dig further into the criteria and weighting process that a specific valuation tool uses to better understand why it might be providing an outlier valuation.
For the following table we chose a fairly good keyword domain, a couple of single word domains, a “saying” phrase and a person’s given name to get a little variety. We also included a couple variations of TLD and plural to provide a sense of that impact on domain name value and the results look fairly typical for other domains we have tried. Other than the person’s name, we did not choose names that may have very high intangible criteria value.
Domain Name Valuation Criteria
Next we will look in more detail at the valuation criteria. At a high level the criteria could be classified into three categories, i.e. measurable attributes, comparable sales, and intangibles.
These criteria tend to be numeric or true/false and can therefore be realistically manipulated by computer calculations to derive a value. There are quite a few of such criteria and I have seen some tools claim to be considering 20+ of them. Representative examples are:
- Domain name extension – .com is the most popular and preferred TLD and in general will be valued several times higher than other TLDs
- Extension usage – are many of the popular extensions of the root name already registered
- Number of words and letters it contains – the shorter, the better, values really start to increase for around 8 or less characters
- Word construction variations – Pre- and appending characters, plural and singular, and word placement
- Search results popularity – are the word(s) being searched for popular keyword(s)?
- Correct spelling – are the word(s) correctly spelled and does it contain substitute words like “4” vs. “four”?
- Amount of traffic and SE rank – Alexa page rank and search engine PR. Traffic for existing domains generally comes from type-ins (direct input into a browser URL), back-links/bookmarks, and search.
- Numbers and Hyphens – can make it hard to verbalize, generally the values are substantially less when these characters are present
- Age of domain – is it established?
This is a process to seek out prior sales of roughly similar criteria domain names and adjusting such values up or down through a logical process to arrive at a predicted value for our desired domain. There are a couple of tools such as Namebio and DNpric.es that can be used to find historical sales values.
This comparable sales analysis can be fairly time consuming since, to a large degree, it is a detailed manual process requiring many criteria attributes to be examined and analyzed. It is unlikely you will find the exact domain name has sold before, possibly not even a reasonably close root domain name. As an example of one that did match from the examples above, motocross.co.uk sold for $6,494 in Jan 2016 and that is a LOT less than one of the predicted values but nearly double two others and one half the average. We don’t know what the sales type was for that transaction or how motivated the seller or buyer was but clearly, you need to be very cautious about making quick valuation judgements on incomplete analysis.
Intangible aspects are more difficult to associate with a measurement that could be part of a computer software algorithm but some valuation tools may try. Representative examples are:
- Memorability – is it easy to remember?
- Broad Appeal – does it have multiple industry or application uses?
- Pronounceability – is it easy to pronounce?
- Radio Test – is it likely to be spelled correctly if only heard once?
- Marketability – is it brandable and a name a business or product brand could be built on?
In summary, you might what to leverage several valuation tools and look at historical sales data before making any sizable domain purchase. It also seems logical to consider the intangibles factors after applying those tools as that aspect may result in additional value not easily or maybe correctly captured by the tools. From our own experience it seems that potentially lower priced domains and high priced domains have the most variation in the tools. We have also seen lots of domains sell for a small fraction of the values predicted on some of the lower priced domains we tried.
If you were wanting to increase the domain name value of an unused domain you could try operating a business on the domain before selling it because in most cases that would increase its measurable attribute criteria based value.
Good luck with your valuations and hopefully you find domain name gold!