In a previous posting, we discussed domain valuation and appraisal basics. In summary, domain name values are driven by four factors:
- Top Level Domain Extension
- # of Letters/Length of Name
- Existing Traffic
- Development Potential
If you are looking to price/validate a domain name that you want to buy or sell, I recommend the following methodology and free supporting tools:
- Comparables method. Like when trying to buy or sell a property in a real estate transactions, the comparable methods is one of the best ways to help determine the market price. For example, if you own the domain Clothes.com, you should try to find the closing sale or listing prices for Clothing.com, Apparel.com, or Clothes.net to help you find a pricing range for Clothes.com
- Unfortunately, closing sale prices can be hard to find but sites like DNJournal.com tracks the top domain sales every year going back to 2004.
- You can also use the listing prices for domains from domain brokers like Sedo, BuyDomains, or Godaddy. Obviously, closing sale prices are better gauges than listing prices
- Free Domain Appraisal Sites. Sites like Valuate.com or Estibot.com provide free domain valuation based on a proprietary algorithm which uses domain extension, name length, traffic, and comparable domains to come up with a price.
- These sites should only be used for directional data only. IE is Chairs.com worth more than Chair.com? Nails.com vs Nails.net vs toenails.com?
- We sold a domain for about 15% of the estimated value on Valuate.com, so these free appraisals are not perfect but can still provide valuable data points.
- Google Keyword Tool in Adwords (GKTA). The GKTA is a free tool which lets users look up the traffic numbers for any search term. You can use this tool see if search term related to your domain gets more or less traffic its variants. Large keyword search term traffic can add to the value for a domain name.
As you can tell, valuing a domain name is as much art as science. The most important factor, development potential, is somewhat subjective, but you can use the methods and tools listed above to help determine an appropriate range. You can always hire a Domain Broker to appraise your domain for a fee, but they will use a similar methodology to what we has discussed in this article.
If you have any questions about how to value your domain name or where to buy and sell domains names in the aftermarket, please post them in our Ask a Question section.
