Every domain has its own value, based on the quality of the domain name. Before choosing a domain name and investing in it, it is worth finding out what the domain name is potentially worth. Nobody wants to pay more than the domain is actually worth, especially those planning to flip the domain at a later stage.
The actual valuation is not as easy as you might think, and finding ‘parallels’ with recent sales or similar names can be tricky. Just because one domain name happens to be valuable doesn’t necessarily mean another will be worth the same or similar, even if there is only one letter difference.
There is no automated appraisal system to tell you whether a domain name is valuable or whether it is worth less or more than you paid. Some domain names are worth $zero!
Let’s look at an example: Condos.com might be worth enough to buy your own condo, BestCondos.com certainly has some value, although not as much as the first example, and then you have BestCondoSales123.com which is worth nothing at all!
Why The Value of Domain Names are So Cheap @dot50?
You might be wondering at this point why domains at dot50 are so inexpensive, and the reason is because a lot of people are going to overestimate the resale price potential.
Investors rather than end users are the ones fueling the current hype, and some sellers are asking too much for their domains. At dot50, domains are acquired as inexpensively as possible. This is the same whether it is a premium aged domain, a hand-registered domain or a brand new one.
We value domain names based on a variety of factors, including different type options, theories and tools developed for value approximation for the keyword, keyword phrase, or other factors which influence the appeal of the domain name.
It is important to know the difference between a domain name which has value and one which is only worth its registration price. Bear in mind serious business domain names end in .com and they are spelled correctly and either make sense or have appeal by being distinctive or deliberately quirky. Moreover they are easy to pronounce and remember. Starting point is make sure you learn the Golden Rules for Choosing Clever Business Names.
To help you understand more about the potential value of your domain name, and discover more about how we determine domain value, take a look at the following guidelines.
Comparable Sales Analysis
This is a very important step in the valuation process. At dot50 we use NameBio.com to find ‘parallels’ with recent sales for the length and pattern of root keywords.
So let’s use SharesForum.com as an example and estimate it’s value based on comparable sales history.
When we are checking a 2-word domain name, we will always search the first keyword and then the second keyword separately ensuring that both keywords are searched in their specific position inside the name.
NameBio tells us, the average of the relevant sales of domains starting with “Shares” + ending in ‘Forum’ went for $1,380 which is a pretty accurate average. Now let’s take a look at other information as well.
The Importance of SEO
An exact match domain name offers a sure advantage for being ranked well in search results for your main keyword. If you are selling ceramic tiles, then the best domain name to choose might be CeramicTiles.com, since that is what people will be searching for online, and the exact words your potential customers will be typing into their search engine.
As well as exact match domain names, we also consider the monthly search volume for the keyword or keyword phrase, factoring that into the price.
If your domain is based on specific keywords, enter those keywords into Adwords Keyword Planner to find out their monthly search volume, then multiply by 12 to discover the yearly search volume. Now multiply that number by the Adwords ‘suggested bid’ or cost per click.
This will tell you what it would cost to advertise your new site for a year if everybody who searched for those keywords were to click on your ad. Not everyone is going to click the ad though, so take off about 25% to get a more accurate estimate (multiply the final figure by 0.25). This end result is the approximate domain name value.
So let’s go back to SharesForum.com and find out why that has a $8,580 value. Google Keyword Planner tells us the keyword phrase ‘shares forum’ has 1300 searches per month, and the cost per click on Adwords is $2.20. This means we calculate 1300 x $2.20 x 12 x 0.25 and get $8,580 in total as our valuation.
If the domain you want to appraise has either exact match or partial keywords which you want to rank for, it is a good idea to look up the search volume of the keywords in order to discover the potential value of the domain name.
You can also use other methods to figure out the value of the domain if it has other positive attributes such as being brandable and/or unique.
Using Online Domain Valuation Tools
We use Estibot.com and tools like Epik.com to collect data from various sources so we can compare the results. Appraisal tools are based on algorithms which search for keywords, traffic and other factors. If a domain doesn’t possess any of those, the value is likely to be very low.
It is important to know that we use clever word play to craft unique domain names, and software is not as accurate as a human when determining the value of such a name. Although online domain valuation tools are useful for research purposes, they should not be used to determine the final buying or selling price.
Estibot values SharesForum.com at $340, however let’s use that figure in our next example. Using the 3 metrics we collected for this domain, we can work out:
($1,380 + $8,580 + $340) / 3 = $3,433.
That would be a fairly accurate figure for a 2016 domain name only sale, but remember these are just a few of the methods that can be used to estimate the value. There are other data points and statistics you can bring into the equation to come up with the most accurate value.
So you might be wondering why we have priced Sharesforum.com at only $1,495?
The answer is simple: we want to leave room for profits if you purchase this domain as an investor, and also support developers who are overpaying for new domains.
Valuing Brands without Software
A domain name can be valued based on similar sale history, keyword or keyword phrase popularity if applicable, brandability, length and pattern.
Software cannot be used to get an exact domain name valuation. Although some objective analysis is important, a lot of the characteristics in a domain name must be manually examined relative to your business and its goals. A domain with better development potential should be more valuable.
Placing an accurate domain valuation is not always easy. It isn’t something to be taken lightly and it’s not just a guessing game. If you want to become a profitable investor, you can either use the methods we have suggested here or save time and money by using dot50.