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How to Value Your Domain Name

You'll find many companies that are happy to assess the value of your domain name. Some offer this service free through an automated "valuation wizard"-type approach, others charge a fee for a more customized, personal valuation. Fundamentally, all these appraisal services suffer from the same flaw: domain names are UNIQUE!

So while there is certainly some merit in looking at the current domain name market and trying to find "parallels" with recent sales, it's impossible to base the valuation of one domain name on the valuation placed on another, no matter how much some domain name valuation services would have you believe otherwise.

At the end of the day, a domain name is worth exactly what a buyer is willing to pay for it, no more and no less. You could have what you consider to be the most attractive domain name in the world in your portfolio of names, yet if you don't succeed in tracking down a potential buyer, and no such buyer presents themselves unbidden, then any discussion on the value of that particular domain is idle, since any value is latent until it is unlocked by a purchaser.

If you are still keen to have your domain name appraised, it is best if you avail yourself of a free service, since paid appraisal services (which cost from $10 upwards, with many around the $30-50 mark) may frankly cost you more than the domain name itself is worth. Also, remember that no paid appraisal service is going to tell you point-blank that your domain name is worthless, since that would guarantee that they would lose the chance of any repeat business from you!

You'll find many companies that are happy to assess the value of your domain name. Some offer this service free through an automated "valuation wizard"-type approach, others charge a fee for a more customized, personal valuation. Fundamentally, all these appraisal services suffer from the same flaw: domain names are UNIQUE!

So while there is certainly some merit in looking at the current domain name market and trying to find "parallels" with recent sales, it's impossible to base the valuation of one domain name on the valuation placed on another, no matter how much some domain name valuation services would have you believe otherwise.

At the end of the day, a domain name is worth exactly what a buyer is willing to pay for it, no more and no less. You could have what you consider to be the most attractive domain name in the world in your portfolio of names, yet if you don't succeed in tracking down a potential buyer, and no such buyer presents themselves unbidden, then any discussion on the value of that particular domain is idle, since any value is latent until it is unlocked by a purchaser.

If you are still keen to have your domain name appraised, it is best if you avail yourself of a free service, since paid appraisal services (which cost from $10 upwards, with many around the $30-50 mark) may frankly cost you more than the domain name itself is worth. Also, remember that no paid appraisal service is going to tell you point-blank that your domain name is worthless, since that would guarantee that they would lose the chance of any repeat business from you!

Enough of the doom and gloom - the fact remains that some domain names do have value, and some have significant value. Here are a few guidelines to help you understand the potential value of your domain name...

Do you receive unsolicited offers to buy the name?
If you get emailed offers to buy the domain name without it being listed for sale anywhere, that clearly shows it has SOME value to somebody. Essentially, you have a new base price when trying to establish a valuation: the amount of the unsolicited offer.

Is the domain name a ".com" name?
.com is still king of the domain name hill. Generally, a .com domain name will have 5-10x or more the value of the same name with any other extension. Cars.com may be worth millions - but nobody's going to pay millions for Cars.net!

How long is the domain name?
Generally, the shorter the better when it comes to domain names - as long as this shortness doesn't come through throwing away words or letters, or substituting numbers for letters. GoForIt.com is a nice little domain name, with some value. Go4It.com is worth less than that. GoFrIt.com is essentially worthless.

Is the domain name hyphenated?
Sometimes, hyphens help to preserve clarity, but generally they reduce the value of a domain name. Sports-Cars.com will most likely sell for less, even much less than SportsCars.com...

Is the domain name spelled correctly?
If there are any misspellings in the domain name, you can knock 99% or more off the price of most domain names. SportsCars.com (to wear this example a little thinner) is a nice domain name. SpertsCars.com most likely wouldn't fetch $50. If in doubt, always consult Dictionary.com

Is the "thing" the domain name refers to generally a singular or a plural "thing"?
This is one of the hardest value factors to consider, given how subjective it is. Still, the effort can be rewarding. BuyTicket.com is most likely worth less than BuyTickets.com, but Chat.com is most likely worth more than Chats.com.

Does the domain name resort to prefixes or suffixes?
Prefixes or suffixes can REALLY hurt the value of a domain name. For example, add an "e" or "i" or "my" in front of the domain, or a "site" behind it and you've just destroyed most of its value. (Exceptions exist of course, such as EBay.com which is worth millions of times Bay.com, but that is because of the tens of millions of dollars poured into branding the domain name. Seen totally independently of the site/service it relates to, eBay.com is worth much less than Bay.com)

How many words are there in the domain?
How common are these words? Generally, the more words in the domain name, the less it is worth. But common two-word expressions are worth more (sometimes MUCH more) than rare one-word expressions. And common three-word expressions can be worth more than rare one-word expressions. Example: SportsCars.com is worth more than Semantics.com. FreeEmailAddress.com is worth more than Superiority.com.

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When comparing domains with the same number of words, think of the likely audience and the commercial applicability of the domain name. Example:

Cars.com is a very obviously commercial one-word domain name. Semantics.com, while having some value, doesn't have a very clearly defined audience or potential use, and is much less commercial. Cars.com might ultimately be worth more than a thousand times the value of Semantics.com, yet they're both one-word domain names.

Just because a domain name is in the dictionary, it doesn't automatically make it valuable! It's a frequent myth on many domain name discussion and auction sites that any one-word domain name must be worth thousands - WRONG!

If the domain name has no COMMERCIAL value, it generally has little or no value, period.

Example: "Gerontocracy" is in the dictionary, but you're not going to get rich off Gerontocracy.com

Armed with the answers to the above questions, you can at least get some idea of the value of your domain name.

At one end of the scale, if you receive frequent unsolicited offers to purchase your correctly-spelled one-word commercially valuable .com domain, then you may be sitting on a real winner.

FAR off to the other end of the value scale (at the $0 point), if your domain name has 4 words in it, one of which is misspelled, you're out of luck.

You may be feeling frustrated at this point with the whole concept of trying to establish a value for your domain name... It's worth persevering, since without even a ballpark idea of value, you're going to find it much harder to locate a buyer for the name and close a deal. And if, after taking a long, hard, as-objective-as-possible look at your domain name, you come to realize that it's not worth anything, then either:

Develop a website using the domain name (this adds value to it)

Sigh, make a mental note that the domain name is not worth RENEWING (!) and move on to considering other domain names.

Selling your Domain Name Yourself

Going it alone...

There are three different ways to market a domain name yourself, depending on the effort you are willing to expend and how quickly you would like to sell the domain name. You can choose to do nothing, set up a basic web page, or create an active site.

Do Nothing...

The simplest way to market the domain name requires no extra effort after the domain name is bought. Just do nothing, and wait for a potential buyer to look up your domain name, see that it is already taken, and send you an offer to purchase it from you. As you can no doubt guess, the chances of success from such a passive method are fairly slim, unless you have somehow managed to reserve a truly fantastic name that everyone else missed.

Set up a basic Web page

The next step up is to create a very simple page connected to that domain, with a short message such as "The following domain names are for sale. Please contact <e-mailaddress@yourdomain.com> for more details." followed by a list of the domain names for sale. The benefits of this sales method is that it requires very little time and effort, yet it allows potential buyers to at least visit your site on the web, even if there is nothing there. Call HitNet.com for help if you need help.

You will need to link your web page to your domain name. This is beyond the scope of this introductory document. Please consult with HitNet for more details.

Create an active site

If you are prepared to devote a great deal of time and effort to marketing the domain name, there is only one possible line of attack: create a fully-fledged web site, attract visitors to the site and place a notice prominently somewhere on the site to indicate that the domain name is for sale. The decision to create an active site should not be made lightly; in order to attract sizeable numbers of visitors and increase the chances of selling your domain name, the site should provide interesting, useful information.

The benefits of an active site are two-fold. Firstly, a site which attracts many visitors will have a greatly increased chance of catching a buyer's eye in the fickle world of cyberspace. Secondly, if the site is popular enough, it could be put on the market as a going concern: the buyer purchases not only the rights to the domain name, but also the information [and readership] of the site. This is similar to the goodwill factor for shops: purchasing a successful bakery will cost more than purchasing a vacant shop and turning it into a bakery, as the daily flow of customers has been factored into the sales price. Equally, a successful, popular web page is worth more than an empty site.

Selling your Domain Name with a Broker

Sit back, relax, pay a commission...

A number of different companies provide services selling domain names. As the market for domain names is still very young, it is difficult to rank the services offered by these companies in an absolute way. Instead, why not follow this four-step plan to help you select which company to use.

Visit the various brokers; explore their sites thoroughly to get a feel for layout and mode of operation.

Send an exploratory e-mail to the contact address on each site. Explain your interest in selling your domain names, and ask any relevant questions. Check how long it takes for a representative to contact you, and how appropriate their reply is to your requirements.

Choose a site after reviewing the information acquired through steps 1 and 2. You may decide that none of the companies fit your exact requirements. In this case, you will want to return to the "Going it Alone" section to plan the next move in your campaign to market and sell your domain name.


Appraised domain names base the value on the following factors:


Marketability
How profitable is it? How large is the market it is targeting? Does it apply to the entire market?

A domain such as dryflowers.com is without a doubt worth less than vacation.com. The reason is that dried-flowers market is less profitable. Vintagecars.com is worth less than cars.com since it applies to a minor portion of the industry.

Clarity
Can it describe its content? Can it be associated with a product, a service, a brand etc?

Bookshop.com or Musicstore.com have a great development potential since they're perfectly clear.

Memorability
How memorable is it? Will people easily remember it? Will people easily recognize it?

A domain name should be easy to remember and easy to recognize. The easier to remember, the higher its price will be. Moreover a good domain name is hard to misspell.

Escrow.com, News.com, are easy to remember and hard to misspell.
cyberwebdiscountcoupons.com is difficult to remember and retains a good amount of value.

Popularity
How popular is the domain name?
The more popular it is, the better it is ranked on major search engines.

Top Level Domain (aka extension)
What is its TLD?
e.g. com, net, org, ws, etc.
Dot Com names are the gold standard on the Internet.

carwash.net is worth less than carwash.com

Length (Please don't count the TLD)
How long is it? Is it easy to type?
When it comes to domain names, shorter is better.

carwash.com (7 characters) is worth less than car.com (3 characters)
fastsearchengine.com (16 characters) is worth less than searchengine.com (12 chars) etc.

Word count
How many words it contains?
The most valuable domain names consist of few words. Two/three words are good, and four words are about the limit.

carwash.com (2 words) is worth less than car.com (1 word).
veryfastsearchengine.com (4 words) is worth less than searchengine.com (2 words) etc.

[Each abbreviation, acronym, prefix or suffix is also considered one word.
e.g. eshop.com = 2 words]

Hyphens
Is it hyphenated?
Hyphenated names usually don't sell as well. It's very useful to register a name with hyphens in, if you own the non-hyphenated version.

car-prices.com is worth less than carprices.com
compare-car-prices.com isn't worth much.

Numerals
Does it contain numbers?
top10.com is worth less than topten.com etc.

Substitutions
Does it contain substitutions?
i.e. "2" instead of "to", "k" instead of "c",
"4" instead of "for", "ez" instead of "easy" etc.
2morrow.com is worth less than tomorrow.com
ezshop.com is worth less than easyshop.com etc.

Abbreviations
Does it contain abbreviations?
wallst.com is worth less than wallstreet.com

Last but not least: Be aware that trademark conflicts reduce the value of a domain name dramatically.

 

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