Pricing a domain can be tricky business. Whether you are trying to buy a domain or figure out what a fair value for your own domains would be, Thorgate can help guide you along this path.
There are a variety of tools which attempt to automate the process of domain valuation; however, an algorithm can only do so much, and is especially ill-adapted to pricing a domain which might be the perfect branding opportunity but have little or no value based on traditional valuation metrics.
End user consulting and recommendations are the most important part of domain acquisition, as buyers can easily end up overpaying for a domain or simply not getting the best domain possible for the budget available.
In addition to buyer valuations, Thorgate provides portfolio and single-domain valuation services. Whether you have a single-high value domain, or a large collection of .COMs, Thorgate will work on establishing a fair wholesale and retail value for your domain or portfolio.
If you have any questions about Thorgate's domain valuation services, please feel free to contact us.
How to Valuate a Domain
Domain valuation can be a confusing process, as sometimes common sense does not match up with the reality of demand for a domain; however, often, a well-crafted valuation will be reasonably reliable. The most important factor of valuation is figuring out how many different uses a domain might have, and consequently how many potential buyers there might be. The more possible uses, and the more potential interested parties the higher the value of the domain.
Things to consider when appraising a domain are:
- Number of possible use cases: The larger the number of use cases a domain has, the higher its potential selling price could be, because it will have individuals or companies interested in the domain, and if demand is high, with an (obviously) limited supply, then the price will go up.
- Number of potential buyers: A domain may have a lot of use cases; however, the buyers may not be there, or those who would want the domain may not be able to pay a premium. Furthermore, if the domain itself is not usable in a lucrative business/industry, then it may not get a big boost in price just because of having many potential buyers.
- The size of the potential buyers' pocket book: As mentioned previously, the ability of the buyer to pay a premium for a domain name will play a big role in the final selling price. So if you are approaching small local businesses and trying to sell a domain for tens of thousands of dollars, you may be out of luck.
- Domain extension: Other than a .com, any other extension will pale in comparison when it comes to price. Of course, if the domain consists of a highly desirable single word, then the .net and .org can also fetch a good price, but nothing close to the .com.
- Number of words & characters in the domain: One- and two-word domains are highly desirable. Anything beyond two becomes less attractive to end users and investors, unless it is specifically describing a subject/topic/category which is comprised of three or more words, but even then, the price is not going to rival that of a two-word domain.
- Keyword popularity: Keyword popularity can be determined by using the Google AdWords tool which provides monthly (and aggregate) search volumes for every keyword. The higher the number of searches for the keyword, the more popular it is, and hence the bigger its impact on the price of the domain in question. Another factor in determining how valuable a domain is, is the per click cost of advertising on Google. For example, if keyword A costs $0.45 per click, and keyword B costs $2.25 per click, everything else being equal, keyword B will command a much higher price as a domain than keyword A.
- Do you receive unsolicited offers?: If as the owner of a domain, you receive unsolicited offers, then there is definitely value in your domain. The more frequent the inquiries/offers, the higher the value. On the other hand, if you have owned the domain for several years, and have never received an inquiry, you can safely assume there isn't much (if any) demand for it in the market.
- Does the domain have hyphens or numbers (excludes numeric domains)?: Putting aside numeric domains, if your domain name has numbers or dashes in it, the value is automatically slashed drastically, unless the number is a meaningful part of the domain. To illustrate, keyworddomain.com is radically more valuable than keyword-domain.com.
- Does the domain have spelling errors?: No matter how small, spelling errors are fatal to a domains value, so stay away from funky spelled domains. Of course this rule does not apply if you are trying to build a brand around a particular domain, and the spelling plays a role within your plans; still, the price you pay for that domain should not be premium pricing.
- Is the domain easy to spell and are there spelling variations for any words within the domain?: Ease of spelling is a highly valuable characteristic in a domain. For example, the domain grey.com or gray.com are not as valuable as brown.com. Putting aside other factors, the fact that there is only one way to spell 'brown' makes it more valuable, as it is less likely that users will end up at the incorrect domain by simply typing it into the browser address bar.
- Is the domain singular or plural?: The plural version of a word is almost always less valuable than the singular version, if for no other reason than making it instantly more brandable than the plural. You can take almost any singular version of a word and turn it into a brand, but that is not possible to do with the plural, or at least not as well/easily.
- Does the domain have prefix or suffix (e.g. 'The', 'HQ', 'Company')?: Prefixes and suffixes reduce the potential value of a domain simply because they introduce more complexity into the domain. As an example, hosting.com is significantly more valuable than hostingcompany.com.
- Domain age: Despite what many industry experts and articles claim, just because a domain was registered a long time ago, it doesn't mean it will have any kind of advantage in organic search engine rankings. The only time the age of the domain will play a role, is if the domain was actually used during that registration period, and it was used to publish useful and high quality content, and at the same time had high quality incoming links. Furthermore, the content which was published on the domain during its previous existence as a website must match the intended new use of the domain if there is any value to be gained from its history. For example, buying toys.com hoping that it will rank well for a site selling car parts is not going to work. So if someone is trying to tell you that a domain is valuable for SEO simply because it is old, don't buy that sales tactic.
- Does it have type-in traffic?: If a domain is receiving direct type-in traffic, meaning that people go to the browser bar and type in the domain name to see what's there, then there is built-in traffic that comes with the domain, and without having to do any kind of marketing or advertising, the owner receives relevant traffic to the site. This will automatically increase the value of a domain.
- Is it suitable for monetization or commercialization?: With some creativity, almost any domain can be used for some type of commercial enterprise; however, if your goal of pricing a domain properly based on its inherent values, then you must consider the ease by which it can be monetized or used for a business venture. The more obvious, and easy the path to commercialization, the higher the value of the domain.
- Comparable sales in recent months/years: As with real estate, domain pricing can be impacted by recent comparable sales. So if you can find out the pricing for similar sales in the recent past, that can give you a fair idea as to the price range of a given domain.