Domain Evaluation
How to evaluate and find a fair price for a domain
Finding a fair price for a domain is almost impossible. Basically a domain is worth around the highest achievable price on the market, but that does not mean the seller would sell at that price.
It is always the seller who can set the price of his asset. Like a special piece of real estate, the price is not what one would assume is fair, it is exactly the price the seller is demanding. The same applies to domains, as every domain is unique. Nothing can force the seller to rethink the price, it is his decision if he wants to sell or not.
As domains are moving from the weaker hands (domainers that are looking for a quick buck) to stronger hands (domainers and investors that are looking for higher prices) one can assume that prices will head higher. Discussions of sliding parking revenues move even more domains from weaker hands to stronger ones and stabilize the markets even more in the long run.
As there is no easy method of calculating a fair price one will have make his or her decisions on how much to spend or demand for a domain.
Sellers should try to maximize the profits of their domaining portfolio, see domain selling.
Buyers that do not need a specific domain should look out for alternatives if the asking price of a certain domain seems too steep. It is always good to make inquiries for several domains at the same time to see if one or more of those are priced within the range one is willing to spend.
Make sure to do some research on you desired name(s) using search engines and archive.org to see if the domain has any history that could be meaningful to you.
What influences the fair price of a domain?
Although it is impossible to calculate an exact fair price there are still some factors that increase or decrease the value of a domain
Ads
Domains made up of keywords that have a lot of corresponding internet ads increase the domain value.
Backlinks
Existing backlinks from well ranking sites may only have a slight price impact. Domains with existing links from bad neighborhoods should be avoided or at least sell for a discount.
Brandability
Can the domain be branded easily.
Commercial value
Domains containing keywords of high priced items that sell well over the internet are more valuable than low priced ones (eg. dishwasher compared to kitchen towel).
Competitors
The higher the competition in a certain field the higher the price.
Developed domains
Domains already including a project usually justify higher prices.
Development potential
A high development potential logically increases the value.
Double meaning
Very few domains can have two meanings depending on how you read them. These names might be problematic to use. Think of penisland.net (Pen Island, actually selling pens) or WhorePresents.com (WhoRepresents, a celebrity site).
EPC
Domains or domains made up of a keyword with high earnings per click are valued higher.
Exchangeability
If the domain can be substituted with other domains easily that reduces the price.
Fancy pre - or suffixes
These (eg. info, news, tip, world, 24) might look nice, but are easy to exchange therefore domains containing one are not worth much.
Free
Domains containing the term free don’t have much commercial value. It’s hard to make money when your visitors expect you to give something away for free.
Hyphens
Domains containing hyphens are usually worth only a fraction of the non-hyphenated version.
Language
Under most TLDs: domains with an English word will usually be worth more than the same word eg. in Italian (big exception ccTLDs).
Length
The shorter the more valuable.
Market
The larger the potential market the better it is.
Number of endusers
The more the better (eg. if you have a generic term of something that is only produced by one company and not sold over the internet, there would only be one potential enduser for the domain).
Number of search results
The higher the more potential interest.
Plans
If the owner already has plans for using the domain that can make it very expensive.
PPC
Keyword domains that have a high paying matching pay per click keyword are valued higher.
Price
A lower price attracts more potential buyers than a higher price.
Pronunciation
If it is easy to pronounce it has another commercial advantage.
Readability
Domains should be easy to read (eg. coollover is more difficult to read than nicelover).
That also reduces mistypes.
Regional domains
Targeting only a certain region means less potential business.
Registration date
Older domains sometimes are seen superior to younger ones.
Search engine placement
A good ranking justifies a higher price.
Sense
Keyword combinations must make sense (eg. doggolfing doesn’t make sense), if they don’t the domain is practically worthless.
Seasonal domains
Potential earnings are focused only around a specific time (eg. Halloween).
Singular or plural
Depending on the term either the singular or plural could be the more valuable one. Words with only one form (eg. ice cream) have a clear advantage for development and marketing.
TLDs
.coms are worth more than .net or .org.
TLD availability
If the desired domain is still available in other extensions (TLDs) it is easy to substitute and should therefore sell cheaper. If the other major extensions are already taken consider paying a premium.
Typos
Generic typo domains can only be valued according to the traffic, the name itself is worthless.
Traffic - Visitors
A large number of real unique visitors increases the value as it shows some kind of demand that might be of value to the buyer.
Sales
Prices for similar domains that have been sold in the past are a good indication.
WayBackMachine
A look at archive,org reveals if there was a previous website under that domain, this can enhance the value or devalue it.
Words
One word domains are usually worth more than two word domains.
Surely there are lots of exceptions to common sense valuations every day, but when building a portfolio it is still recommended that you keep a close look on what influences domain valuations as you should not end up with a portfolio that has not much commercial value.
Domain appraisals
Although it is difficult to find a fair price there are several companies that offer domain appraisals. All have there own formulas so you might get two completely different appraisals from two different companies. The major factor is often to compare prices that have been paid in the past for similar domains and adding some other factors to find a fair valuation.
There are also some free sources on the internet that you should not trust, none of these has yet come up with a technique to make serious appraisals.
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