Domain names can range from a few to a few million dollars in valuation. Some people trade them for a living, others buy expired ones to kickstart their own websites.
You could see domains as the land of the web. But compared to land, valuing domain names is quite a complex challenge.
I have personally bought domains ranging from a few hundred dollars to low five-figure deals and want to share a few of my thoughts with you.
The most expensive domain names ever sold
Here are the three most expensive domain name sales publicly reported. GoDaddy lists way more in case you are curious.
- CarInsurance.com — $49.7 million
- Insurance.com — $35.6 million
- VacationRentals.com — $35 million
Crazy right? At the end of the day, the price solely depends on how much a buyer is willing to pay for it. Period. Your calculations can be as complex as you want or as simple as you want. If there is nobody willing to purchase, it simply does not matter.
At the lower end of the market ($5,000), the demand for domains is relatively high these days and the valuation/price seems to follow an actual demand curve. At the higher end of the valuation range, with only a few buyers, paid prices seem to be way more random and depending on other factors.
For me determining a price is more an art form with no single method of arriving at the perfect asking price. However, there is a myriad of factors contributing to a valuation, which I will analyze in this article.
Let’s have a look at some of the most popular methods for determining the value of a domain name first.
Have a look at recent domain sales to become familiar with the market. The website DNJournal regularly publishes recent sales on its website.
Keep your domain in mind and evaluate how it compares to the listed domain sales. How does your domain differ in length, in regards to similar keywords?
Try to start narrowing down a range that the domain you look at buying would eventually come close to.
Another good website to look at is Flippa’s domain section. Click on “see all domains” and then filter by “recently sold”. While DNJournal shows you all premium domains, Flippa also gives you a feeling about the lower end of the market.
A domain appraisal service will calculate the domain value for you. Those tools factor in SEO-related factors such as keywords, the search volume, costs per click and more.
While this helps to get a “technical understanding” and arrive at a ballpark range, it still leaves quite a few variables out of the equation. As those estimates usually vary from service to service I usually use multiple at the same time.
Here are a few of the ones I use:
Factors that positively influence the value of a domain
Good top-level domain
While there a >1,500 different domain name extensions available for you (see Wikipedia), .com domains are still the most valuable as most people have set their hearts, eyeballs, and clicks on them.
Also: how often do you see non-dot-coms ranking on page 1 of Google?
You can, of course, choose a different domain if it helps your purpose, but keep in mind that local domain name extensions ultimately limit your market of potential buyers (and thus most likely the valuation of your domain).
If the keyword your domain represents is in high demand it positively influences the value of your domain.
Gauge demand via Google Trends
You have no idea how to gauge the interest in your domain’s keyword? Check out Google Trends – it’s free and gives you useful insights on whether interest in your keyword is in- or decreasing over time.
Evaluate cost-per-clicks via Google’s Keyword Planner
Understand the market even better by analyzing the costs-per-click with Google’s Keyword Planner. The tool gives you an indication of the actual traffic value if you would be able to rank for the keyword.
Passes the tell-your-friends test
Is the domain easy to understand and sounds good? Do your friends know how to spell it after hearing it? Is the domain name easy to remember? Avoid domains that are really hard to spell or even hard to pronounce.
To achieve the highest value of a domain ensure that it’s spelled correctly. Even using a “u” instead of a “you” drastically lowers the value of a domain. That’s why I personally even try to buy dictionary domains only. They are expensive but at least clear to understand and correctly spelled.
If your domain is short in length, spelled correctly, representing a positive trend with a lot of search volume, you are in a great place.
A domain name high in value needs to sound great. It’s as simple as that. If it looks or sounds awkward, you’ll have a harder time finding a buyer. So following this logic, you could even have a made up word as a domain.
If it sounds great and fits an industry or idea really well, such a domain with great brandability can most likely have a high valuation.
Existing domain authority and age
In our post why and how to buy expired domains we have discussed in great length why aged domains with existing authority can help you kickstart your website project. However, this is not only great for your own project and helping it’s SEO position, but also positively impacts it’s SEO value.
It’s more Art then a Science
There simply is no exact formula to calculate the correct value of a domain. Even if your domain is ugly, hard to spell, and has no search demand, you might be lucky and find that highly interested buyer who is willing to pay anything for it.
While appraisal services can help you (and use a complex set of criteria), there’s much more to valuing a domain name than algorithms and organic rankings.
Valuation for selling a domain
To value a domain for the purpose of selling, you need to understand your potential buyers. What is the industry? How relevant is the domain for them?
Valuation for buying a domain
If you want to buy a domain for your own portfolio, turn those questions around: how much does the domain help you? Does it most likely increase your rankings? Do people remember your business better by using this domain? How many competing buyers are out there?