How Domain Name Value Is Calculated
GoDaddys domain valuation tools algorithm uses proprietary machine learning and real market sales data to estimate domain values, providing you with comparable domain name sales so you can price your domains with confidence.
The tool also looks at similar domain names based on the TLD and SLD the words to the right of and left of the dot respectively .
Each domain name is different and the domain valuation tool factors uniqueness into the equation, too.
The length of the domain name is also examined. A domain with less than 15 characters has a greater value.
This is especially true with the limited amount of domains still available using just the 26 letters of the English alphabet .
In 2013, WHOAPI.com confirmed that all the four-letter domains are registered.
Coincidentally, most domains less than four characters long are valued in the thousands, tens of thousands and even hundreds of thousands of dollars depending on their TLD and SLD.
How To Find Out How Much Your Domain Name Is Worth
Theoretical considerations are fine, but youll need to put your theory into practice to figure out how much your domain is worth. To do so, well walk you through three basic stages for performing a domain valuation.
Keep in mind that these stages do not have to be completed in this sequence or at the same time. However, the technique outlined below is one that can assist you in gaining a clear and thorough knowledge of the value of your domain. Lets get this party started!
Similar Domain Name Sales Comparables
The first thing you should do when appraising a domain name is to research comparable sales that have been made in the past few years.
So, in the domain space, what counts as a comparable sale? Essentially, its a domain that meets similar appraisal factors laid out above. The most important factors are the extension, length, and brandability.
For example, for the domain Place.com, Estibot estimates the value at $564,000 with the following comparable sales:
- Place.com $550,000
- Shout.com $450,000
All of the above comparable sales are short, single-word, .com names.
An important point on comparable sales like used car sales, make sure you distinguish between wholesale comparable sales and retail comparable sales. Wholesale comparable sales typically involve domains that have expired and were placed in expiration auctions. Retail sales, on the other hand, involve names purchased from domain brokerages, on marketplaces, or directly from individuals or companies. Those sales tend to be higher.
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Why Domain Appraisal Is Important
Whether you own a simple blog or a thriving e-commerce site, knowing the value of a domain that you own can make a huge difference should you ever decide to sell. In our increasingly digital world, theres a lot of money to be made by buying and selling domains. There are only so many good addresses to go around. Having a general idea of what your investment is worth can give you the upper hand during negotiations.
If youre ever approached by a person or company that wants to purchase your domain, theyve probably already looked at the hard data and appraised it themselves. The last thing you want to do is put the ball in their court and get ripped off. By knowing how much its worth, you can offer a fair price and negotiate from there.
From a practical standpoint, domain names are simply part of a web address. However, they also play a larger role that extends beyond the confines of the World Wide Web. Businesses rely heavily on domains for advertising and brand identity. The domain is also directly associated with the company and how it does business. You can use this to your advantage and gauge how much interest your domain name really holds with a potential buyer. If the buyer is very serious about making a purchase, your knowledge of the domains worth can help you get the most money possible.
Found Money Is The Best Money
Your domain could be the name of the next big start-up or brand. But how do you find out what its worth? GoDaddy Domain Appraisals gives you the most accurate estimate available. Our exclusive algorithm combines machine learning with real-market sales data compiled from our 20+ years of experience. We manage over 84+ million domains as the worlds largest domain registrar, and were the largest aftermarket name seller, so we have the most experience. With our Domain Appraisal youll even get back samples of comparable domains and their values to help you decide what step to take next.
And itâs all free.
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Research Recent Domain Sales
The best way to get started in the world of domain name sales is to become familiar with it. Take a look at recent sales and see what types of domains are being purchased and for what amount.
DNJournal regularly updates this domain sales report to show how much domain names have recently sold for at different premium domain services. Keep your domain in mind and see how it compares to the listed sales. Pay close attention to length, similar keywords, and other related factors to narrow down a range that your domain would likely fit within.
An important note here is that only a small number of domain sales get reported, so this is by no means a comprehensive list of domain value. However, there are still a lot of domains to look at that will help you better understand how much various types of domain names have successfully been sold for.
See What Buyers Will Offer For Your Domain Name Right Now
Theres no better way to get the real value of your domain than to put it up for sale. This may seem a bit drastic, but its incredibly effective. You see, estimations will only get you so far. Your domains actual value is how much real people are willing to pay for it. Just because it seemingly fits all of the criteria doesnt mean that youll get a ton of money for it. On the other side of the spectrum, you may think that your domain name doesnt hold much value at all, only to find someone who has been searching high and low for something just like it.
This technique can be a bit tricky, but there are ways to minimize the risks. Essentially, youre going to put an ad up for your domain on a marketplace website as if you were selling it. Then, you simply wait to see what kinds of offers come in. To ensure that your domain name doesnt actually get sold, you can apply a reserve to your listing. This reserve prevents the sale from going through unless a certain threshold is met. On domain marketplace sites like Flippa, you can set the reserve amount pretty high and hide the amount from buyers.
Most domain auctions last for about two weeks. During this time, people will view your ad, check out your domain, and make offers based on what they think its worth. Because your reserve is hidden, theres no outside influence whatsoever. Just real and honest information about the value of your domain.
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Review The Domains Search Volume And Average Cpc
Does your domain include a generic keyword? Domain names with keywords, such as teethwhitening.com or have a significant amount of value due to their ability to rank well in Googles search results.
A website with an exact keyword in its domain name will typically rank higher in the search results for that keyword than a domain name without the keyword, assuming all on-site and off-site optimisation is equal.
If you have a generic domain name that contains an exact search keyword, studying its search traffic can give you great insight into its value.
For this, youll need to use the . This is a free tool provided by Google to Adwords advertisers that lists the average search volume for a wide range of keywords.
To use the keyword planner, enter your domain names exact keywords into the Get search volume data and trends field, then click Get search volume. Weve provided an example of an exact keyword search below, using this websites domain name.
Google will display the average monthly search volume for the keyword, as well as a suggested bid for Adwords advertising. Multiplying the search volume and Adwords bid together, along with other factors, can provide an approximate domain value.
In this case, there are four factors to consider. The first is the search volume for the keyword. The second is the average CPC. The third is the average clickthrough rate for the top-ranked search engine result.
* 6.97) * .33 * 12 = Approximate domain value
Does The Valuation Process Consider Domain Value
If you have ever gone through a thorough valuation process, you know that it can be quite tedious. We typically require at least 36 months of profit and loss statements, detailed analytical data, and a lengthy written client interview.
But when we present the formal valuation, there are seemingly only two factors considered: discretionary earnings and a multiple.
Why is that? How can anyone determine the value of a complex website based on just two factors?
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Understanding Domain Name Valuation
Domain valuation is the process of determining the value of a given domain. Its a similar process to when companies are valued, but much less intensive.
Before we jump into how to do a domain appraisal, lets have a quick overview of how domain names work. If you already have the basics down, such as how to register a domain, feel free to skip to the next section.
If youre just getting started building websites online, this section is for you.
Domain names are synonymous with URLs , but essentially its what a user types into their browser address bar on their search engine to access your site things like HostGator.com, Facebook.com, Google.com, etc.
There are two primary parts that make up a domain, the second level domain and the top level domain. These two factors will also contribute to a domain valuation,, but more on this below.
Heres how top-level and second-level domains work together:
Whether youre purchasing a domain name for a new project, or simply to hold onto and sell one day, the process remains the same.
A Domains Value Is Purely Speculative
While domain names are intangible assets , they can carry their own independent value. Domains such as Insurance.com, which sold for $35.6 million in 2010, make the news for their ground-breaking prices.
But where does a domain name get its value? From speculation.
More specifically, the value of a domain reflects the speculation of how profitable that domain could be with a website and business attached.
Take a look at the list of the most expensive domains ever sold. Insurance.com wouldnt sell for $35.6 million if the acquirers didnt think they could make far more than that by selling insurance. Similarly, Nations Luxury Transportation, LLC didnt buy PrivateJet.com for $30 million unless they believed they would receive more value in the general goodwill that the domian would bring.
So when we think about the value of a domain name, it is important to keep in mind that a domain name, on its own, has little to no value. It is the speculation of what could be done with that domain name that brings value.
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What Characterizes A Valuable Domain Name
Whatever your motivation for wanting to know, calculating the worth of a domain doesnt have to be complicated. It will, however, need an understanding of what makes a domain valuable in the first place. Of course, as with other assessments of this sort, its important to keep in mind that this isnt an exact science.
A domain will always be worth what people are willing to pay for it, and the bottom line is that theory and reality dont always match up. Calculating the estimated worth, on the other hand, provides you with a useful benchmark, ensuring that you dont wind up selling a valuable domain for peanuts.
With that in mind, lets take a look at some of the traits that are commonly regarded as crucial in domain names. These are some of them:
What Is My Domain Name Worth
Determining the value of a domain name is important when the owner is looking to sell it or when an offer to buy a domain name is received. People regularly ask, what is my domain name worth when trying to understand how much their domain name is worth, and the answer is a bit complicated.
The domain name resale market is a fragmented business. There are many individual owners who have certain price expectations for their domain names. There are quite a few marketplaces and domain sales venues with different sales channels. Millions of dollars worth of domain names are sold privately each year, making values difficult to track.
Domain names sell for prices across the board. Some companies will only pay the registration fee for a domain name, while other companies value domain names into the millions of dollars. Each month, we see hundreds of sales reported in the $2,000 $100,000 range. There are thousands of sales completed for less than $2,000 each month and just a handful of sales in the 6 and 7 figure price range.
The price paid for a domain name depends on the domain owners willingness and interest in selling and the prospective buyers budget. If the buyer and seller can agree to a fair price, a deal can be struck. Prospective domain name buyers need to realize that with good domain names, there are many people and companies who would want to buy a domain name, and the value is likely based on prior offers or the potential of a future sale.
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Buy Undervalued Domains And Sell For More
This is exactly what it describes. Look for domains that appear to be underpriced, buy them, then sell them for more. This isnt as easy as it sounds because you have to know and understand what makes a domain undervalued.
For example Men.com was bought for $15K in the late 90s and later sold for $1.3 million in 2003
My personal strategy when it comes to flipping domains is to spend very little to minimise risk, and to make sure theres a broad market I can sell it to.
A couple of examples of my sales include VertinaryHospital.co.uk – paid £60 on Domainlore and sold for £500 FuneralCompany.co.uk – paid £30 on Acorndomains and sold for £500
I only tend to buy domains to flip if I see a bargain, its my version of going to a car boot sale and looking through all the junk to find something of value.
How A Premium Domain Name Can Improve Your Websites Value
The most recognizable part of your website is most likely its domain name. So if you have a really great domain name, this should make your website more valuable, right?
Well, yes, but not in the way you might think.
Many people expect the domain name to be valued separately from the rest of the website, then added on to the value of the website. So, for example, if the domain is worth $50,000, and the business is worth $100,000, they would expect the buyer to pay a total of $150,000.
But this is not how your domain adds value to your website.
The value of your domain name is, in most cases, already baked into the value of your overall website. Its value is reflected in the earnings of the company and wrapped up in the goodwill of your website.
This is a concept that many sellers have trouble accepting, so in this article Ill try to dissect the concept of goodwill, how your domain name participates in goodwill, and also look at the few cases where the speculative value of a domain name might exceed the value of the overall website.
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Your Domain Name Is Part Of Goodwill
While the upfront valuation of an online business may appear to only consist of two variables , at the tail end of a website acquisition, buyers and sellers are required to assign values to the various parts of the acquisition price. Most of the time, the majority of the purchase price is assigned to goodwill.
Dont Rely Solely On Valuation Tools
One way to value a domain name is using a domain valuation tool. These tools are automated applications that typically assess your domains value based on its total search volume and the value of each search using networks like Google Adwords.
Some of the most popular domain name valuation tools include Estibot, Freevaluator and SitePrice.
The best way to view valuation tools is as a means of working out the approximate value of a domain. Valuation tools rely on metrics like search volume, average CPC and PageRank to determine a value, and arent always completely accurate.
For example, a .com or.co.uk domain for an extremely specific search keyword, such as an industry term with a huge value to a small, clearly defined audience, might not achieve a high valuation using an automated tool. On the other hand, a domain with a high-volume, lower-value keyword may receive a very optimistic valuation.
If youre interested in working out the approximate price of a domain name, using an online tool can be a good idea. However, tools should only ever act as a guide a very rough valuation and shouldnt be used to calculate a domains sales price.
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