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Domain name appraisal FAQ
While there are numerous valuable domain names, there are
essentially an infinite number of domain names (actually 6.2 to the 98th power
in.com alone). As such, most domain names are worthless. It
is very challenging to determine which domains have monetary value and even more
challenging to determine what that value might be.
One complicating factor is that the value of a domain name
changes over time depending on market conditions. The domain
"loans.com", for example, sold for $3 million in 1999 during the
height of the Internet Gold Rush. As so-called "New Economy"
technology companies failed due to lack of financial viability and the NASDAQ
market fell precipitously into 2001, the whole Internet landscape
changed. Today, most domain names, including "loans.com", are
likely worth far less than in 1999 as a result.
Obviously, the best way to determine the true value of a
domain name is to let the market forces of supply and demand determine it -- in
other words, let a buyer and seller negotiate a price. Nonetheless, it is
beneficial for a buyer and seller to estimate the value on the front end to
engage in an optimal negotiation.
While there is no exact science to assessing the value of a
domain, we present our general valuation model below.
In addition, there are a number of companies that provide
commercial appraisal services for a small fee (usually less than $25)
that you might wish to use.
Based upon our research, the market price of domain name
depends upon six key factors:
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TLD
Domain names in .org and .net have value,
but, all other aspects being equal, .com names are
significantly more valuable. Based on our research, .com
names are worth 1.7 times the same domain in .net and 2.2
times the same domain in .org.
Since .info and .biz domain names are new,
they are less valuable because they are not widely known among Internet
users.
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Number of Characters
Domain name values follow the laws of supply and demand. Shorter names
are in smaller supply, and thus are worth much more. Our research
indicates that a 6 character domain name is worth over 3 times a 12-character
name in the same TLD. Good names of 4 characters or less are very, very
valuable.
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Genericism
The most valuable domain names are common English words that relate directly
to a viable product or service. One of our favorite listing sites, for
example, GreatDomains.com,
place the following domain names among it's highest value sales:
|
Domain Name |
Sales Price |
| Loans.com (sold) |
$3,000,000 |
| BroadBand.com |
$975,000 |
| StockMarket.com |
$900,000 |
| Media.com |
$700,000 |
| Human.com |
$600,000 |
Words that are more narrow in meaning --
"mortgageloans.com" as opposed to "loans.com", for example
-- have less value.
A special note: domain names
that contain or are similar to any trademarked or private-use words
("coke.com" and "tomcruise.com", for example) have no
economic value to anyone but the legal owner of the name. Trading in such
names can bring about civil and criminal penalties under U.S. law. In
addition, the Uniform
Domain-Name Dispute-Resolution Policy
, adopted in 1999 by ICANN, gives the owners of such terms (trademarked or not)
the right to the use of related domain names. Stick to generic words and
phrases and consult your attorney if you are uncertain about a particular name.
-
Memorability
Most of the economic value of a domain name depends upon it's ability to
generate traffic to a website. This ability to drive traffic is directly
influenced by people's capacity to remember the domain name (from a magazine ad
or TV commercial, for example) and properly enter the URL into a browser.
Simple but unique words and phrases are easiest to remember and make the best
brand names.
The domain name "Amazon.com", for example, has nothing to do with
books but is a short word that is easy to recall. It is one of the most
recognizable corporate brands in the world today.
-
Spelling
Sure "dbcq.com" is only 4-characters long, but it's meaningless.
"g0lf.com" is a legitimate domain name, but much less valuable
than "golf.com" due to the zero. "Lawyer.com" is a
better domain name than "attorney.com" because the latter is harder
for most people to spell. Words that don't spell anything or are
difficult to spell are worth less.
-
Market Potential
Any potential buyer willing to pay you more than the $20-$70 necessary to
register a new domain name has to be able to justify that additional
expense. That implies that the domain name in question must be able to
generate income, which in turn implies that the domain name must likely relate
to a product or service that can be provided over the Internet. Words
that relate to products and services with the greatest income potential have
the most value.
What is the annual revenue expected in the online marketplace for the good or
service? How much revenue would be generated by a company with 1% share
in that market?
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We recommend the following appraisal resources to assist in
determining a domain name's value:
|
Recommended Services |
Comments |
|
GreatDomains.com |
Automated appraisals are $14.95; premium
appraisals from staff expert are $75
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Domain Name Forum |
Free domain discussion board with sections
on appraisals, domain selling, and more. |
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