Domains are valued based on many factors such as marketability and brand-ability, the industry they are related to, comparable domain sales, applicable traffic and associated revenue. Ultimately, final price is determined at the meeting point between buyer and seller.
Below are some statements by various sales leaders within the domain industry on how they determine what a domain name is worth.
I think about the potency of the meaning or other qualities of the domain name, and how much value it could deliver to a company over a lifetime if used as a brand or identity.
Past sales, financial savings and marketing value to a business, and cost to replace that domain with a domain of similar quality.
For what concerns liquid domains, I typically determine how much a domain is worth by a combination of comparable sales, trading ranges and how much the buyers I am talking to are typically offering for those specific domains. For what concerns other types of domains, Estibot.com is a valuable starting point.
I look at comparable sales. NameBio.com is a great site. I also look at potential uses, potential buyers, margins on the businesses that would use the domain name, PPC comparables, potential competition in the market, brand recognition, other TLD’s being used by end users, etc. Many factors.
As the saying goes, a domain name is really only worth what someone is willing to pay. However, when working with our clients to assess values, we take several factors into consideration including current comparable sales, search volume, Pay Per Click rates, any associated revenue, trending industries, etc.
That is a much longer question! But basically, it’s a formula of search volume, cost per click, length, age, and many other factors.
I used to look up similar sales a lot, but now I have a bit more of a gut feel. I wish I could say that there was more of a science to it, but over time, I’ve just developed a sense for what I think someone would pay for a domain name. I’m not sure whether I would have that sense without looking at tons of past sales for years, so maybe I’m just looking it up in my head now?
That being said, determining the price of a domain differs greatly based on investment strategy. Some investors want to hold out for the highest bidder, that perfect buyer that really sees the value in the name. I’d rather sell a name for less and make a profit than wait around for the perfect buyer.
That is such a loaded question because I also have to balance what my client thinks a domain name is worth (and can afford) and what the domain owner thinks it is worth. It can take a long time to get those numbers to align.
For my clients, I show them what comparable domains have been sold for, and are listed for sale for, and I will sometimes take that approach with the domain owner. So much depends on the level of desire that the client (buyer) has for the target domain name, as well as how emotionally attached the domain owner is to their domain name. (By the way, I have found that many real estate agents are the most difficult to try to purchase a domain name from. They often think that every subpar domain name they own is worth millions!)
As we all know, however, a lot of transactions are not publicly reported, so the “comparables” dataset that we all have to work with is incomplete, but it’s better than nothing. One thing I avoid is trash-talking someone’s domain name or insulting the domain owner. Even if I think their asking price is completely unrealistic, I will make my case politely and professionally rather than get hostile. I try to never burn bridges, especially with domainers since I may be coming to you again in the future to buy another domain name.
More on how to value domains below.