Domain Valuation

Domain valuation is part art and part science.

Factors Impacting Domain Valuation:

  • The TLD is usually the most important factor impacting the value of domains. .Com domains are almost always more valuable than any other TLD. Country code domains (ccTLDs), such as .ca, .eu, .us., in, or a .de domains usually hold about the same value as domains using the .org TLD.
  • Keywords in the domain:  brandable words and brand names have a big impact on the value of domain names as they are usually Premium Domains.
  • Language of the keywords in the domain. Domains with English terms continue to be the most valuable domains.
  • The ease of recalling and spelling domains when heard over the telephone or radio dramatically improves the value of domains.
  • The frequency the keywords are search on Google and other search engines
  • Future popularity trends of the keywords
  • Relative popularity of the keywords: the ratio of a query’s search volume to the sum of the search
  • The click value of the keywords on Google Ads and other ad platforms
  • The number of words in a domain name. One word is significantly more valuable than two words. For example, men.com sold for $1.32 Million,  carrot.com sold for $600,000 USD and purple.com sold for $900,000 USD. These domains are examples of Premium Domains.
  • Length of the domain: 4 to 8 characters is usually optimal. Never get a domain longer than 15 characters.
  • While hyphens seem to be popular in Europe, they decrease the value of domains in the rest of the world.
  • Number of syllables: 1 or 2 syllable domains are more valuable than longer one word domains.
  • Domain age: the older, the more valuable the domain will be. It’s difficult to get new domains to rank well.
  • Historical domain traffic analytics can increase the value of domain names.
  • The ranking of a website can dramatically increase the value of a domain name.
  • The number of relevant and quality back links to a domain’s pages usually improves the Google ranking of a website.
  • Whether there’s a potential buyer of the domain with deep pockets.
  • Purchase and leasing options: Not every business can afford to pay $100,000 or more for a valuable domain. Some businesses will need an installment plan. Others will be content to lease a domain name, so that the cost doesn’t show up on the books as debt.

Impact of Website Ranking on Value

The automated domain valuation tools generally don’t take into account the value of actual traffic to a website. For example, we will compare the relative values of domains with the michaels.ca keyword using the GoDaddy Domain Valuation tool and Alexa.com on April 13, 2019:

michaels.ca Estimated Value: $2,098 (USD)      Alexa.com Traffic Rank 1,840,634

michaels.com Estimated Value: $19,736 (USD)       Alexa Global Rank 4,405

michaels.ca GoDaddy valuation of $2098 USD on April 13, 2019
michaels.ca GoDaddy valuation on April 13, 2019

Michaels Stores currently runs a website at michaels.ca with poor SEO and a whopping 86.8% bounce rate.

michaels.ca bounce rate according to alexa.com on April 13, 2019
michaels.ca bounce rate according to alexa.com on April 13, 2019

When I owned and ran a website at michaels.ca:

  • It ranked as the second result on Google for the search term “michaels;”
  • It had at least 1 million visitors per year; and
  • It had a bounce rate that ranged from 40% to 60%, depending on the year.

 

Automated Domain Valuation Tools:

Automated domain appraisals are usually undervalue domains significantly. Domainers – people who have been in the domain business for years and are experienced domain investors, don’t rely on these automated domain valuations.

The GoDaddy Domain Valuation tool is based both on heuristics and past sales of similar names. The values it assigns vary from month to month and year to year. In 2017, the GoDaddy Valuation tool said that

Afternic www.afternic.com
Domain Appraisal www.domainappraisal.com
Domain Appraisals.org www.domainappraisals.org
Domain Index www.domainindex.com
DomainWorth www.domainworth.com
Estibot www.estibot.com

GoDaddy Domain Valuation
Moniker www.moniker.com
NameBoy www.nameboy.com
Sedo www.sedo.com
Valuate www.valuate.com

Domain Sale histories http://dnpric.es/