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Before a domain name is bought or sold, it is highly recommended that the domain name be appraised. This is very important for several reasons. Firstly, you might enter your domain names into the market at such amounts that it would never be sold. Equally important, you might acquire a domain name at a cost you will in all likelihood not recover over a long period of time, depreciating the value of your domain portfolio and your bank balance.
By appraising a domain name you can estimate the monetary value of the domain name’s worth, but remember the golden rule of domain name sales: “A domain name is only worth what the buyer is willing to buy it for.”
In many, many instances we found domain names, with no meaning or even monetary
value, sold for tens of thousands, even hundreds of thousand dollars. The reason
for this phenomenon is that the buyers of these domains had a need for them and
was willing to offer these large amounts to ensure their ownership over these
domains. Quite often these types of buyers are businesses who require these
domains for business or their product services.
In general, on the domain traders’ playground, these domains would never have
traded and if traded, it would have been at very, very low prices.
There are currently three ways of appraising domain names.
They are all commonly in use by domain traders. Domain name appraisals can be done by automated scripts, professional appraisals and lastly self-appraisals.
We will discuss each of the three appraisal methods in detail.
Automated Tools
A number of websites offers scripts, specifically developed to appraise the value of domain names, and in some instances even websites. Although widely in use by domain traders and domain name owners, the values estimated by these scripts are not always true and accurate. They should only be used as guidelines. Many of these tools over-estimate the value of domain names and some highly under-estimate the same.
Here are some recommended online services, which are free to use.
DomainScore.com is a great tool for estimating the score of a domain name. This
tool is mainly used to determine the premium status of a domain name and
calculates its scores based on domain name readability, search results and
keyword results.
Estibot is a great tool for determining the estimated value of a domain name and
website. This tools’ algorithm looks at various factors related to domain names
and website traffic and backlinks and offers an appraisal on the domain name as
well as the website.
Another tool to determine the estimated value of a domain name.
Use this formula for a quick way to get an idea of your website’s value.
Professional Appraisals
Professional domain name appraisals are mainly conducted by organizations actively involved in domain name trading. These organizations appraise domain names physically upon several factors, such as traffic to the domain, the domain name strength, length, readability, brandability, etc.
Professional appraisals are conducted by domain name professionals and an
appraisal certificate is issued by the appraising institution. The majority, if
not all, of these institutions are paid services, whereas automated scripts
offer services at no costs.
If you consider obtaining a professional appraisal, we recommend the following
services:
Find out if you’re sitting on garbage or a domain that’s worth some serious cash
by getting it appraised with Premium Domains.
Self Appraisal
Professional domainers, who have been involved in this area of expertise for a long period of time, often appraise domain names themselves. By obtaining experience in this area, any domainer can learn the techniques associated with self-appraisal and determine the value of a domain name without consulting other means of professional appraisals or automated scripts.
We will now take a look at some techniques you need to be familiar with when
appraising domain names yourself.
1. Traffic
Traffic is always the most important factor to consider when appraising domain
names. The amount of traffic to a domain name will automatically increase or
decrease its value. When looking at traffic, you should consider, more
specifically, Natural Traffic. Natural traffic is also referred to as Type-in
Traffic. This is where an individual, who needs to find information on the
Internet, types the information into the browser, as opposed to conducting a
search engine search.
As example, a person looking for information on Advance Fee Fraud, will type in
his browser, www.advancefeefraud.com, instead of going to Google and do a search
there. Yes, this type of traffic does exist and do offer a lot of natural
traffic to many domains. These are domains with high values.
Other types of traffic refer to links or search engine traffic. These are
visitors clicking links on other websites or search engines, which points to the
domain. The more traffic to the domain, from these types of links, the higher
the value.
A good way to determine the number of traffic to a domain is to do a check on
Alexa.org. Alexa also offers a rank. The lower the rank, e.g. 100 000 or 50 000,
etc. the higher the value of the domain.
Alexa.org
Additionally, you can make use of Market Leap’s link popularity tool to
determine how many sites are linking to a domain.
Marketleap's Link Popularity Check
You can also use this tool to test a domain’s receptiveness to search engine
spiders.
SEO Analysis Tool
Here is another great resource. Find out where your domain ranks on PR, Alexa,
and links. You can also take advantage of their URL comparison tool.
UrlTrends.com
Get traffic graphs for up to three domains at a time on this site.
Compete.com
2. Marketability
Your next step to consider in appraising a domain name is its marketability. You
need to ask yourself whether the domain name is marketable, i.e. can it be
marketed to the general public. Does it represent anything? Can a website with
content, which is represented by the domain name, be built?
What is the keyword(s) in the domain name? You can easily search on keywords and
determine whether the general Internet community is conducting searches on these
keywords. The more searches that are being conducted on the keyword(s), the
higher the value of the domain.
A great tool to use in order to determine if keywords are being searched is
Wordtracker. This tool helps website owners and search engine marketers identify keywords and phrases that are relevant to their or their client's business and most likely to be used as queries by search engine visitors.
You can also make use of Google Adwords’ Keyword Tool to determine how many people
are searching on your site’s top keywords.
3. Brandability
Is the domain name brandable? Will the domain name identify a service, a product
or an institution? Is this the type of domain a business would want to associate
itself?
When looking at brandability, especially in domain names, it is important to
note that a brandable domain name would often be a short, readable,
easy-to-remember and catchy name. These domains are very brandable and high in
demand.
Let us take a look at a specific branded domain name, which will always be used
as an example of brandability. Google. Not long ago, there did not exist a word
such as Google in any dictionary. It had no formal meaning, but many used this
term to refer to the act of ‘looking around’.
A company later took on the word Google, registered it as a trademark and
started a search engine. They developed their search engine to become the
world’s fastest, most accurate and most used. This company actively promoted
their brand and later expanded by offering additional services.
In fact, Google promoted their brand in such a manner that their brand is known
in almost all countries around the world. Their brand became so famous and
recognized that the term Google was accepted into all formal dictionaries.
This is a great example that could be used to describe the term brandability in
domain names.
4. Pronouncability
Another very important factor in a good domain name is its pronouncability. For
a domain name to be easily pronounceable, the rules are that it should not
contain any numbers of characters such as hyphens. These are often not easy to
pronounce and visitors might easily type in the wrong domain name in an attempt
to visit your website.
Besides the pronounceability factor, it should be noted that domain names with
letter and number combinations or with characters such as hyphens immediately
suffer a loss in value and are automatically disqualified as premium domain
names.
5. Top Level Domain
The top level domain in domain trading is of utmost importance. The extension
(TLD) of any domain name determines the value of such domain. As example, let’s
look at the domain defrauded.com. This is a dictionary word domain, has a fair
number of Internet searches on its keyword (defrauded), easily pronounceable,
short and easily remembered. This domain has the quality of a premium domain and
can easily trade on the market at amounts exceeding $5000. Let’s look at
defrauded.biz – same characteristics, buy you will be lucky if you sell it $500!
Why? The domain extension, .biz, drastically decreases the value of the domain.
Currently the .com domain extension is the only extension that ensures constant
high returns on investments. Other domain name extensions will often sell domain
names at high prices, but the .com extension is the only extension continuously
increasing its values and sales.
Next to .com, the best returns on investments would be .net, followed by .org.
As for traders, it is highly recommended to attempt to limit acquisitions to the
.com extension to ensure initial secured growth of your portfolio.
6. Development Potential
Can the domain name be developed into a website? Will the keywords in the domain
name assist in attracting search engine traffic to the domain? Can the domain
name be identified with the website’s content?
These are all factors you need to consider when looking at appraising the
domain. If a website can indeed be developed based on the keywords of the
domain, the value will increase.
7. Domain Name Length
All 2, 3 and 4 letter .com domain names have been registered and are no longer
available for registration. These short domain names have very high value
attached to them. In general, the shorter the domains name the higher the value.
Any domain name under the number of 12 letters is considered a good and short
domain.
It is also a fact that the majority of dictionary word, or two word combination
domains have been registered. It is still acceptable for domain names to be up
to 20 letters to be considered to have value. The higher the number of letters
in the domain, the lower the value.
8. Grammatical Correctness
A requirement for a good domain name is grammatical correctness. Ensure that the
domain sounds right grammatically and that the keywords in the domain name are
used correctly.
Additional Reading
Read more at this thread to learn how to appraise the value of your site on your own.
http://www.webmasterworld.com/forum25/614.htm
See the way Zetetic.com values domains.
http://www.zetetic.com/methodology/variables.html
Consider the cost to create a new comparative website, traffic, revenue, and
other factors when valuing your developed domain.
http://www.webmasterworld.com/forum31/1195.htm
Get the basics on website valuation in this article.
http://www.stuntdubl.com/2006/02/20/website-valuation
Yaro’s number one rule? “Your site is worth as much as someone is willing to
give you for it.”
http://www.entrepreneurs-journey.com/265/how-to-sell-a-website-how-much-is-your-website-worth
Read this thread from Webmaster World to calculate future profitability,
traffic, and other valuation basics.
http://www.webmasterworld.com/forum31/1766.htm
Read more in this guide about domain name valuation from Internet Gold Rush.
http://www.igoldrush.com/sell1.htm
Arm yourself with knowledge against scammers who want to take advantage of
domain name owners.
http://www.domainappraisalscam.com
