A domain is the address of your website, which means it’s an important piece of online real estate. Domain names are valuable assets that can generate significant revenue if you know the importance of domain name valuation and what factors make a domain name valuable. Furthermore, the domain market is a huge industry, and for domain buyers and sellers alike, domain value is always a hot topic as they are always looking to get the best possible deal. So, this article will talk about what domain valuation is and why it is important. We’ll explore some of the important factors that make a domain valuable, and we’ll see how you can calculate your domain’s value.
Understanding What is Domain Name Valuation
Domain name valuation is the process of determining the value of a given domain name. The value of a domain can be determined by looking at how much traffic it generates, and sometimes with an auction-style sale. Domain valuations are not always clear cut, though, and may often take into account things like domain history, such as if a domain has been previously sold or transferred before, any pending trademark infringement claims that might exist, etc.
Before we move on to understanding how to value your domain name, you first need to understand what a domain name is. Domain name refers to the web address that you type in the address bar of your browser (e.g., google.com, bigrock.in, etc.).
READ: Domain Names: What? Why? And most importantly – how much for?
A domain consists of two primary components:
Top-Level Domain (TLD): The domain name’s top-level domain refers to the last part of the domain in the address bar. For e.g., .com, .net, .org, .gov, .edu, etc
Second-Level Domain: The domain name’s second-level domain is everything that follows your TLD and typically includes words or phrases such as google.com (Google), bigrock.in (BigRock)
Domain names are an important part of any business or individual’s internet presence, and they can often be a domainer’s most valuable asset. Domain names are bought, sold, transferred, and sometimes even rented out to generate revenue through advertising or affiliate programs.
Whether you’re planning to purchase a domain name for a new project or simply to hold onto and sell one day, you need to determine your domain’s worth.
What Factors Make a Domain Name Valuable?
Valuing domains is not an overly complicated process, but there are certain factors that take precedence.
Often, the value that a domain name holds is determined by how desirable the domain is. However, it is significant to note that, as with most evaluations of this nature, this is not an exact science. A domain name will always be worth what people are willing to pay for it, and the bottom line is that sometimes these theories may not line up with the practical reality. But by calculating the estimated worth, you’ll be able to get a baseline — so you don’t end up selling your valuable domain name for pennies.
With that in mind, let’s take a look at some of the key factors that make a domain valuable. These factors include:
The Top-Level Domain (TLD)
Having a domain name with a trustworthy TLD will go a long way towards making a domain desirable. For example, domain names with domain extensions such as .com or those in India domain extension of .in are more valuable than other generic domain name extensions like .eu. Typically, more standard and popular TLDs will be a better bet.
Some popular TLDs are .com, .co, .net, .org, etc. However, other combinations could hold value, providing they make sense.
READ: What is a TLD? Top Level Domains and its Types Explained
Popularity & Traffic
If the domain name is being used for a particular website, the level of traffic that the website receives can become a crucial factor in calculating a domain’s worth. The reasoning for this is pretty straightforward. If a domain name comes with an existing audience attached to it, the buyer can leverage that traffic for their website right away. And if the domain has been active for a while, this will also help with its SEO (Search Engine Optimization) for the new owner, making it even more appealing.
Length of the Domain
Generally, the shorter domain names are considered more valuable. Now, this is not the golden rule. For e.g., a domain name like “gd4xf3.com” won’t be very valuable. But, taken as a whole, domain names with short phrases or few words will hold more value. Shorter domains are much easier to remember and easy to share and are more marketable.
Keywords
Including the right keywords in your domain name is crucial from an SEO point of view. A study by Higher Visibility says that in most industries, a majority of websites include high-quality keywords in their domain names. For e.g., the top-rated website for the search engine query “sales jobs” domain is www.salesjob.com. So, if your domain contains a desirable keyword, this could increase its value.
Brand
While it can be difficult to define the brand of a domain name, it’s an important consideration many website owners make when choosing a name. Some of the most visited websites in the world have clear, memorable, and unique domain names, such as twitter.com, Instagram.com, facebook.com, etc. thus, it is always better to look for a domain name that is catchy and attention-grabbing, as it may make buyers take special notice.
These factors are all worth paying attention to as you research your domain’s potential value. However, you must remember that there are no guarantees and that the value of a domain name can shift dramatically over time.
How to Determine Your Domain Name Value
To find out how much your domain is worth, you’ll need to take a concrete approach. So, below we’ve shared three easy steps that can help you learn more about the value of your domain.
Of course, these steps don’t have to be taken all at once or in this particular sequence. The purpose here is just to provide a guide that will give you a clear and comprehensive understanding of your domain’s worth. Let’s get started!
Research What Similar Domains Are Selling For
A good starting point for determining your domain’s worth is researching what domains similar to yours are selling/have sold for. At the very least, this will give you a range to aim for.
There are some resources such as Sedo, DN journal, which compiles data from different marketplaces to show you which website’s domain names have brought in the most money lately.
Here’s a quick look at DN Journal’s highest reported domain sales:
Such reports give you an insight into the types of domain names that are sold at the highest price, the domains that bring in the most money, and more valuable information that you can compare to your current domain name to see how you stack up.
Use a Domain Estimation Tool
There are a variety of domain estimation tools out there that will give you a clear idea of what your domain is worth. These tools simplify a lot of difficult estimation work for you. In general, these tools enable you to find information about your domain, helping you estimate its value and compare it to similar names.
The most commonly used domain name estimator is EstiBot. In this tool, you just need to enter your domain name, and you will get an accurate report of how much your domain is worth.
Apart from general valuation, these reports will also give you an insight into all kinds of valuable data, such as the value of other related domains that were just sold, along with search volume, keywords, and more.
Consider Selling your Domain and See What People are Willing to Pay for it
Taking the time to do all the research and using estimation tools will undoubtedly be useful. These steps will give you an idea of the potential price you may be able to charge for your domain name. However, it is often best to go straight to potential buyers to see what people are willing to pay for it.
Even if you’re not ready to sell your domain, you can create a high enough reserve price (which is a figure you specify that serves as the minimum price you will accept), where if someone does buy it, you’ll be satisfied.
For e.g., you can create a domain listing on Flippa, which is an online marketplace for domains, SaaS assets, ecommerce, etc. There you need to enter all the relevant details about your domain and set a high reserve price. The higher the reserve price will be, the less likely people will buy your domain.
Your goal here is to simply get the actual bids from potential buyers to see what they’ll pay for your domain. You never know; someone might even purchase your domain for a super high reserve price!
READ: Tips for Buying and Selling Domain Names for Profit
Conclusion
How much is your domain worth? It’s a question that many of us ask ourselves when we’re thinking about selling our domains. The reality, though, is that there aren’t any one-size-fits-all answers to this question because each domain has its own particular value. The value of your domain name is not just its sale price but also the marketing power it provides to you and how much control over your brand identity. That said, taking factors like TLD, popularity, traffic, keywords, brand, and length of a domain name into consideration will help in increasing your domain value. Furthermore, following the above-mentioned steps to estimate the potential range for how much a specific domain might be worth on the market today.
