Domain Valuation Fundamentals Explained.
I think you will agree with me when I say:
It can be VERY difficult to determine the correct domain valuation range for most domain names. The last thing you want to do is leave money on the table when selling your domain.
Or is it?
Well if you understand these key elements of domain valuation you can increase your return on investment by multiples.
In today’s post, I am going to review several factors that impact the value of your domain.
In the domain community, we use examples to draw similarities to real estate, coins, art, advertising (etc…) to help buyers and sellers understand the value and market for domain names.
For example, a premium domain is like owning the marque property on Broadway in New York City because of how it connects to consumers and search intent. A bad domain is like putting a 1,000,000-square foot shopping mall in Jay Oklahoma.
But, you can buy property in Jay Oklahoma for next to nothing. Why not save the difference and use it for your marketing?
No offense against Jay Oklahoma, however, no amount of advertising would support this investment. I will let you figure out why ?.
Another example to explain the domain valuation would be to look at coins.
A 1944 steel penny is worth $110,334 where as a 2016 penny is worth, well a penny.
A 1943 steel penny is worth only $10 (I actually have one). So why is there a difference in values between these pennies, they are after all only a penny right?
It is good to draw similarities to other markets because it helps buyers and sellers make quick connections.
Understanding Domain Valuation
Domain names, however, have a uniqueness that sets them apart from these categories.
Understanding the value of a domain name can have a profound impact on your return on investment, both for selling and acquiring a domain.
Although the internet has been around for over 20 years, there is still a lot of misunderstanding of how domains are valued. More importantly, there are only a small percentage of people who understand how a great domain supercharges the value of a brand’s positioning and marketing. These would be people like Elon Musk (Tesla.com), Paul Graham (Y Combinator), etc…
After reading the rest of this article, my hope is you gain a deeper understanding to establish the value of a domain you want to acquire or sell.
Here are 6 factors to consider that determine the value of your domain name.
- The general market for domains
- How different types of businesses will invest differently
- Size of the market based on the domains connection and meaning
- How the domain will be utilized
- Where and how you sell your domain
- Using Google CPC as an indicator