Many of us nurture a dream of finding out that something we own is secretly immensely valuable. Perhaps that old vase in the attic is actually worth thousands of dollars, for example. However, it’s not just dusty antiques that could be unexpectedly profitable. Something as simple as a domain name could be worth a considerable amount.
However, in order to find out if you’re sitting on a potential moneymaker, you’ll need to know what makes a domain valuable in the first place. Fortunately, this is not nearly as complex or time-consuming to figure out as you might expect. In practice, estimating the value of your domains simply requires you to do a little research.
In this article, we’ll discuss the importance of domain valuation. We’ll also explore some of the most critical factors that determine a domain’s worth, and show you what you can do to estimate your own domain’s price. Let’s get started!
An Introduction to Domain Valuation
Whether you’re planning on selling a domain, or you just want to know how much one you own is worth, you’ll be looking to perform a process called domain valuation. This can also be referred to as domain appraisal, but the principle remains the same. Either way, this is a method for estimating the value of a specific domain name.
Before moving on, let’s quickly recap some domain name basics. A domain name refers to the main part of a site’s URL, which visitors use to access the main page of that site. For example, our domain name is dreamhost.com.
In turn, a domain name consists of two primary components:
- Second-Level Domain (SLD): This refers to the main part of the URL, which most commonly contains the name of the website or the business that owns it. In our example, this is “dreamhost”.
- Top-Level Domain (TLD): This is what comes at the end of the domain name, which in our case is .com. There are hundreds of TLDs available to use, but some of the most popular include .com, .net, .org, .gov, and .edu.
To add a domain name to your site, you’ll need to register one with a vendor known as a Domain Name Registrar (DNR). You can also buy domain names from several hosting companies. In fact, DreamHost specializes in domains by providing an easy interface to search for, purchase, and manage your assets. This can be particularly useful if you want to get your website hosting and domains from the same provider and keep the administration of your entire site under one roof.
Once you’ve purchased a domain name and linked it to your site, you’ll often give it little more attention. However, sometimes it’s worth finding out how valuable a domain you own is. The main reason to do this is when you’re considering selling a domain you’re not using, or one you no longer need. In these cases, it’s smart to find out how much your domain is worth ahead of time, so you know if you’re selling it at a fair price.
What Makes a Domain Name Valuable
Regardless of your reasons for wanting to find out, estimating the value of a domain doesn’t have to be too difficult. However, it will require you to understand what makes a domain desirable in the first place.
Of course, it’s significant to note that as with most evaluations of this nature, this is not an exact science. A domain will always be worth what people are willing to pay for it, and the bottom line is that sometimes the theory may not line up with the practical reality. By calculating the estimated worth, however, you’re providing yourself with a handy baseline — so you don’t end up selling a valuable domain for pennies.
With that in mind, let’s look at some of the features generally considered important when it comes to domain names. These include:
- The Top-Level Domain. A domain’s TLD can be a big part of what makes it desirable. For example, .com remains the most popular option (as it’s recognizable and common), so many buyers will gravitate towards it. However, newer alternatives can also become trendy (and valuable).
- Popularity and traffic. If the domain name is currently used for a specific website, the level of traffic that site receives can become a vital factor in calculating the domain’s worth. The reason for this is pretty straightforward. If the domain comes with an existing audience attached, the buyer can leverage that traffic for their site right away. If the domain has been active for a while, this can also help its Search Engine Optimization (SEO) for the new owner, which may make it even more appealing.
- Keywords. Including the right keywords in your domain name is another crucial aspect of SEO. According to a study by Higher Visibility, in most industries, a majority of sites include high-quality keywords in their domains. For example, the top-rated website for the search query “hotel” is www.hotels.com. As such, if your domain contains a desirable keyword, this could increase its value.
- Brandability. While a domain’s brandability can be very difficult to define, it’s also an important consideration many site owners make when choosing a name. Many of the most visited websites in the world have clear, memorable, and unique domains, such as twitter.com, youtube.com, and facebook.com. If your domain is similarly catchy and attention-grabbing, it may make buyers take special notice.
- Spelling. This may seem obvious, but making sure your domain is spelled correctly can be critical. After all, few buyers will be swayed to use something that looks sloppy and unprofessional. At the same time, using unexpected spelling can sometimes be a benefit, as it could make the domain more brandable. For example, fiverr.com and tumblr.com have taken technically incorrect spellings and used them to create memorable, lasting brands.
- Length. A general rule of thumb is that the shorter a domain is, the more people will pay for it. This isn’t always the case – brevity alone isn’t going to make an otherwise cumbersome domain like zz0xy2c.org more appealing to potential buyers. However, a concise domain is often considered rarer and therefore more valuable. This is due to shorter domains being more memorable, easier to share, and more marketable.
These points are all worth paying attention to as you research your domain’s potential value. However, remember that there are no guarantees,and that the value of a domain can shift dramatically over time.
How to Determine the Value of Your Domain Name (In 3 Steps)
Theory is all well and good, but to find out how much your domain might be worth, you’ll need to get practical. To do this, we’re going to show you how to perform a domain valuation in three simple steps.
Bear in mind that these steps don’t need to be performed all at the same time or in this specific order. However, what follows is a recommended process that can help you get a clear and comprehensive understanding of your domain’s worth. Let’s get started!
Step 1: Research What Similar Domains Are Sold For
To figure out what people may be willing to pay for your domain name, you need to know what people are charging for similar domains. We mentioned earlier that the value of a given domain can shift dramatically over time, so you probably can’t use what you initially paid for the domain as a baseline.
At this stage, you will need to do some digging to see what domain names are currently being sold for and compare them to the ones you own. Fortunately, several sites collect information about domain sales. One of these is DN Journal, which can tell you about the past three weeks’ highest reported sales.
Another site that does something similar is Domain Name Wire. On its blog, you can find regular roundups of prominent, recent domain sales.
If your domain is concise, you may find ShortNames especially useful. This site also collects recent sales, but specializes in (you guessed it) short domain names.
These sites are all handy resources to help you track what names are selling for the highest amounts. For example, if we take a look at the most recent list provided by DN Journal (at the time of this writing), we can spot several domains that match the criteria we outlined earlier.
Featured prominently in this list are short, memorable, clear, and keyword-heavy domains. If one of your domains is very similar, you might be sitting on a potential goldmine. These roundups can also help you catch recent trends in domain names.
However, if you want to find information about sales for domains that are more directly comparable to yours, you will need to dig a little deeper. Let’s look at how to do that next.
Step 2: Use an Appraisal Service
A domain appraisal service is exactly what it sounds like. It’s a website that enables you to find information about your domain, helping you estimate its value and compare it to similar names.
This kind of service will do a lot of the hard work for you. It automatically compares your domain against similar names and collects information about what those other domains sold for. It will also measure your domain’s worth, based on many of the factors we outlined previously. If you’re serious about putting an estimated price on your domain, this is one of the easiest methods for getting an educated answer.
While there are many appraisal sites you can use, we’re going to look specifically at one of the most well-known. Say hello to EstiBot.
EstiBot is the most widely used domain appraisal tool, with over two million appraisals performed on a daily basis. To try it for yourself, you can start by entering the domain you want to check in the field on the homepage and clicking Appraise.
At that point, you should be presented with a report on the specified domain.
At the top of the page, you’ll see the estimated value and some basic information about the domain. However, if you scroll down, you’ll find more details regarding how EstiBot arrived at this value. For instance, you can see the total amounts that similar domains sold for.
You can also view a huge amount of statistics and analytics for the domain, giving you an even clearer picture of its ultimate worth.
All of this information should give you a pretty good picture of what you could potentially ask for your domain. You may also want to use some appraisal tools to get an even better average, by comparing their different evaluations. For this, you could use DomainIndex and NamePros, to name a few options.
This should provide you with a substantial theoretical value for your domain. However, as we’ve already mentioned, a domain’s real value is what someone is actually willing to pay for it. As such, if you want a definite answer, you may need to go straight to your potential buyers.
Step 3: Find Out What People Are Willing to Pay for Your Domain Name
Taking the time to do research and use estimation tools will undoubtedly be useful. This gives you an idea of the potential price you may be able to charge for your domain. However, it’s often best to go straight to potential buyers for a definitive answer.
For instance, a domain could theoretically tick many of the boxes we outlined earlier, but still not be one that people are keen to purchase. It could be that the domain simply isn’t relevant to anyone, is too similar to an existing prominent site, or it has an unfortunate connotation that makes it less desirable.
On the flip side, the opposite could also be true. A domain that shouldn’t be particularly valuable might be just what a particular website owner is looking for. This can make it much more lucrative than anticipated.
The best way to find these things out is by putting the domain name up for sale. That might sound drastic, especially if you don’t actually want to lose the domain just yet, but it doesn’t have to be a risk. In fact, many sites that enable you to buy and sell domains will also let you set a reserve price for them. If you’ve ever sold anything on eBay before, this should be a familiar concept.
Essentially, a reserve price is a figure you specify that serves as the minimum price you will accept. If the reserve is not matched or exceeded by any offers, the auction ends without a transaction actually taking place. This lets you put up a domain for auction and see what people are willing to pay, without the risk of selling the domain for less than you’re satisfied.
Let’s try this out for ourselves to illustrate the process. The site we’ll use is Flippa, which is an online marketplace for domains.
To get started, you’ll need to sign up for an account. Bear in mind that while accounts are free, actually selling a domain costs at least $9 per listing. As such, you should only do this if you’re willing to spend a little money on valuing your domain. Other sites vary, but most charge similar token fees.
If you decide that the cost of entry is worth it, click Sign Up on Flippa’s homepage and enter your personal details.
You’ll then receive a confirmation email to activate your account. Click on the attached link and you’ll be taken back to Flippa, where you’ll be asked if you’re signing up as a buyer or a seller.
Naturally, you’ll want to select the latter option for now. When you do so, you’ll be asked some further questions, so add in your details as appropriate.
Once you’ve done that, you’re ready to start selling. Select the Domains option, and enter the domain you want to value in the text field that’s provided.
The next step entails providing information about the domain and how you want to sell it. You should select the Auction method, as this will let other users set whatever price they’re willing to pay.
You also need to specify a duration for your auction. Fourteen days should generally be enough to give you a good estimate of your domain name’s value. Then, towards the bottom of the page, you can also set the domain’s starting price and your Reserve price.
If you don’t want to sell the domain under any circumstances, you should set this value very high. In addition, make sure that the Show reserve price option is not checked, as users will otherwise be able to see it. Bear in mind that the highest you can set a reserve price on Flippa is $10,000.
The next few steps in this process will ask how much you want to pay for the listing, which determines its visibility. Stick with the cheapest option for now, and provide your payment details.
Once you’ve provided all your details, you can verify your listing. When this is done, it will appear on the site, where other users will be able to bid on it.
You can now sit back and watch as the bids roll in, giving you an accurate estimate of your domain’s value to real users. If you’re lucky, somebody will take a fancy to your domain, and may even bid above the reserve right away. Either way, at the end of this process you should have a much clearer idea of how much your domain name is worth.
Claim That Domain
Whether you’re planning on selling your domain name or you simply want to know what it’s worth, performing domain valuation will help you find the answer. By understanding what factors are essential in determining a domain’s value and conducting a little research, you can quickly learn how badly other people might want to own it.
Do you have any questions about estimating the value of a domain name? Join the DreamHost Community and start the conversation!