How Much Is My Domain Name Worth?

Michael Gargiulo - CEO, VPN.com

By: Michael Gargiulo, CEO at VPN.com

Updated: 8:55 PM ET Mon, January 18th 2021

How much is my domain name worth

If you already own a domain name or you’re interested in buying one, you may be wondering what it’s worth. Looking at domain selling websites might only confuse you more at first since the value of one domain or another may appear arbitrary. This is because domain name evaluation is a complex process that takes many distinct yet interwoven characteristics into account. It’s possible to use machine-learning algorithms to get a reasonably accurate estimate or to hire an appraisal expert. Either way, when you ask, “How much is my domain name worth?” the answer may surprise you.

The answer might be a dollar value in the thousands, millions, or ones. Furthermore, it might be worth much more today than it was yesterday. Many domain names have sold for millions of dollars, such as the famous $30 million Voice.com sale.

It’s unlikely you own a million-dollar domain such as VPN.com. In fact, the great majority of domain names are barely worth their $10 annual maintenance fee. However, there are countless examples of domains worth tens of thousands of dollars. A domain name derives its value from how well it can sell on the aftermarket.

What Makes Domain Names Valuable?

There’s no objective method to assign value to a domain. While there are factors that make a domain more or less valuable, they’re ultimately worth what someone, somewhere is willing to pay. This might be because a domain has great value to a specific buyer, which drove Facebook to spend over $8 million on fb.com.

On the other hand, it might have a great generic value which would allow many different buyers to find it useful. Understanding the metrics that make a domain appealing will help you understand the value of your domains. Once you understand these factors, you can get an idea of the value of your domain by seeking out examples of similarly good domains and seeing what they’re selling for. If you’re not satisfied with this self-estimation, you can also turn to free, computerized appraisal services or a domain brokerage.

Assessing The Value Of A Domain

The exact number of metrics that influence the value of a domain depends on which expert you ask. Some cite the importance of generic value and concision, while others consolidate these and other features into the catch-all concept of brandability. This refers to the ability of a brand to build itself around a domain that is catchy and easy to remember. If you’re looking to gain an in-depth understanding of domain value, it’s best to break a domain down into its most basic components.

Top-Level Domain

On a technical level, there are two components of a domain name. The first half, such as “VPN” in VPN.com, is the second-level domain. A top-level domain (TLD) such as .com, .co, .net, .org, or .biz forms the second half of the domain name. While there’s an effectively limitless number of second-level domains, there’s a relatively smaller number of TLDs.

Your choice of a top-level domain doesn’t materially change the function of your website, but it’s extremely important nonetheless. This is for two key reasons, which are viewer perception and searcher mistakes. Studies show that people perceive .com and .co as the most trustworthy and reliable, with .org and .net following closely behind. This is particularly interesting because .org has an association with nonprofits and charities while .co is simply the Colombian country code. It’s likely that the popularity and trustworthiness of .co originate from its similarity to .com, the most popular and valuable TLD.

You can use any top-level domain, save for a few restricted TLDs, for any purpose. You need to exercise caution, though, because using a domain that isn’t reputable can damage your perception. In many cases, it will result in people failing to go to the correct domain, too. When people misremember a domain name, they assume it ends in .com by an overwhelming margin.

What this all boils down to is that .com is generally the most valuable top-level domain. However, other well-known and respected domains can still be extremely valuable. On the other hand, TLDs that are obscure and lack trust among the public can sink the value of a domain. However, there are successful websites with unconventional TLDs; it ultimately depends on the specific domain name and the state of the market. 

Keywords

Search engine optimization and organic traffic capture are two of the most important elements of online marketing, and they run on keywords. While Google and other search engines have mitigated the value of domain keywords, they still help websites rank. As a result, domain names that include popular keywords are especially valuable. When a domain is a single keyword or key phrase, this is especially favorable. Additionally, such a domain name will necessarily rank well on two other important metrics: brevity and generic value.

Short Length

If you look at a website where domain owners sell their domains, you’ll frequently see short domains selling at high prices. In particular, three and four-character domains are almost guaranteed to be valuable. These names are perfectly suited for acronyms that will be useful and sellable to countless possible buyers. The likelihood of eventually selling a short domain at a profit also makes it easy to sell them to investors at a reasonable price.

The other type of short, valuable domain is the one-word or two-word domain. These typically do well on SEO and have broad appeal. For instance, any website that makes, sells, or writes about shoes would love to own shoes.com. In general, brevity tends to result in high generic value.

Generic Value

A domain with generic value is one that’s sufficiently non-specific that many businesses can brand themselves around it. Any second-level domain consisting of one word that is associated with a product or service should have excellent generic value. However, high levels of generic value can exist even in longer, multi-word domains.

Memorable

Generic value, brevity, and related features all interplay with how memorable and brandable a domain is. If someone hears about a company using the domain name you own from a friend or sees it in an advertisement, will they remember it? A catchy, memorable domain name enhances the effectiveness of the owners’ advertising efforts. A domain name is only as good as its ability to draw traffic and help a website succeed.

Precise Spelling

The human brain stores visual and audio information more effectively than the written word. As a result, domain names that don’t use a natural spelling may be worth much less. If someone hears about a website called “pizza for you,” it’s somewhat unlikely they’ll realize that the actual domain is pizza4u.com. If your domain name uses the first spelling that people will assume the name uses, that will make it more valuable. Domains that use letters or numbers in place of words may be less valuable, and a misspelled domain (shoos.com vs shoes.com, for instance) could be worth little overall.

Existing Brand Associations

If your domain is similar to a popular, existing brand, then that can be a boon for its value. Facebook purchasing fb.com for $8.6 million is a famous story, but the company also bought up many other similar domains. The company owns fb.com, facebok.com, and facebook.org among others. This even includes domains with low-trust TLDs, such as facebook.biz. Upon visiting them, you’ll find that the only thing the company uses them for is traffic redirection back to the main website.

While manipulating a brand association can result in a violation of cybersquatting laws, this requires actual wrongdoing on part of the owner. Overall, brand associations can only be a good thing for the value of a domain. If nothing else, the owner can count on accidental traffic and a resultant boost to SEO.

Pre-existing Traffic

An existing flow of traffic is one of the best signs of value for a domain. When a domain name with no website is already receiving visitors, it means the owner can count on a minimum amount of traffic. It also indicates that a domain name performs well on other value metrics. After all, a counterintuitive spelling with an obscure top-level domain and no website is unlikely to receive any accidental traffic. If it’s common for searchers to reach your domain accidentally, then those who want to find it should have no trouble.

The Nuances Of Domain Name Evaluation

While you can use all of these metrics to understand domain name evaluation, this comes with a caveat. By nature of the industry, there isn’t and never can be a formula for precisely measuring the value of a domain. Another complicating factor in domain name evaluation is that a domain is hardly ever worth the sum of its parts.

When every metric except one implies that a domain is extremely valuable but one metric is outright bad, the domain is likely mediocre. However, this and every other rule of domain appraisal have plenty of exceptions. It’s this complexity that leads many industry specialists to say that appraisal is less of a science and more of an art.

Domain Name Appraisal

Once you understand what constitutes a good domain name, you can compare your domain to others. Search for domains that are as similar to yours as possible in terms of memorability, brevity, and keywords. If the domains you deem similar consistently sell within a certain range, then you have an idea of its value. However, you shouldn’t take risks on undervaluing any financial asset, whether it’s a home or a domain name.

If you’re looking for an answer to “How much is my domain name worth,” you have two options to choose between. There are many websites that offer a free appraisal tool, and domain brokerages offer evaluation as a core service. Both options are worth using, for different reasons. The accessibility of a free, algorithm-based appraisal is too much of an advantage to discount. However, hiring a domain name broker to assess the value of your domain name will ultimately produce a more reliable estimate.

Algorithmic Appraisal

A free evaluation typically uses an algorithm. This might be a manually programmed algorithm or one that uses machine learning. Either way, their inner-workings are highly complex, and the result is what amounts to a ballpark estimate. Utilizing one of these free services is easy, but the complexities of evaluating domain name value are hard for an algorithm to grasp. For a truly accurate estimate, you’ll need to contact someone who can combine raw data with human experience.

Professional Domain Name Appraisal Services

A professional domain broker isn’t constrained by the limitations of an algorithm. Each of the many metrics that inform domain value interact in a dynamic, non-linear manner. One of the strengths of hiring a professional to appraise your domain is that they appreciate this and can incorporate it into their estimates. Consider reaching out today for a free domain name appraisal.

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