The domain name business can be extremely lucrative, with people
willing to part with considerable amounts of cash to secure the perfect
name for their hot new start-up or innovative product.
Although there are still a plethora of dot-com addresses available,
most word-related domains were snatched up a long time ago, most likely
they are being sat on by the owner until someone shows signs of
interest.
If you are lucky enough to own a catchy or highly desirable domain,
it can be difficult to reach an accurate and fair valuation. Likewise,
if you are looking to purchase one, you must understand what you are
paying for.
Although there are plenty of ‘estimation’ tools available online,
their accuracy is often highly questionable and ultimately it comes down
to one thing – how much the end user is willing to pay for it.
Brandability
Due to the ever-decreasing effectiveness of exact match domains (eg
mobilephones.com, mountainbikes.com, etc) in the search engines,
branding is the way forward. If a domain name is catchy and memorable,
you can easily build up a strong brand around it. Better yet, a name
that is pronounceable, while not necessarily forming a real word, is
also a great alternative. For example, Waze.com or Twilio.com or
Zynga.com.
If a domain name meets the above criteria, it’s almost certainly
going to increase its overall value. Although they are hard to come by
these days, a domain that is short in length, regardless of how
pronounceable it is, will also hold a higher value.
When it comes to extensions .com remains king, with .net and .org
generally being worth less. More and more obscure domain extensions are
becoming available, making it easier to construct a word that
incorporates the extension (eg www.Mirro.rs). In some circumstances,
these can fetch high prices in auction. Although .coms are generally
more valuable, it all comes down to what domain is right for your
business.
Authority
The overall authority of a site is often the main factor taken into
account where established domains are concerned. The rapid advancement
of the World Wide Web coupled with the sheer amount of potential
customers that regularly surf it, means people are happy to pay for a
domain name that has value from a search engine optimisation
perspective.
Important factors include:
- Domain age.
- Amount and quality of external links pointing to it.
- Its historical ranking history.
A large number of low quality and ‘spammy’ external links pointing to
a domain can have severely detrimental effects on its ability to
perform in the search engines. This in turn can greatly reduce its
value, due to the amount of work required to ‘clean up’ the link
profile.
Always be sure to thoroughly explore a domain’s link data and consider using the Wayback Machine to view historical snapshots of what site used to reside on it.
End user
Taking the above factors into account may help you arrive at a rough
valuation of a domain, but if you can’t find an end user (ie someone who
might be interested in the domain), it is essentially worthless. An end
user is usually someone looking to launch a new business or complement
an existing one, who can greatly benefit from owning the domain.
Consider exploring the potential value of a domain name by simply
searching on Google for any keywords it contains, and seeing who is
currently advertising for these terms. If people are paying to advertise
within the search engines for a term, the will most likely be
interested in a matching domain name.
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