Valuing domain names

Here are ten factors that you should consider when attempting to predict the likely value of a domain name

1.) The Length Factor – Shorter is generally better than longer.

2.) The Extension Factor – There is a general hierarchy when it comes to domain names. .com is generally the most valuable followed by .net, and .org. Occasionally sales of quality domains with .biz and .info extensions are reported.

In terms of UK domain names .co.uk is more valuable than .org.uk or .me.uk.

As a general rule .Com is king. Country Code Top Level Domains (ccTLD) from Germany (.de) and United Kingdom (.uk) can have good value. Better quality domains with .net, .org, .biz and .info extensions can be valuable.

Some Country Code Top Level Domains (ccTLD) have been adopted worldwide. One example is .tv (associated with the television broadcasting industry) the ccTLD for Tuvalu and another is .cc, the ccTLD for the Cocos (Keeling Islands), an Australian territory (perhaps because it is easy to remember). Particularly good examples of these can also have some value. The .mobi extension has been created for sites that will be accessed using cellular and mobile phones.

3.) The Keyword Factor – Domain names with valuable and sought after words in them will have some value. For example, domains containing business and commerce related keywords are generally more valuable than hobby and pass-time related domains.

4.) The Brandable vs. Generic Factor – Generic domains are domains that describe a specific category or ‘thing’, such as dog.com, cats.net and toys.co.uk. They are very memorable, very descriptive and so, very valuable.

GoDog.com, KitsCats.net and TimsToysAndGifts.co.uk are examples of brandable domains. Good brandable domains can also be very valuable. However, it is not always easy to predict with any accuaracy the demand for any particular brandable domain. This is especially the case if there are cheaper alternatives, or even unregistered alternatives available. Domainers buy brandable domains speculatively, in the hope that someone will like the name and buy it. Through experience, domainers can learn how to identify quality brandable domain names.

5.) The Traffic Factor – Domains with traffic are particularly sought after.

The best names have ‘type-in’ traffic. This comes from people actually typing the name of the thing they are searching for, directly into the browser address bar and then attaching ‘.com’ at the end – i.e. typing ‘ManchesterPlumber’ followed by ‘.com’. This is valuable because its obvious that the traffic is directly related to the topic of the domain name, in this case plumbers based in Manchester.

A domain name that has previously had a site on it will get trafffic from existing links on other websites, directories, blogs etc. It is possible that this sort of inherited traffic will decline over time as websites remove their ‘dead’ links, change hands etc.

6.) The Revenue Factor – This is simply the amount of money made by the name. Often this will be relevant if there is no associated website and the domain is ‘parked’ with a domain name parking company, such as Sedo.com.

When valuing a domain, a component of a domain name’s value is often based on revenue estimates over say 10, 18 or 24 months. While sellers might be willing to provide actual revenue details it has not been unknown for unscrupulous sellers to amend revenue details or otherwise miss-represent them. This is a tricky area and great care should be taken when considering revenue estimates.

7.) The Search Engine Factor – The amount of interest in topics related to the domain name will have a considerable influence in the value of a domain name. Wordtracker.com is a website that enables domainers to determine the volume of internet searches made for particular words. As a general rule, the more popular the better.

8.) The Word of Mouth Factor – There is nothing better than word of mouth recommendations – and this is just as relevant for websites.

However, for a domain name to pass the ‘word of mouth test’ it has to avoid certain characteristics. Remember, the name of the game is for a stranger to be able to type a domain name they were told about, read somewhere, or heard on the radion, directly into the address bar of their browser, successfully. If I have a website with the name “Insurance4U.com” just think of the possible errors! I need to tell everyone the the word “for” is the number “4″ and the it is the letter ‘U’, not ‘y-o-u’ – otherwise they would type in InsuranceForYou.com or even InsuranceForU.com. To make matters worse these websites may belong to the competition! Similarly, if your site is credit-cards.co.uk when people talk about your site they have to remember to mention that there is a hyphen in it, otherwise they will send all your visitors to creditcards.co.uk.

So the general rule is that domain names are worth a less if they contain hyphens or have letters or numbers instead of words.

9.) The Similar Sales Factor – This is simply, the fact that amount that similar domains sold for in the past can easily affect the value of domains relating to that topic.

A variety of websites list sales data which can be used to research domain sales . These include Sedo.com, Afternic.com and DNJournal.com. Additionally, Namebio.com and DomainPrices.co.uk (uk domain name sales) provide a detailed record of domain name sales and can be a very valuable resource.

10.) The ‘X’ Factor – Has the domain name got the qualities that make it exceptional? Does it fit perfectly into an industry or business niche? Does it have that special something that makes it err…….. special? Sometimes it is hard to put into words what the ‘X’ factor is. However, the most successful domainers have the ability to pick the prettiest and most talented domains from a line-up – and if you want to be a successful domainer you have to develop that ability too!