ReleasingDomain.Com provides an totally platform for premium domain name transaction. What we’re interested in is getting deals done and the best way to do that is for both domain buyers and domain sellers to be informed. Estimating the value of a domain name is always a subject of great debate.
Those making arguments for the value of a premium name can typically be separated into two parties: those who want the domain and those who own the domain. Quite often there is a disconnect between what both parties view as a fair price.
So who is right? What is my domain name worth?
Unfortunately, it’s not that cut and dry. Domain name value depends greatly on the specific domain name and prices can seem arbitrary. Often the best way to value a domain name is to review the comparables. If your offer is not in line with current market realities, there is a low chance of it being accepted.
What about those domain name value estimation tools?
There are many automated tools online that attempt to estimate the value of a domain based on things like Google PageRank, Alexa rating, search frequency etc. To put it bluntly, they are generally useless.
Domain values are subjective, but if you take into account the information below, you should be able to sort out which domains are worth a few hundred dollars and which are worth hundreds of thousands.
Some Guidelines for Domain Name Valuation
Below are some guidelines and concepts you can follow when trying to price a domain name. The opinions below are our own opinion based on years of experience. There are widely varying approaches to domain name valuation, so we’ve tried to offer a high level overview; it is not definitive and our views will not necessarily be shared by everyone.
Rarity & Commercial Potential
The biggest factor in determining domain name pricing is the fact that there are a limited number of words and terms in any given extension (.com, .net, etc.) that have value on their own. Commercial viability, the ability to make money with a domain name in an established market, is the second factor in valuation. If a domain name is comprised of a common term that is used commercially, the value of that domain name is high.
Examples: Cars.com, Loans.com, Books.com, Travel.com etc.
Shorter is better, to a point. Short concise domain names are ideal, but one should avoid the temptation to abbreviate domain names when possible. Let’s look at an example: say you are a bottled juice company, ‘Bottled Juice Incorporated’ and you want to buy a domain name.
What is the clearest, simple to use domain name for your company? Juice.com? BottledJuice.com? BottledJuiceInc.com BottledJuiceIncorporated.com ? Clearly the first domain name, Juice.com. The shorter and simpler the domain name is, the easier it is to use in marketing and the fewer opportunities there are for typos or misunderstandings to occur.
Should length be the primary factor in domain valuation? Is a 3 letter domain name valuable and what makes it valuable (assuming it’s not a word)?A 3 letter domain name is valuable simply due to scarcity and demand.
Many companies abbreviate their company names and a 3 letter domain name would be an ideal match for them (ie. IBM). However some are more valuable than others. The more common the letter’s usage, the more valuable the domain. 3 letter domain names using Z X Y V F U are less valuable than domains using R S T L N E.
4 letter domains overall are much less valuable than 3 letter domains, there are over 456,976 4 letter domain name combinations compared to 17,576 3 letter combinations. 4 letter domain names are currently gaining in popularity. Value is being driven up by speculation.
The Radio Test
An important factor to take into consideration is what’s called the ‘Radio Test.’ If you were to say your domain name on the radio without spelling it out, are people going to go to the right site? TheirThere.com might read well, but if you just heard that domain name on the radio there are 4 possible domain variations. That’s a problem and that impacts value. This is an extreme example, but illustrative of a common issue that impacts value.
The Gut & Reality Check
Ultimately the final price that you offer or accept for a domain name will come down to your own reality. Will the sale or purchase of this domain name at the price offered make a positive impact on my life or business? If you believe it’s the right thing for you to do given your current situation and information, then it’s the right thing to do, if it’s not, it’s not. Wondering if you did the right thing after accepting a sale or purchase is entirely normal. Don’t worry, it goes away.
A Note About First and Last Names
These days everyone wants to have TheirName.com, for example “JoeSmith.com” or “McDermitt.com”, but it can be extremely difficult to buy these sorts of names.
There are two usual scenarios: either it is owned by someone else with the same name as you and it has an inflated value as a result or it is owned by a company attempting to own ALL of the common first or last names and losing a name will impact the value of their entire collection.
In the second scenario there is almost no chance to own the domain and in the first you will likely have to pay an amount that overcomes the sentimental value of the name. It can be done, but don’t expect it to be cheap.