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.
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.
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.
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.
Post supplied by Mark Potter of ICANN accredited domain registrar and web host www.namecheap.com
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