How to Value Your Domain Name

How Much Is Your Domain Name Worth?

In this blog, Sam Allcock talks through the process involved in valuing your domain name. If you own a generic domain name and are looking to sell it, you’ll need to have at least an idea as to what it’s worth. Domain names can differ hugely in value. Some may cost as little as the registration fee whereas, others may be worth millions of pounds.

There are several steps involved in establishing the value of your domain name, from current market demand to brand potential; which we will go into in more detail a bit further along.

We frequently receive large amounts of queries from domain owners wishing to sell their domain names and most usually, they tend to hold little value. However, there are, of course, times, when a seller contacts us with an excellent name for sale that holds a lot more value.

So, you’re probably now intrigued as to what your domain name is worth? Could you be sitting on a pretty penny? I’ll aim to simplify the valuation process to help you to distinguish between low-value and high-value domain names. Ultimately, you will be able to figure out an approximate valuation for your domain name on the premium domain market.

Please note: All of the domain names listed below are for example purposes only.

1. Valuation Tools

Firstly, if you’re looking for an exact valuation, do not rely solely on valuation tools that pop up everytime you search to value a domain name. The most popular domain valuation tools, also known as appraisal tools, are Estibot, Freevaluator and SitePrice. These tools use networks like Google Adwords to assess your domain name’s total search volume and the value of each search. We always advise our customers to view these valuation tools merely as a means to gather an approximate guide price. The fact the tools rely on metrics such as search volume, CPC and PageRank means the valuation is not always 100% accurate.

For example, a .com or.co.uk domain for an extremely specific search keyword, such as an industry term with a huge value to a small, clearly defined audience, might not achieve a high valuation using an automated tool. On the other hand, a domain with a high-volume, lower-value keyword may receive a very optimistic valuation.

1. Compare it to recent sold domain prices

One of the easiest ways to value your domain is to have a look at other similar domain name selling prices. The best sites to check this are Flippa and DNJournal, which provide a list of recently sold domain names with their final sold price. Markets respond quickly to current trends, which is why you will get a more accurate valuation from recent sold prices rather than using valuation tools.

We recommend you bear the following in mind when going down the past sales route:

• Is your domain name really similar to the ones you are comparing it to? It should have a similar keyword volume and average CPC as there can still be a significant difference in search value between similar domain names.
• Were the past auctions very active? Very active domain auctions are usually for ‘en trend’ domain names reflecting current market demands, offering short term value.
• Think about the audience for the domain. Some domains are more attractive than others. The larger the audience, the more attention it will attract.
• You can also check past sales of domains using DomainTools’ premium Whois service, where you can view a domain’s historical record.

1. Search Volume and Average CPC

Domain names containing generic keywords, such as teethwhitening.co.uk or creditcards.co.uk will hold a higher value as they rank well in Google searches. If your domain name reflects the name of your website, this will also increase its value. You can gauge a lot from a domain name that includes an exact keyword by studying its search traffic. We tend to use Google Adwords Keyword Planner which is a free tool available? to Google Adwords advertisers. It lists the average search volume for a range of keywords.?

Here’s how to use Google Adwords Keyword Planner

Firstly, enter your domain name’s exact keywords into the “Get search volume data and trends” field, then click “Get search volume”. We’ve provided an example of an exact keyword search below, using this website’s domain name.?

Google will display the average monthly search volume for the keyword, as well as a suggested bid for Adwords advertising. Multiplying the search volume and Adwords bid together, along with other factors, can provide an approximate domain value.?

In this case, there are four factors to consider. The first is the search volume for the keyword. The second is the average CPC. The third is the average clickthrough rate for the top-ranked search engine result.?

In the case of our example, the domain name’s exact match keyword receives little in the way of search traffic, with just 20 searches per month. It has a decent suggested bid on Adwords, with an average CPC of $6.97.

Assuming a first place organic ranking on Google, we can use the following formula to determine an approximate value for the domain based solely on its exact match search volume:

???????????(20 (search volume) 6.97) .33? * 12 = Approximate domain value

The .33 included in the above equation is the average clickthrough rate of the first-ranked organic result on Google. On average, the first result achieves a 33% CTR in organic search, making it by far the most valuable position.?

The 12 included at the end of the equation is a period of 12 months, which refers to the period of search traffic we will use to calculate the domain’s value. This formula is known as the Rosener Equation, after domain investor Andrew Rosener.?

Using the formula above, we reach an approximate value of $552.02 for the domain name used in our example. Of course, this valuation doesn’t factor in the additional value of similar search keywords and variations of the main exact match keyword.

While the Rosener Equation is a great method for gaining insights from an SEO perspective, it isn’t an exact formula in valuing your domain name.

SEMRush is another useful tool for looking at advertising trends and has several advantages to Google Adwords Keyword Planner.

• Provides a live view of the domain name’s current rankings for relevant keywords, as well as the real value of those keywords via Adwords.
• If the domain name includes a competitive Adwords keyword, you’ll see information on the value of its potential search traffic.
• If the domain is affiliated with an active website, it provides an overview of the website’s backlinks, referring domains and unique referring IP addresses.

If you have a really brandable domain, the Rosener Equation isn’t that important. For a more accurate valuation, particularly for premium and ultra-premium domains, we advise following the two techniques below.

1. Generically Applicable

Would your domain name be valuable to a specific business or industry? Domains like Lawnmowers.com or Loans.co.uk have generic value, since they can be used by any lawnmower or lending company, respectively.

Generically applicable domain names are keyword domain names that can be used by a large range of businesses within a specific industry. They’re typically directly related to a specific product or service and have absolutely no existing branding.?

For example, a domain name like Lawyers.com is as generic as any domain name can possibly get, and has value as a generic asset. LegalAce.com, on the other hand, could have value to a specific law firm or lawyer, but isn’t a generic domain name.?

The best method for this type of valuation is the Rosener Equation, which is applicable to generic domain names that lack any type of branding.?

When it comes to generically applicable domain names, short and sweet is almost always a better option than long and descriptive. A domain name like Lawyers.com has significantly more value than LawyersInChicago.com. However, location does play a role in its value, for example, NewYorkCityLawyers.com would be of significant value to legal firms in New York.

1. How Brandable Is It?

A brandable domain name tends to be short and easy to remember. It may not have much value in terms of search but can be very popular with startup and online companies. The easier to remember, the better.

Take Mint.com - this is owned by Mint, a personal finance tool under the trade name Intuit. Based on search volume and generic applicability, this domain is pretty much worthless, but the name carries a secondary meaning as where money is created, making it a high brand value.

It is difficult to value a domain name on its brandability. It may also have little brand value at the time of valuation, however, it has the potential to be immensely valuable at? a future date, should a fast growing company wish to acquire it. People tend to look for brandable domains as and when they need to and so this market is not a constant, unlike generic domain names.

I tend to follow the below techniques when looking into the brandability of domain names.

1. The radio test. If you were to hear it on the radio, would you be able to spell it after only hearing it once?
2. Is it short and simple? Most brand names prefer one to two syllables to make it more memorable.
3. Does it relate to a specific industry? Flickr.com may not seem to be valuable, but it is easy to remember and makes you think of the sound a camera shutter makes, giving it high brand value to the photographic industry.
4. Have a look at BrandBucket.com, which sells pre-built brands, complete with domain names. If your domain name is similar to one you see on here, you may be able to use the listed example as an approximate value.?

Finally, one of the most accurate ways to determine the value of a domain name is to calculate who can buy it and how much they are willing to pay?

Checking the market for a domain you own involves finding prospective customers and estimating the domain’s value, from their perspective. If they have the capital to buy the domain, how much would its traffic be worth to them?

One of the most effective ways to find these customers is to search for its target keywords. Look above and beside the organic search results to find companies that are currently buying Adwords traffic for those search terms.

In highly competitive industries, you might find 10 or more bidders for one keyword, all paying Google for SEM traffic. Each of these 10 advertisers is a prospective buyer for your domain.

Domains with a large number of buyers, usually attract higher values at sale than the Rosener Equation listed earlier, would reach.

Do you have a domain name you’d like to sell?

Do you own a generic or brandable domain name you’re interested in selling? Give me a shout and I can point you in the right direction.