The reality is that appraising domains is not an exact science and is heavily subjected to human judgement (and error). Human judgement may depend on many variables such as buyer’s and seller’s level of motivation, available options, among other things. However, there are some fundamental aids that can be of great assistance in arriving at a price for a given domain. Let’s face it, though, no matter what you sell a domain for, you will always wonder: “Could I have sold it for more?” The goal is to arrive at a price that both the buyer and seller are happy with now and in the future. You don’t want to find yourself in a situation where you sold a domain at a price you were happy with at the time of the sale and then learned that you significantly undervalued the domain. On the other hand, you don’t want to price your domains such that no one is willing to buy them. This applies both to domains with published BIN prices and domains that receive offers. So lets take a look at some factors that can assist in appraising domain name prices.
Automated Domain Name Appraisal Tools
Automated domain name appraisal tools are notoriously inaccurate but if they provide relevant related info (such as sales, traffic, search volume, etc) they can be helpful. There are number of domain name appraisal tools that are free. Some of these include:
Free Valuator is a relative newcomer and, as the name suggests, a free automated appraisal service. According to the site, “Free Valuator calculates the value of the domain based on the domains keywords, statistics, website rankings and the sales of similar domains”.
Domain Value Appraisal from GoDaddy is a new free service that is still in beta and uses an exclusive algorithm (most likely held secret) plus 20+ years of sales data. This last point gives GoDaddy the edge as sales data is one of the key metrics to arrive at a reasonable valuation. So far, our tests show that their appraisal tool is good at matching a domain you enter to past sales.
Estibot & Valuate we’d lump together because they use the same algorithm. It appears to use keywords, cost-per-click spend, search volume, related sales, similar domains currently for sale, Alexa and Google ranks, among other things in their algorithm. Estibot allows 1 free appraisal a day, while Valuate allows 5 as of time of writing, but Estibot provides more information in the appraisal. Monthly plans range from $29.95 to $149.95 USD, again at the time of this writing. Based on our tests, Estibot tends to get confused about some domains and puts out irrelevant supporting data that have nothing to do with the domain.
DomainIndex.com is another service that gives you 2 free appraisals per day. Our tests have resulted in very inaccurate pricing valuation but some of the other data might be helpful in your own appraisals.
It is safe to say that automated appraisal tools always under-value domains. By how much, varies. These tools, at best, give you a ball-park price. One clear sign that a valuation is of any value (no pun intended) is if it returns with relevant data: related sales, similar domains for sale, search volume, etc. But this should be taken with a grain of salt and be your first checkpoint, not decide the final price.
Google and Alexa ranks and other website rankings are of little importance since you’re dealing with domains and not websites. Those rankings may impact the price but not by much for most buyers.
Recorded Domain Name Sales
This will be one of your best friends when determining a domain price. Past sales can give you good insight into the value of domains you are pricing. But, again, they do not automatically indicate the best price for your domains. This is yet another tool to gauge your pricing. How so?
A domain sold 10 years ago may have a different valuation today. While great domains increase in value over time, some domains, even good ones, have been sold at a higher price then resold at a lower price few years later. Why is that? Is it because there was a bubble at the time of initial sale? Did the first buyer over-pay? Or did the first buyer go out of business and let the domain drop or forget to renew? Was it sold to an end-user directly, then sold again at auction? There are many variables involved. There may not be a way of knowing most of them but you can glean some key elements from sales data besides the price. Take note of the venue, where it was sold, and also visit those domains. Are they parked? Are professional sites build on them? This will tell you whether the domains sold to end-users or domain investors. Obviously domains similar to yours that sold to end-users will make your domains more valuable than if those were still parked.
Sales data is a big indicator whether a domain is valuable and what amount you might be willing to sell it at. It will aid you at arriving at realistic pricing that will lead to quicker sales. Here are some of the top sites that provide up-to-date domain sales data:
DN Journal provides a regularly updated list of sales that nicely breaks up the sales info into Top 20 domain sales, Supporting Cast with 4 figure sales, country code sales, followed by non-com and new gTLD sales. The sales list is peppered with interesting editorial comments that provide an insightful take. The downside is that those lists are not searchable. Be as that may, you should make DN Journal’s sales reporting a must read as it is good training for pricing domains.
DNPric.es maintains a database of over 1.5 million reported domain sales that is searchable. You can search by keywords or by similar domains. You can also browse latest reported sales and a variety of top 100 lists.
Namebio is another searchable database of reported domain sales that is very useful. It includes advanced search options, appears to be very up-to-date and can be used in conjunction with DNPric.es to get as complete searchable sales data as possible.
It is important to note that many, if not most, domain sales go unreported because of non-disclosure agreements or other reasons. As such, it is impossible for any database to be complete. The above resources will give you a window into domain pricing but should be used as a guide not as a final decision. So this brings us to the most important factor.
The Human Factor
Before you can make the best decision as to price, you need to be armed with as much information as possible. The above tools help you in this regard, but as you can see, you still need to use good judgement in reading the data those tools provide. There are still other things you can do to equip yourself to make the best decision as to domain prices.
Know your market.
If you have intimate knowledge of the market the domain targets you will have a better idea as to the domains being used for business sites and some idea as to budget. For example, a geographic name targeting mechanics will have a different value than the same geographic name targeting financial or investment businesses. Also one geographic area will have a different value than another for the same type of business. Knowing the types of businesses that would be interested in a specific domain and their potential budget will help you in setting a price for that domain.
Additionally, certain non-com gTLDs work well in certain local markets and poorly in others.
Learn all you can about naming.
Domaining is not simply about selling domains for the sake of domains. It is about selling names that can be branded and advertised successfully. When you understand naming as it relates to start-ups, services and products then you will be able to instantly recognize valuable domains, even when they are made up brandables. You can take that knowledge and combine it with the above factors to be in a much more confident position to put a figure to a particular domain.
Know the fundamental features of a great domain.
Length. The shorter the better in most cases.
Number of words. 1 word domains have the most value, followed by 2 words, then 3 (but only in few cases where it makes sense).
Order of words. If the domain does not follow the logical order of words in the language it is in then it loses value.
Extension. At the time of this writing, .com is the most recognizable extension world-wide. But other extensions can also be successful for niche or local domain sales.
Not confusing. Valuable domains are those that are sufficiently different from existing brands that can make a business differentiate. They don’t confuse with other words when spoken.
Radio Test. You want domain names to roll off the tongue, that don’t need repeating or to be spelled out loud.
Trademark Safe. No matter how great a domain is, it will lose all of its value if it infringes on an existing trademark.
If you take all of the above factors into your pricing decision, you should be able to price your domains within the margin of error. This means that your pricing will not be so low so as to leave significant money on the table and not so high as to turn off potential buyers.
Another point to mention is that once you decide on the prices, you should add some percentage points to allow for negotiations and discounts as incentives.