How to Assess Domain Name Value

Domain names serve as an important asset in the digital marketplace, offering both individuals and businesses a strategic piece of online territory to enhance their brand visibility. For investors, understanding the intrinsic value of these digital assets is key, as the right domain can significantly influence the market positioning and brand perception of a company. 

Securing a premium domain name is akin to acquiring prime real estate in the business world, providing a platform for growth, customer engagement, and competitive advantage. To that end, just like with physical real estate, your domain name can become a core digital asset that you can use as a financial investment or a long-term representation of your brand.

In his Forbes article ‘Here’s What You Need To Know When Assessing Domain Name Value’, domain trader Michael Gargiulo breaks down the basics of the domain name market and what factors influence the value of your domain registrations. Whether you’re looking for a premium domain to bring value to your brand or you’re interested in buying and selling domain names on your existing platform, understanding how domain names are valued can help you effectively leverage them as strategic digital assets.

Key factors influencing domain name value

When the internet first rose to popularity, savvy business people started snapping up domain names with the goal of using them as the basis for a digital business or eventually selling them at a profit. Because of their memorability and domain value, one-word domain names with popular keywords were hot commodities on the domain market. 

As the digital marketplace matured and domain registration rates increased, the factors associated with domain name value also became more complex. Here are some of the key determinants to consider as you research potential domain names for your business.

Domain name registration status

When you’re the first person to register a domain name, you can typically secure the domain at a budget price. Once someone buys a domain name, they can then set their own price or put it up for auction and sell it to the highest bidder. 

If you want a domain name that someone already owns, you’ll likely have to pay a premium that potentially over-values the domain name. Because of this, people looking for a deal on premium domains often search for options that are unregistered or have recently expired. 

Domain length

Interestingly, 70% of the most popular websites in the world have domain names with 8 or fewer characters, showcasing the importance of a brief, concise web address. 

Because they’re easier to remember, shorter domain names typically attract more traffic, giving a major boost to their domain value. While there are still some short domain names that have yet to be registered, many one-word domains have already been secured, increasing their base price and domain worth.

Domain age

While it’s a common belief that older domain names inherently rank better in search results due to higher domain authority, recent updates to Google’s algorithm have nuanced this perspective. Domain age alone is not a significant ranking factor; rather, it’s the established metrics and credible history that older domains may have accrued, such as backlinks and consistent content quality, that contribute to their value. These factors can enhance a site’s reputation and search engine standing without the need for excessive content publication.

Since buying an older domain name gives you instant access to a certain level of trust and authority within the digital landscape, these, and other similar domains can come at a price. 

Domain extension or TLD

The introduction of alternative TLDs, or top-level domains, completely transformed the world of domain names. Traditional TLDs like .com are still usually some of the most valuable options, but other top-level domains like .io are currently on the rise. These more affordable alternative TLDs have the potential to increase in value as they continue to grow in popularity. 

It’s important to keep in mind that some TLDs may be more valuable within certain sectors, such as .ai or .tech. Tracking the popularity of descriptive domain extensions in your field can help you identify premium domains with long-term growth potential.

Market trends

Keeping up with trends is a key element of a successful domain-buying strategy. As new concepts are introduced to the market, domain names with related keywords can quickly rise in value. 

Anything from trendy slang to new technology can take a low-profile domain name and turn it into an extremely valuable digital asset. When working with trend-based domain names, it’s critical to keep an eye on public opinion to determine the best time to buy and sell. 

Historical sales data

Demand often sets the market rate for domain names, especially when they’re put up for public auction. So, the amount a domain name sold for in the past can be a good indication of its value in the future. However, you should always consider the context of historical sales data for domain names. Some companies may be willing to pay more than market rates for a specific domain name in order to preserve their brand identity or launch a specific project. 

Look at previous sale prices alongside overarching trends in the domain name market for a more accurate understanding of your domain name’s value. 

Consider standard vs. premium domain names

Standard domain names are the most common and typically consist of basic combinations of words or phrases that are not yet registered. They are affordable and readily available for registration by any individual or entity. These domains often include longer names or less common extensions and are suitable for those looking to establish a basic online presence.

Premium domain names, on the other hand, are highly sought-after for their brevity, memorability, and relevance to popular keywords or industry terms. These domains often come with a higher price tag due to their perceived value in branding and marketing. Premium domains are particularly valuable to investors and businesses looking to establish a strong online identity and gain a competitive edge.

Methods for valuing a domain name

You can purchase domain names through registrars, private brokers, or public auctions and marketplaces. 

By researching the potential value of your domain name, you can determine whether you’re getting a good deal through your registrar. Thoroughly appraising your domain can also help you identify how much you’re willing to spend when bidding on an auction or completing a private sale. 

Once you have a domain name in mind, use a combination of the following techniques to come up with an accurate valuation.

Leverage domain appraisal tools

Many free online appraisal tools can help you kickstart your research. These domain name valuation tools implement an algorithm to determine the general value of a domain name. Popular options include:

• Sedo
• EstiBot
• Siteprice
• Domain Index

Once you submit a domain name to a domain appraisal tool, the site will generate an estimated price for the domain and provide you with the factors that contributed to that pricing. The algorithm will asses factors like: 

• The search volume for keywords in the domain name
• The length of the domain name
• The historic resale value of the domain name’s extension

If relying on these automated tools, run your chosen domain name through multiple options to ensure you’re getting an accurate appraisal. Each algorithm will assess appraisal factors differently, so securing multiple quotes can give you a well-rounded understanding of the domain name’s market value. 

Assess comparable domains using a domain search tool

Along with having your specific domain name appraised, you can learn more about its value by conducting a comparative analysis. This method is ideal for understanding the general state of the domain market in your sector. 

• Start by making a list of similar domain names to research so that you can hone in on a price range using a domain search tool that makes sense for your domain name. 
• Look at the current or historical value of domain names with similar keyword and extension combinations, paying special attention to any trends that could have influenced the sale price. 
• Focus on domain names that relate to your brand or industry but also include domains with a similar length or style to gather additional context.

Take advantage of Registry Premium Reserve Release Events

Registry Premium Reserve Release Events are special occasions when domain registries release previously withheld premium domain names to the public. These events provide a unique opportunity for investors and businesses to acquire high-value domain names that are not normally available. During these events, premium domains are often sold at a fixed price or auctioned to the highest bidder.

Premium reserve releases are often preceded by an early access period that allows investors to purchase domains ahead of the premium reserve release on a first come first serve basis. Purchases made during the early release period may incur a fee on top of the domain price.

These premium reserve releases are significant because they offer access to top-tier digital real estate that can play a crucial role in a brand’s online strategy. For investors, participating in these events can be an excellent way to secure a valuable asset, as these premium domains often have strong branding potential and marketability. Keeping an eye on upcoming release events from various registries can be a strategic move for anyone looking to enhance their digital portfolio with high-impact domain names.

Domain valuation case studies

High-value domains are constantly being traded and sold as companies try to strengthen their presence online. Exploring high-profile domain sales is a great way to learn more about how the domain market works and what attributes to look for when securing a premium domain at a fair price. 

Cars.com

With a valuation of $872 million, the 2014 sale of Cars.com is still the largest domain name deal in history. The sale of the Cars.com domain name was part of a larger buyout, with the domain name making up a significant portion of the Cars.com business as a whole. 

The searchability, recognizability, and lasting relevance of the ‘cars’ keyword gave a massive boost to the domain name’s value. 

Business.com

Business.com was purchased in 1999 for $7.5 million—a small fraction of its 2007 valuation of $345 million. Multiple businesses were bidding on the business.com domain name, including Dow Jones and the New York Times, creating a sense of competitiveness that could have driven the price upward. 

The timeless, one-word keyword of ‘business’ combined with an authoritative ‘.com’ domain extension also contributed to the high value of this domain name.

NFTs.com

NFTs.com sold for $15 million shortly after the popularity of NFTs skyrocketed in 2021. 

The sale of NFTs.com is a reminder of how market trends can influence domain name value—a domain name that may not have even been on the radar a few years prior was suddenly in high demand with the launch of the NFT marketplace. 

Securing high-value domains with Name.com

Like any asset that fluctuates in value, domain names have several factors that influence their worth at any given moment. By carefully assessing each of these characteristics, you can find undervalued domain names that have the potential to bring exponential value to your business. 

Get started by using Name.com’s domain search tool to check domain name availability and price, use bulk search to find multiple high-value domains, and search our expired and premium domains inventory. 

Sources:

Forbes. Here’s What You Need To Know When Assessing Domain Name Value. https://www.forbes.com/sites/forbestechcouncil/2024/02/01/heres-what-you-need-to-know-when-assessing-domain-name-value/?sh=77eb626163c3 

Daily Blog Tips. On Domain Names, Size And Quality DOES Matter!. https://dailyblogtips.com/on-domain-names-size-and-quality-does-matter/ 

Feedough. The Top 10 Most Expensive Domains Ever Sold. https://www.feedough.com/10-most-expensive-domains/ 

Domain Name Wire. NFTs.com domain sells for whopping $15 million. https://domainnamewire.com/2022/08/03/nfts-com-domain-sells-for-whopping-15-million/ 

Domain Name Wire. (2022, February 10). The difference between a standard domain name and a premium domain name. https://domainnamewire.com/2022/02/10/the-difference-between-a-standard-domain-name-and-a-premium-domain-name/

Domain Name Wire. (2021, August 10). How to buy a premium domain name. https://domainnamewire.com/2021/08/10/how-to-buy-a-premium-domain-name/

NameBio. (2022). Premium domain name sales. https://namebio.com/premium-sales

Sedo. (2022). Premium domain names. https://www.sedo.com/us/premium-domains/

GoDaddy. (2022). Premium domain names. https://www.godaddy.com/garage/what-is-a-premium-domain-name/

NameJet. (2022). Premium domain names. https://www.namejet.com/resources/premium-domain-names/Rightside. (2021). Premium domain names. https://www.rightside.co/premium-domain-names/