Determining Domain Name Value: Part I
After registering a domain, some may ask the question, “How much is my name worth?” Most see a domain as just an address for their website, a mile marker of sorts. The right name can help drive traffic to a website, but like a piece of land or stock, can also serve as a valuable investment.
If domains are investments, then how much much are they worth? This is often a hard question to answer. Much of the domain market is based on speculation, and there are more domains out there worth nothing than those worth something. There are a few steps one can take to determine the value of a name, however.
Check the extension.
A domain’s suffix is one of the most important value indicators. Naturally, the .com TLD yields the highest prices at auction. Other TLDs, namely .net and .co.uk, are still attractive, but aren’t worth nearly as much as their .com variants.
As a general rule, .net names are usually worth between 5 to 25% of a .com’s value. For the less common ccTLDs, you might get as little as 0.5% of the .com sale price up to 5%. Granted, auctions often deviate from these guidelines.
To get an idea of how domain values vary based on extension, look at sex.com. The name sold in 2006 for £9.2 million ($14 million USD). The same year, sex.net sold for only 3% of that- £297,207 ($450,000 USD). Compare that to sex.gen.in and sex.gl, which sold for £172 and £660 respectively.
The name should also match the extension. Juego.es (Spanish for “game”) or juego.com.mx would be worth quite a bit, but juego.br would be worth much less because Belarus is not a Spanish-speaking country.
An extension can also enhance a name’s value if it fits. For instance, sex.pro or sex.me would surely fetch more than sex.gl because of the connotations with the words “pro” and “me.”
Determine keyword popularity.
The more popular a domain’s subject matter is, the more it will be worth. You can bet that visitAruba.com is worth quite a bit more than visitPitcairn.com. Similarly, computer.org is much more attractive than deodorant.org (though the latter is probably more important).
Some names will have value for a short period of time if the topic is newsworthy. Swine flu is a classic example. If Mount Vesuvius were to erupt, there would be a spike in the value of volcano domains. After Hurricane Katrina in 2005, thousands of hurricane and disaster relief-related names were registered.
A good way to track popularity is through Google Trends and OVT, or Yahoo Overture Score. OVT measures the number of searches for a given keyword on Yahoo Search during the previous month. It isn’t as accurate as it it used to be, but still useful. The higher OVT score your domain’s keywords have, the more potential your domain has and thus the more it could be worth.
There are many other factors one must take into consideration when determining a domain’s value. Whether you just registered a name or are thinking about buying a domain from another owner, it is important to take its value into consideration. Just like stocks, domain names fluctuate in worth and can be good long-term investments. Check back tomorrow for Determining Domain Name Value: Part II.
