5 Exterior Factors I Consider When Valuing a Domain Name
I buy and sell all types of domain names related to various trades and industries. One day I might be negotiating to buy a real estate domain name and the next day I might be trying to sell a domain name related to cosmetic surgery.
There are certain standard domain name factors I generally consider when I am trying to place a value on domain names, and I think other domain investors look at these as well. I use the Keyword Planner tool to see search numbers, and I find the Adwords CPC to see how much advertisers are paying for clicks. I also look at the age of the domain name and number of extensions registered (and by whom). Comparable sales and prices for similar domain names are also standard factors.
There are other general domain name factors I also consider, but for the sake of this post, I’d like to discuss five of the exterior factors I consider to place a value on a domain name I am trying to acquire or sell. I welcome your feedback, and I invite you to share some other considerations you make when placing a value on a domain name.
Cost of product or service – I look at how much people are paying for the product or service that the domain name covers. For higher end products and services where trust is important, I believe exact match keyword domain names may be critical in attaining that trust. If it’s a high end business, the value of the domain name may reflect that.
Commission or margin on product or service – If I am looking to buy or sell a domain name related to an industry where the commission or profit margin is high and one closed deal can pay for the domain name, the value I place on it will reflect this. Having higher profit margins means that an excellent lead producing domain name should be worth more.
Types of domain names other companies use – If companies who operate in the space use variations of a domain name I own or am trying to buy, I would likely value it higher as a result. To give you an example, when I bought LakeWinnipesaukee.com, I saw that a number of local businesses use variations of this as well as different extensions, so I valued it higher. I think it’s the best domain name of those in use, and when I build it, I believe there will be a higher level or trust.
Size of market – The more businesses involved in the market, the more valuable a domain name should be. For a category defining domain name, I have found at least one company wants to have the prestige of owning that domain name or to prevent a competitor from getting it. If the market is small, the value would probably be less.
Size of companies involved – The actual value depends on the companies, but the size of the companies is a consideration. If it’s going to be tough or impossible to contact a decision maker or the domain name probably wouldn’t be of interest to any companies in the space, the value would be lower.
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