Have you ever considered how much your domain name is actually worth? Like the usual real estate property, domain names can cost a lot in the online world. The value of a domain name depends on factors such as length, keywords that are on the domain, and, of course, the ability to attract visitors to your site and make money.
Let’s explore the concept of domain value, examine some high-value domain sales, and discuss the factors influencing a domain’s worth.
What Is Domain Value?
Domain value is the estimated monetary worth of a domain name. In other words, it is the price a domain name can be sold for on the open market.
Domain value would depend on such factors as the length of the domain, keywords that are in it, the top-level domain or TLD, overall brandability, and memorability.
The value of a domain name will typically be determined based on these factors in conjunction with market trends and historical data of sales for domains of a similar nature.
Examples of High-Value Domains
- Cars.com sold for $872 million in 2015: Such a category-defining domain puts a high premium on the “cars.com” domain, as it is short, very memorable, and super relevant to an industry that is of very high value.
- Insurance.com sold for $35.6 million in 2010: That is the price of a domain name that encapsulates a very, very, very expensive keyword. Fact is, the insurance market is cruel but very rewarding, and a site with a domain like that would bring miracles towards site search engine rankings and site brand value.
- Voice.com sold for $30 million in 2019: This speaks entirely to the brandable side of short, brandable domain names. Even though it contains no industry-specific keywords, the brevity and memorability of a domain name like this could make a huge difference in terms of the value of a domain for a business that wants to build a strong brand in digital media.
6 Factors That Influence Domain Value
Whether you are to purchase a domain, sell it, or you are simply curious about its value, you should understand the factors that are key to its value.
These are six aspects regarding domain names that determine the market value of a domain:
Domain Name Length
Generally, short domain names tend to be more valuable than long domain names. Shorter domains are definitely easier for people to remember, type, and share.
A domain like “cars.com” is much more valuable than “bestcarsintheuniverse.com” simply because it is short and to the point.
Keyword Relevance
The valuable domains are those that have popular keywords, most frequently industry-specific, that are found in it. For instance, the domain “insurance.com” is directly related to the insurance business.
Domains with relevant keywords attract organic traffic, thus being keenly sought by businesses in that niche.
Top Level Domain (TLD)
Of all the other TLDs one would go for, a .com name would broadly be the most valuable. The .com TLD is the most recognized and trusted, hence, it is the first one that comes to mind when choosing one.
As other TLDs – from .net and .org to newer, more trendy options like .io and .co – increase in popularity, .com holds the number one place in standard domain value.
Brandability
Remember, such domain names can actually be worth so many more times than their rather confusing and complex-to-pronounce counterparts.
A brandable domain name—for example, “zoom.com”—is much better than a generic domain or a keyword-loaded one, for example, “videoconferencingsoftware.com.” A brandable domain name is unique and catchy, helping businesses gain a major online identity.
Domain Age
An older domain sometimes can have more value due to the history of the domain and potential SEO value associated with it. Generally, search engines consider older domains to be more reliable and authoritative, which can benefit search rankings.
Existing Traffic and Backlinks
Domains with a history of organic traffic and quality backlinks are much more valuable. These domains will have an audience and a base of search engine ranking, which is very attractive to potential buyers who want to leverage that existing authority.
Benefits of Owning a Valuable Domain
A well-chosen domain name might be considered an investment for a business intending to find, create, and expand an online presence with a brand. The advantages of having a high-value domain name include:
- Brand awareness: An easily memorable, appropriate domain name can make a difference in creating brand awareness for your product in the online marketplace. When your domain name corresponds to your brand and is memorable, it can substantially increase brand awareness and recall from the target audience.
- More website traffic: Valuable domains tend to have a stronger correlation with good search engine rankings. When your domain is keyword-oriented and has a good reputation, search engines will give it a higher chance of being considered an authoritative and trustworthy domain, meaning high visibility and organic traffic to your website.
- Potential resale value: As the world continues to become even more digitized, premium domain names will likely continue to increase in value. If you have any high-value domain, you have the potential to sell it at a profit in a future resale.
- Competitive advantage: By acquiring a worthwhile domain name, you already gain a head start over the others in the marketplace. A memorable and relevant domain can set you above the competition, provide a robust online identity, and make an impression on the right people.
- Greater credibility: A premium domain name exudes instant credibility. Customers who stumble upon an industry-relevant, well-chosen domain will likely view your brand as professional, trustworthy, and experienced in your industry.
How Does Domain Valuation Work?
Domain valuation is the cumbersome process of weighing different factors to determine how much a domain name may be worth. Domain valuation tools and professional appraisers consider several key elements in their assessment of the value of a domain name.
The most common elements they’ll look at are:
- Length and memorability: Short and memorable domains tend to have more value. Valuation tools break down this criterion further into domain length, overall brandability, pronunciation, spelling, and uniqueness.
- Relevance of keywords: Domain names that contain very popular keywords pertaining to an industry category automatically tend to have a higher value. Valuation tools assess the search volume and advertising cost-per-click (CPC) of keywords within a domain to determine its potential value to businesses in related industries.
- TLD Popularity: A domain’s top-level domain can strongly influence its value. The tools used to value domains take into account the popularity and credibility of different TLDs. At the top of the list in value and demand is .com.
- Comparable sales: The data on past sales for the same kinds of domains is highly significant in the valuation process. Recent sales of domains of approximately the same length, with similar keywords and TLDs, are taken into consideration to estimate market value with the help of tools and appraisers.
- Market trends: Professional appraisers track market trends and the shifts in domain demand. The focus of the research by professional appraisers valuing a domain is on the trend in the market and shifts in demand for that domain, focusing on the growth of new TLDs, changes in consumer behavior, or growth in certain industries.
- Potential buyers: Domain appraisers will also consider who is most likely to buy a specific domain. A domain that is likely to catch the eye of a potential buyer—such as a large corporation or well-financed start-up—can be appraised to a higher value, based on the domain’s ability to command premiums.
It is equally important to note that the domain’s valuation is, in any case, an estimate relating to available data and market knowledge. The real value of a domain is what a buyer is prepared to offer to purchase it.
However, taking the key factors above into account and drawing from the wisdom of valuation tools and professional appraisers should provide you with a greater awareness of what your domain should likely be worth in today’s open market.
Is It Worth Investing in Premium Domains?
Buying premium domains can be part of your digital strategy. It could bring you benefits such as:
Strong Brand Foundation
A premium domain name can be the backbone of your brand identity. It instantly communicates the value proposition of your business and helps you stand out in a crowded market.
A memorable, industry-relevant domain will increase your brand recognition and make it easy for your customers to find and remember your website.
SEO Benefits
Typically, high-value domains have a history of very strong backlinks and organic traffic flow. Invest in a premium domain to get a head start in search engine rankings.
Websites that have keyword-rich names and established domains are poised to earn decent placement in topical queries, bringing targeted traffic to your site with minimal effort in SEO.
Asset Value
Premium domains appreciate with time. The number of businesses joining the online business platform is on the rise, and so does the demand for such domains. Buying a valuable domain now might pay off in the future if you decide to sell it.
Many businesses and investors are buying premium domains to either provide a strong foundation for their online operations or to hold them as appreciating assets.
Profitable Resale Opportunities
Even a domain that is considered premium can be purchased, at the right price, and sold at a profit. The domain aftermarket business is booming, with lots of investors and corporate entities willing to pay top dollars for premium names.
This probably means that you can churn out worthy profits by reselling your domain through smart investment in premium domains and keeping an eye on the market tides.
When considering investing in a domain, weigh the potential benefits against the initial costs. Determine how the domain aligns with your business goals and branding strategy.
Check its historical performance and backlink profile, and see if it has the potential to drive relevant traffic to the domain. The premium domain may often be slightly more costly, but in the long run, it more than pays for itself and can be a justifiable investment for business or investor purposes.
Failure to understand well what you have will result in missing opportunities to strengthen your online presence and really leverage your digital properties.
At HostPapa, we provide you with tools and know-how to help you create a valuable domain so you can use it to its fullest advantage and best suit your business needs.
Click here to create your ideal domain and start growing your digital presence.
