We all know that a domain name simplifies the complex internet addressing scheme represented in numbers. Instead of typing in a long IP address such as 220.127.116.11 to find a website, we can type in BigBazaar.com, which is much easier. As more and more people worldwide search the web to seek information, learn new things and buy unique items, website domains are becoming part of everyday living. What you may not know is that there is a way to determine domain value.
Domain name is in the virtual world like how equipment and products are in the real world. As more and more people use the web for meeting their needs, your business’s focal point of connecting with visitors — the domain — gains value. In fact, your business domain name is an asset that can be sold along with the business.
A digital asset
The domain name is a significant digital asset for any enterprise, especially if it is associated with an active website.
However, the concept of domain valuation is both science and art. It is science because domain names have specific and measurable data points which can be used to base a valuation. It is also an art, since in many cases, a domain is worth what someone is willing to pay for it. How the investors assign domain value depends upon:
- How appealing it is to a particular target audience.
- How it will help identify and differentiate goods and services in the marketplace.
- How much traffic it is attracting on the internet.
In general, domain names which are short, catchy and have high-recall potential can be of great value.
Factors influencing domain value
The domain value depends on a variety of factors, some of which correspond to measurable parameters. Factors include:
Top Level Domain (TLD) used
TLD is the part that appears to the right of the dot. The most valuable domains use .com TLD and for good reason. It is a common tendency among all of us to look for any website by adding .com to the business name. What’s more, .com has been around longest and is considered the global domain. Of course, there are many other TLDs — .in, .net, .org, etc. — but none as valuable as .com.
The domain names which are simple and have broad appeal are generally more valuable. This also ties in with length — domains that comprise fewer letters command better value (e.g. Flipkart). This is very likely because shorter domain names are easier to remember, faster to type and less prone to typing errors.
The radio test
Domain names are often spoken, as when one friend tells another about a favourite website. So a domain whose proper spelling is clear and easy to grasp when spoken is often more valuable than one which is ambiguous.
Web traffic comes from type-ins (direct input into a browser URL bar), links/bookmarks and search. If you can estimate how much each unique visitor is
worth, you can then come up with a simple formula which calculates the amount of revenue or value the domain generates.
For this same reason, domain names basing on popular subjects are better valued than those referring to niche subjects (e.g. ShopClues vs. Ayush). This is owing to the simple fact that more people search for these topics on the web. More traffic equates to higher website worth.
Of course, there are also some things that reduce domain value. For example, a domain that uses numbers like “4” in place of “for” to make it catchy will suffer in value. This is not considered good from the valuation perspective.
One way to estimate domain value is to look at how much similar domains have sold for. Recent comparable transactions involving similar domains can suggest the current market value of a domain name. You can use Dnjournal.com and Namebio.com for this type of research.
So how much is your domain really worth?
Finally, the answer to the question, ‘How much is my domain worth?’ GoDaddy launched a domain value service to give you the most accurate estimate available. Their algorithm combines machine learning with real-market sales data compiled from 20 years of experience to appraise your domain name. GoDaddy’s credibility in this area is well established, as they manage millions of domains as the world’s largest domain registrar. Try it now.
Increase your domain’s worth
Search engines determine website worth based on how relevant or useful it is to the searcher’s query — and the first indicator of relevance is the domain name. You can increase the value of your domain name by using it to launch a website or blog you promote. Offer useful information on it and in time the people will come. This will not only benefit your business by bringing in new customers, but enhance the domain value.
In summary, your domain is an important strategic asset and has the potential to multiply the overall valuation of your firm. Tend it with care.