How to Appraise a Domain Name's Value

Knowing the value of an internet domain name is crucial in today's business industry. Altough there is no exact formula to appraise a domain, there are a group of things to consider before putting a value to a domain. A majority of people will base their immediate appraisal on TLD extension, word length and keyword popularity but won't really consider backlinks, brandability or emerging trends part of the equation. There are a few factors that a person must be aware of before they can feel they have thoroughly assessed the domain and attach a valid appraisal amount. The first thing a person can do to is recognize that there are many subtle components that need to be assembled and viewed as a whole to get a comprehensive perspective on the domain. It seems every domainer has their own method used to appraise a domain so I've listed a few factors that I feel are necessary in being considered before a domain can be appraised.

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TLD Extension
TLD or Top-Level Domain is the ending extension attached to a domain such as .com, .net or .org. The .com extension is considered the most sought after even though there are other TLD's that are gaining huge popularity and acceptance. CC's or Country Codes are also seeing their fair share of registrations.

Name Length
Now that all the 2, 3 and 4 letter .com's have been registered, the letter count on a domain is fast becoming a huge factor in a domain's worth. The desire for a short domain is at an all time high and values are steadily climbing due to the limited supply of shorter length domains. Seems shorter names are easier to remember and with that a value increase.

Characters, Numbers and Hyphens
Hyphens integrated between letters are often viewed as separators between keywords. Although there is much dispute whether or not the hyphens negatively impact a domain's search engine optimization, there is considerable preference that a domain not include anything extra in it's name. Number digits are beginning to see their popularity rise and can be included with relevant keywords or letters to make a great domain.

Keyword Popularity
Marketable search terms and keyword popularity are extremely relevant in appraising a domain name. The frequency of a given search term helps to indicate the brandability or popularity of the keyword. Generic word domains, such as flowers.com or poker.com are the strongest in their keyword popularity genre.

Traffic and Revenue
Traffic or visitors to a particular domain is one of the most important factors to consider when appraising a domain. More traffic usually means more revenue due to pay-per-click income and possible advertising opportunities, therefore increasing the value of the domain.

Brandability and Trends
Any domain that is easily memorable, short and non-descript is considered brandable and therefore increases it's value. It would be easier for a person to remember TVrepair.com instead of the longer fix-my-broken-television.com . Not only is the first choice shorter and has better word flow but also there is less of a chance of someone incorrectly typing in the URL. Also keep tuned in to current trends that may seem to increase an otherwise meaningless domain into a treasure. An example is when Apple Computers began to incorporate the letter i into their products descriptions, such as iPhone, iPod and iLife.

Automated Domain Appraisals
This is a tricky one. Although I feel automated domain appraisal systems such as Estibot are helpful in assisting to appraise a domain, I don't feel they should be the "end all" decision used to obtain a domain's value. If used more as a reference tool, they can be one of the greatest resources that help determine an appraisal value. Any script/applications can have some bugs, especially ones with complex algorithms as Estibot. Make automated domain appraisals one of the tools to find an appraisal, not the only tool.

Future Potential Interest and Overall Appeal
As time goes by, new words, trends and fads explode onto the scene, and with each new word or trend created, a domain is born. Stay up with current events and become a regular visitor to news aggregate sites, such as Digg and domain industry specific DNHour to stay on the cusp of emerging potential interests.

Backlinks
I like to keep my eye on the number and quality of backlinks to evaluate an domain appraisal. While tons of irrelevant backlinks might negatively effect a domain's search engine optimization, it can still be a positive thing for a domain names' value. With more and more domains being "parked", the links tend to lean towards relevant backlinks and therefore less likely to be bogged down in the SEO nightmare of page rank. And, it's hard to argue that backlinks don't increase traffic.

Relevance, Region Specific and other Fuzzy Logic
As said earlier, there is no exact formula to appraise a domain name, and therefore the not-so-exact elements must come into play. An example would be that veteran domainers tend to skew their entire method of appraising when it comes to country specific or region specific domain names. Different factors are incorporated to determine non-English domain word values and domainers across the globe are becoming better in detecting future potential interests in foreign markets. Another example is the continuously growing popularity of "long-string domaining", or stringing multiple words or keywords to achieve a brandable and memorable domain name. TacoBell has ThinkOutsideTheBun.com and Amazon has the domain BuyABook.com. By definition, these would not be very valuable but that's when the fuzzy logic creeps in. A domain's value can be perceived in multiple ways.

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So keep in mind that even though there isn't one exact correct formula being used by the domain industry to appraise domains, a reasonable appraisal can be determined by anyone if they keep all the factors in mind and how they each interact with each other.

I'd suggest you monitor the pulse of current domain sales

by frequently visiting
DNJournal's Domain Sales Chart. This will show you weekly and even yearly to-date domain sales for the industry. And don't forget to visit the front page of Sedo to view ongoing live auctions. Each of these great resources will help you in creating your own customized method of domain appraising by seeing what domains are selling and for what amount.

15 Ways to Become a Better Domainer

The competition in the domain industry is steadily increasing as more and more people are becoming aware of it's global impact in today's financial marketplace. Professional investors and huge corporations are staking their claim of this internet real estate and have turned this once primitive name exchange into a booming multi-billion dollar industry.

Today's domainers are needing take their domain investing to another level in order to have continued success and profitability. Below are 15 Ways To Become A Better Domainer.

Utilize the forums
As I've said in previous posts, the importance of domaining forums in the domain industry are vital and serve as a great resource for beginners and professional domainers alike. Whether you are looking for some honest appraisal opinions or asking questions that only another domainer would know the answer to, the domain forums are there to assist. 24 hours a day, 365 days a week, this constant stream of domain information has shaped many beginner domainers into today's greatest professional domainers. If you're not a member of a domain forum you should greatly consider joining one today.

Are you a domainer or a domain developer?
Are you buying domains for quick profit sales? Are you buying domains for the long-term traffic revenue? Are you buying domains to develop and birth new traffic? Whether you choose to do one or all three, you must come to terms and clarify a solid game plan when it comes to your domain investments. It's reasonably okay to have a few domains being developed but your overall strategy needs to take shape and be narrowed down to a specific objective. Developing a domain name takes time, effort and more time, but the possible payoffs are always huge. Buying domain names in bulk for quick sales is also profitable but relies more on a constant sales initiative to be successful. Either way, you need a tactical approach on how you want to market your domains.

Dissect your portfolio
I once spoke to a guy who boasted a domain portfolio of over 3000 names. After hearing how he was considering selling a few of his "best" domains, I offered to peruse the list and maybe assist with finding some end users that might be potential buyers. He agreed and the next day he sent me a list of about 1000 of his best domains that he was willing to sell. To my surprise over 90% of them were, in my humble opinion, not worth much more than the reg fee. I contacted him back and explained that I was only to find about 75-100 names that could possibly be decent sales. He was stunned. He declined and stated that my appraisal was not correct and thanked me for my time. 3 days laters, I received an email from the exact same guy asking for assistance in selling the 75-100 domain names I previously found in his list. Seems that during those 3 days, he spoke to a few other domainers and received the same appraisal and evaluation of his so called "best" domains. This guy thought since his domains contained popular words like gamble, casino, sex and technology that it automatically made his domains super valuable. What he didn't consider was the multiple hyphens and terrible combinations of typos and keywords. Don't be the domainer with a huge list of terrible domains just to brag about how large your portfolio is. Trim your "extra" domains and streamline by selling or trading and use the profit for investing in quality names that are earmarked for immediate revenue or immediate development. Be proud of the overall quality of your portfolio and not just the number of domains it contains.

Know your rep
I amazed on how many people I encounter that in the domain industry that have no idea who their representatives are for such companies as Sedo, Moniker, Go Daddy and other big domain powerhouses. The representatives of such companies exist to assist their members who utilize their services and are hands-down the quickest and easiest way to get something resolved if you feel a mistake has been made. If you have domains either parked or offered for sale with a domain company, I highly suggest sending a quick email to find out who your representative is and do you best to maintain a professional and courteous relationship with them. It's easier to ask assistance from someone whom you know and knows you than it is to ask a complete stranger. And don't forget to vote for your favorite domain rep at next years Domainers Choice Awards.

Stay clear of Trademark Infringements
This should be a no-brainer. Time and time again I see domainers struggle with the headaches caused by trademark infringements and bad faith domain registrations. Not only do most of the trademark claims filed at the WIPO result in the domain being transferred to the appropriate party, but it also indicates that your choice in domains is questionable and therefore proving that you are still purchasing non-quality domain names. Domains that infringe on trademarks are not quality. Ask any lawyer. Save your registration fee and steer clear of legal woes.

Auto-renew
Now that your portfolio is streamlined and contains only select domain names, you definitely don't want to lose or let any of them drop and take a chance of someone else buying you lovely internet real estate. Do yourself a favor and set your domains for auto-renew at your domain register where purchased. It's a terrible feeling to have someone else scoop up one of your prize domains just because you didn't or couldn't find the time to renew the registration. Visit this great article by the Daily Domainer that explains the life-cycle of a domain name and don't let accidental "drops" happen to you.

Limit the hand regs
Hand regs or hand registrations are domains that are purchased from a publicly available source at a regular registration fee and are either brand new (never been purchased) or have expired and no longer owned by the previous owner. Go Daddy is a domain registrar that is popular with domainers and consistently used for hand regs. The possibility of stumbling along a unregistered domain is always there and the opportunity for someone to register a new domain name that never existed and create value to it is also conceivable, but in essence, most domain names that are hand regged are simply non-researched, impulse purchases that pad a domain portfolio with non-value names. Distinguish yourself as a profitable domainer and limit the amount of hand regs you add to your portfolio. One good way is to wait 24 hours before registering a hand reg domain and then re-evaluating before buying. You may lose a registration every so often but in the long run you will save on unnecessary registration fees and useless domain name ownership.

Stay current with news and sales
To be successful is to be informed. The pulse of the domain industry is constantly evolving and therefore it is beneficial to a domainer to know exactly what is the next potential opportunity or trend being created within our industry. If you buy domain names, you are an investor. If you are an investor, you need to stay current with the news of your investments and other people's investments. You can do this by monitoring the recent domain sales and news offered by many websites that are specifically geared towards todays domainers. One of my favorite websites is Ron Jackson's DNJournal. You can find great articles, news and the popular Year To Date domain sales. You need to know what domains are selling, which domains are being bought and how much they are being bought for. Invest time in your investments and reap the rewards. Predicting the next big trend is priceless.

Blog around
Domaining blogs are sprouting up everywhere with domainers eager to share their experiences, setbacks, lessons learned and tips with anyone who wants to listen. We all need to take advantage of this free and useful information by visiting various domain blogs and getting another person's perspective on our industry. And don't forget to subscribe to their RSS feeds, if it is offered, and have all this new information sent directly to you to read at your convenience... for free. Subscribe to this blog here.

Diversify with other TLD extensions
While some domainers swear that .com is the only extension worth being bought, there are others, like me, who think it's absolutely insane to dismiss all other TLD's and only buy one flavor of domain name. The popularity of .TV and .Mobi and the ongoing success of ccTLD's has risen and is playing a prominent part in today's domain marketplace. Generic domains in any of these extensions are being recognized as a highly sought after commodity with no signs of slowing. Familiarize yourself with other TLD's beside .com, .net and .org and evaluate your domain purchases on a global niche scale the next time you go to buy a domain.

Consider fractional domain ownership
Fractional domain ownership is simply a group of people that own a domain name and share in it's profits, development and use. There is not one sole owner because it is owned by the entire group. Owning a portion of a high value domain is a great way for a newcomer to the domain industry to begin and understand the ins and outs of professional domaining and share in the profit growth associated with that certain domain. It also allows "regular" domainers to group funds together and own a very premier domain name without one person having to pay the entire purchase price. Look for this trend to boom in 2008.

Optimize your parked pages
Once you buy a domain name, it is up to you whether your domain will contain a fully-functional website that you can customize/adsense or whether you will "park" your domain and allow targeted content to automatically be placed and monetized per visitor. If you choose to park your domains, it's imperative that you understand how domain parking works and how it can be optimized to bring better results. Sedo is a popular place for domain parking and allows users to see detailed stats and account information for each domain parked on the Sedo network. Revenue is shared with Sedo each time someone clicks on content on one of your parked pages and relies on consistent traffic to be a steady stream of income. Brush up on your domain parking information here.

Update your WHOIS information
The WHOIS database is sort of like a directory of purchased domain names that contains the owner's contact information, purchase date and expiration of a certain domain. One use of this information is being able to contact a domain owner and inquire about purchasing the domain. Without the correct information in the WHOis database, a potential buyer may not be able to contact the current owner and allow an offer to be placed. Contact your domain registrars and make sure your WHOis information is current and correct. If you opt not to be contacted by potential buyers, you may consider using a service that purchases domains for it's clients and keeps their information private. There is also an option to pay an additional fee at some domain registrars for private domain registration.

Contact more end users
So you have a great domain name that is considered gold in a certain industry. Great job. Now, if you have decided not to develop it and simply want to profit from a sale, I highly suggest contacting an end user. What's and end user? An end user is someone who would use the domain name specifically for creating brand recognition in a certain industry. Here's an example: Adam owns organicdogfood.com and Bob owns an organic dog food company in Texas but uses the domain BobsSuperGoodOrganicDogFood.com. Adam contacts Bob and offers a shorter, brandable and easier to remember domain name that can increase Bob's exposure on the internet for people searching for organic dogfood. Adam has just contacted a possible end user. A domain name can usually be sold to an end user for more since it is valued more by the actual user of the domain instead of a regular domain buyer.

Change your views on the domain industry
Are there still opportunities to be successful in today's domain industry? Yes.
Is there still time to take advantage of the booming domain sales? Yes.
Is it still possible for a domain newbie to come in and thrive even with a small initial investment. Yes.