This question is asked by thousands of people a month and the answer is never clear. Unlike stocks, real estate, commodities and other more popular assets, domain names have many x factors which contribute to value.
Some of these factors are tangible such as the elements of the domain name (dictionary word, three letter dot com, etc) but the most valuable factors are intangible. A seller’s relative value of money, a buyer’s need for the domain, the buyer’s relative value of money etc.
Many articles and tools exist to help measure how much a domain name is worth. Some articles have value. Some tools have value. But there is no magical formula accurate enough to broadly value domain names in general. In fact, it’s mathematically impossible due to the numerous amount of x factors included in the foundational data set of comparison.
Note that public sales comprise the primary data set foundation for which most automated valuations are formed. Many other factors are also used (such as keyword volume, CPC etc) however, the data set is not complete, nor ever can be, without incorporating intangible and immeasurable factors.
SO HOW MUCH IS YOUR DOMAIN NAME WORTH?
The quick answer is there is no simple answer. However, speaking with a domain name broker can help answer many questions such as:
- How much do you think a buyer will pay?
- Why did other domain names sell for so much?
- What if I auction the domain name?
- Is the domain name a good investment?
A good domain name broker can not only help you understand value but also may be able to identify other available domain names of similar value or other potential buyers.
Note that if your domain name is considered super premium (one word dictionary .com, two/three letter .com or two/three/four numeric .com) then its imperative you look at current sales or speak with a broker. Most anybody who owns these type of domains typically has a floor value in mind since they have likely been offered a great deal but premium domains continue to rise in value so you need current information – not a valuation based on offers made a year ago.
Also remember that 98% of domain names have no liquid value. This means the words you buy today (thinking they are great) likely have zero resale value unless you get an inbound lead. Yes, almost every domain name registered today is not valued high enough to liquidate for cash tomorrow .
Some of this 98% however were worth nothing yesterday and over $100,000 today. That is the gambling side of domain name investing.
If you want to know how much a domain name is worth before you buy then understand the LIQUID value of the domain name – the value if you needed to sell today. Most people will never answer this question correctly so learn from people who have been around. There are many who have already lost millions learning what not to do. Understand the word “liquid” otherwise you are just gambling.