What is the value of a domain?

February, 2015 the domain 360.com sells for $17,000,000 ( 17 million United States Dollars ) 

The first thing to understand about a domain is that a domain is an UNIQUE virtual (internet) address. Just like snowflakes , no two domains are exactly alike. No matter , who or where in the world someone is, if they type in your domain address into the internet , it will go only to your designated location or website. YOUR domain is YOUR piece of real estate on the worldwide internet.

Think of the domain as if it was a vacant plot of real estate on the internet with an unique address (virtual real estate). A “developed” domain , that is a domain with a website, is therefore akin to a piece of real estate in the physical world that someone has built something on. Some developed domains just lead to a one page website – some lead to huge mega sites. Just like some plots of land have a shack built on them , while others have huge malls or buildings.

Whether you are trying to determine the value of a domain , the value of a property , or a painting , antique or for that matter , the value of most any unique object, value is determined when a willing seller and willing buyer agree to a price and consummate a sale. Usually the more demand ( willing buyers ) the higher the price. As the worldwide growth of the internet continues , demand will continue to increase.

Let us try to understand some of the factors that would influence the value of a domain (virtual real estate).

Value Factor One: Every Domain is Unique.

But unique does not necessarily mean valuable. Which unique domain would YOU rather own? Why?

ABC.com or WK2PVSLFZX8.net

Value Factor Two : Domains have different extensions

A domain consists of two parts separated by a . ( dot ) There are thousands of extensions , with more becoming available all the time. Some common extensions are : .com , .net , .org , .info , .biz

Which domain would YOU rather own? Why?

ABC.com , ABC.net , ABC.ru , ABC.eu

Value Factor Three : Domains can spell “words”

Which domains would YOU rather own? Why?

Coffee.com or cofee.com

Coffee.com or CanadaCoffee.com

Coffee.com or Kaffee.de or Kaffee.com (kaffee is German for coffee )

How much is a one word .com domain worth

Value Factor Four: Statistics
Two important statistics that can influence the value of a domain are the “Average Monthly Searches” –
number of times the “keyword(s) are searched for on the internet and the “Cost Per Click” of the keyword(s).
Cost Per Click or CPC , is the amount advertisers pay google for EACH click on their ad that is displayed on the
google webpage that is displayed when a person searches for the keyword(s).
( these are the ads at the top, side and bottom of the search results. )

Statistics can be very helpful when you go to develop your website. If you properly optimize your website for the search engines ,
this will result in “organic” traffic. That is FREE visitors to your website from the search engines. The better your website is
optimized the higher it will be listed in the search results for your keyword(s) and the more free visitors you will receive. The search volume gives you an idea of the potential number of monthly
organic traffic your website can receive. The CPC times the organic traffic received tells you the amount of advertising dollars
your domain name saved you.

The keyword(s) are to the left of the dot. In the above example the keywords would be :

Coffee – Average Monthly Searches: 4,087,000 Average Cost Per Click: $1.64

Cofee – Average Monthly Searches: 6,588 Average Cost Per Click: $1.19

Canada Coffee – Average Monthly Searches: 317 Average Cost Per Click: $1.01

Kaffee – Average Monthly Searches: 164,700 Average Cost Per Click: $1.50

Which of the above would you value more? Why?

Some other statistics that are paid attention to are the age of the domain , Google PageRank , backlinks , Alexa ranking , DMOZ listing , keyword(s) competition among other statistics.

Value Factor Five: Developed and Developmental Domains
A domain with an established website can have substantial intrinsic value over the same domain without a website.
If the website already generates income , that can be a big factor in the domains value.
Even without there being a developed website, if the domain appears to have good developmental potential , that can also add to its value.

Value Factor Six: Some domains are Brandable
Brandable means that with advertising it should be possible to get people to remember your domain name. Some websites examples would be:

Ebay – as far as I know , this was a totally made up name that has become known worldwide.

Amazon.com – Amazon was a member of a legendary race of female warriors , not the worldwide virtual department store people think of when they hear the word amazon.

Made up brandable domains like Ebay have no search volume to begin with whereas a name like Amazon would have started out with some search volume , albeit nothing to do with Amazon the book seller. On the other hand “google” being a large number (10 followed by 100 zeroes) in a way relates to google the search engine with it’s large database of websites.

Value Factor Seven: Emotion
Emotion can play a big part in the price of a domain (piece of art , real estate or anything for that matter) . I will admit that I am guilty of sometimes buying a domain for more than the numbers and logic suggest. As well as selling a domain for less than the numbers would suggest. But I honestly have no idea why someone would spend $17 million for a domain, let alone who would have the audacity to price it that high.

[February , 2015 : 360.com was a confirmed sale for a record $17,000,000 USD. (However most domain sales go unreported and the PrivateJet.com sale was never confirmed that it sold for $30 million).]

However , what do I know about value. People spend $30 million for a Rembrandt painting, and hundreds of millions of dollars on a parcel of vacant land. As my Grandmother use to say ” Value is in the eye , and pocketbook, of the beholder”