Hey everyone,
Here's my first attempt at a helpful article for us NP'ers: Domain Apprasial. If this isn't in the right section, please move it
Article: How to better help a domain owner determine a domain's value
Many appraisers on NamePros simply post "Low to mid $xx" or "Low $xx IMO" or "High $xxx" without stating a reason for his/her valuation. In this thread, I hope to better the NamePros appraisal forum by providing suggestions for how appraisers can better assist the owner of a domain determine the value of his/her name in several different situations. To start off, let's look at the different types of major extensions in the most common order of what they're worth.
.com is the commercial extension. Typically, .com domains are worth the most.
.net used to be a "network" extension; however, it fits forums well and is used when the .com version of a domain isn't available.
.org is the most 'restricited' of the top 3 TLD's. By 'restricted', I mean that many .org names aren't worth much at all unless they are obviously useable for a nonprofit organization. Recently, however, with many other TLD's being taken, the value of a good .org has increased.
.biz is the business extension. Although not widely used, some businesses do have .biz domains. A commercial keyword ending with .biz can be quite valuble.
.us means .United States. Domains that would be usable to a United States reseller aiming its products at the U.S. market can be worth a good amount in .us.
.info domains are an intereted batch. .info domains can be registered for under $3; additionally, a premium .info domain is typically worth less than a premium .com or .net. There are exceptions; some buyers do indeed value .info's over other domains because of factors such as universality.
When appraising a domain, be sure to keep the following factors in mind: keyword frequency, length of the name, extension and relevancy of the extension.
Keyword frequency in search can be determined using the
Overture search frequency tool. The more searches conducted on a particular keyword or set of keywords, the more valuble that keyword or set of keywords is as a domain name.
Length of the domain name is another important factor; users have an easier time remembering shorter names. In addition, longer domains may recieve less traffic than competitors because users simply don't want to type in computerdiscussions.com when they could go to pctalk.com, which is (let's pretend, at least) of similar or equal quality.
Relevancy of the extension is the most important factor in appraising a domain name. For example, EuropeanUnion.us does not fit its extension in that the EU is not a United States body. Another example: buycars.org may try to be a commercial site. However, since .org is typically used for non-profit groups, the site may not have much success.
Remember to keep all of the factors in mind when appraising a domain. Also, say more than "Mid $xx".
Tell the owner what he/she needs to know to develop a sense of the domain's value. ~ Also include what you would pay ~
Recently, many appraisals here at NP have been based around what the appraiser thinks the value of the domain name is to a
another reseller and to an end user. That's good, but it may not be all that helpful to the owner of the domain being appraised. Why?
The real value of a domain is what it sells for. If you think that
someone else may pay $250 (low $xxx) for a domain, but you're a frequent domain buyer and you're only willing to pay $25, then you should state that in the post.
Tell the owner what you would pay, even if it's only $5. Here's why: if 5-15 appraisers are only willing to pay $5, the domain is likely worth $5 in the reseller market.
Example: if your domain recieves 10 appraisals, and 8 people say that it's only worth $10 because they aren't looking to develop a website around such a topic, then it gives the owner a good idea of what the domain is
actually worth to domain resellers.
However, if the two remaining appraisers would pay $xxx because they plan to develop a website around that topic or
may be interested in or capable of doing so, then the owner has an idea of approximately what percentage of the domain/website development market his or her domain name is marketable to.
Summary: in addition to reseller & development value estimations, tell the owner of a domain what
you personally would pay for the domain, no matter how low, because a domain is only worth what it sells for.
~ Example: ~
Sports.us is the domain being appraised. You'd go to Overture and find that many people searched for "sports". You realize that sports are played in the United States, so the extension is relevant. The domain is short and sweet, adding to its value. Also, there are tons of results on Google for "sports". So you'd say:
"Since 'sports' had X searches this January on Overture and since it's very short and memorable, I'd say you could sell it for [price] to an end user and [price] to a domain investor. The extension doesn't hurt if you can find a user with a sports site targeting the United States market."
~ Example #2: ~
MarketForums.net is the domain being appraised (using this one b/c I own it). I'm the appraiser. I go to Overture and find high results for 'market' and 'forums', but not 'market forums'. On Google, however, there are surprisingly many results for "market forums", probably meaning that there's a large interest in the subject. So, search results are OK for this domain. The extension would be better in .com; however, .net does not bring the value down too much considering that many .net is often used for forums.
For an international market forum, this domain is good. To a developer wanting to start up a United States stock market forum, however, MarketForums.us may be better. To a domain investor, MarketForums.net would be the pick over MarketForums.us.
~ Example #3: Country Code Extensions ~
Beaches.sc (also mine) is the domain up for appraisal. On first sight, you might say "Registration fee; the extension hurts it." However, upon using your friend Google to research the .sc extension, you find that the ext. was created for the
Seychelles, a beautiful French archipelago and a great tourist/vacation destination. In your appraisal, you should include that because the U.S. market for tourism to French lands is down at the moment because we're munching on freedom fries, beaches.sc could be used as .South Carolina.
Overture tells you that there are hundreds of thousands of results for beaches in South Carolina like Myrtle Beach. Enlighten the domain owner to the fact that with a good amount of development as a South Carolina beach information site, beaches.sc is an excellent keyword domain and would be worth [price]. However, to a domain investor, .sc may mean "source" (like whois.sc); "beaches source" makes no sense and wouldn't be worth much at all.
~ Example #4: 3-Letter Domains ~
When your appraise three-
letter domains, take two main things into consideration: if the letters mean anything or are an acronym and the quality of the extension. FYI.co.in is likely worth more that QYX.com because FYI means "For Your Information", whereas QYX does not have a widely known meaning. 3-letter domains (LLL - Letter Letter Letter) are typically more valuble than LNL (Letter Number Letter) or NNL or NLN names because they're easier to pronounce.
~ Helping the domain owner: ~ Tell the person who posted the domain all of this info, including what market(s) the domain would be most valuble in and why. It helps him/her get a better feel for the value of the domain in different situations with different buyers. You should also get a feel for the value of certain extensions and for whether the market is "bull" or "bear". To keep up with the market, frequent sites such at DNJournal.com and the NamePros sales forums to see how much names are going for.
If you enjoyed my article and think other NP'ers could benefit from it, please send some $NP this way so I can sticky the thread.
Happy appraising!
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