A domain is worth only what someone in the open marketplace is prepared to pay. There are no formulas which can accurately establish fair market value and domain valuation tools are a complete waste of time.
Market forces are dynamic and the motivations of buyers and sellers vary widely.
Some of the factors which can influence value...
Historical Sales
While past sales of comparable domains can yield some insight, it still provides only one indicator of value at a given point in time whose circumstances may or may not be relevant to a similar, yet different name. Additional factors to consider include:
Extension
The highest prices ever paid for domains have always been for .com. Every other extension falls in line behind .com.
Market Potential
If there were some way to ascertain the best possible use for a particular domain name then theoretically one could begin to estimate value based on market variables. No different than if there were an empty corner building lot on a busy intersection. It could contain a rundown carwash or a high rise office complex. The same location could support multiple uses.
Regardless, it is still worthwhile to consider the size of the market to which the domain name could be applied and the revenue generated by that industry. For example, the size of the Travel or Insurance industries would make a relevant domain name more valuable than one dedicated to a smaller sector. Likewise even within an industry or sector there are value levels i.e. Business.com would have a higher value than PaperClips.com.
Recognition
There is value in being memorable, unique, and “brandable”.
Trends
Names that represent a hot trend or emerging sector can have enhanced value.
The Bottom Line...
- Each domain name is unique. In the entire world there can only be one version associated with each domain extension! That is hardly the case for business names where the same names can exist in different countries or even within the same country.
- Your investment in a domain name is not necessarily ‘lost’ should the original use for the domain fail. If it is a good name it will maintain and very likely grow in value as time passes just like any other good investment!
- Think about the cost of real estate in the real world. Prime real estate in the best neighborhoods is expensive but we all know the importance of “location, location, location”. Domain names and especially .com domains are the prime real estate of the virtual world. They have value.
Choose wisely... then go create some Internet life!