Domain names are some of the most interesting digital assets out there. The vast majority of them are more or less valueless. You can register them for under $5 and the upkeep is trivial. Web hosts throw in free domain names with their packages.

And yet, at the same time, domain names can be worth thousands of dollars. It's not just the short ones and the dictionary words as you might expect, either. Brand names, product phrases, and clever plays on words can all be high in value. Plus, their value can change at a moment's notice. A new product, brand, or innovation hitting the scene can skyrocket the value of a domain name related to it, even if it's been sitting parked for a decade prior.

The most expensive domain names ever sold have crazy values attached. Insurance.com sold for $35.6 million six years ago. Internet.com sold for $18 million. Hotels.com sold for $11 million. Of course, those are all dictionary words. Then you have things like 360.com selling for $17 million, IG.com for $4.6 million, and of course Facebook buying FB.com for $8.5 million. Before Facebook, who would have thought the random letters f and b in a domain would be worth so much?

How can you determine how much a domain may be worth? The first step is to use a little common sense. A lot of domain names, particularly old exact match domains or nonsense domains, aren't going to be worth much at all. It may be worth it to estimate a value for some, since you never know when the next IG, YP, or FB might be yours, but even so. Most of the time, the domain isn't worth much. Moreover, most domains have to be .coms to have value. .orgs, .nets, .bizs, and other similar TLDs can be valuable as well, but many of the newer TLDs like .music or .pizza probably aren't going to be very valuable.

So: the older a domain is, the closer it is to a brand name or a single word/acronym, and the better the existing site on it, the more value the domain is likely to have.

The second thing you can do is check on some appraisal tools. They derive values based on various metrics, like the primary keyword, the age of the domain, other similar domains, and a past history of sales. Using hats.com as a test, I get this:

Of them, you can see how some valuators just pull massive numbers out of their hats, while others have a more nuanced approach to analyzing value based on age, SEO, existing content, and more.

Of course, there's one caveat we can't forget; the buyer. Even if I owned hats.com and I was willing to sell, the domain could be worth $1 or $1,000,000 and it wouldn't make a lick of difference if no one has an interest in buying. The most accurate value you can get is what offers you get. Do people send you email with offers to buy? There's a base price for you. You can also list a URL on Flippa and auction it off; they do domains as well as sites and apps. Just set a high reserve if you aren't in a rush to sell. The longer you hold onto a domain, the better a chance of finding a higher paying buyer.

Published on: Jun 20, 2016