Many believe the topic of Domain Appraisals and Values to be speculative as the ultimate value of any domain is based on the amount a buyer is willing to pay, and a seller is willing to accept for a domain. Certainly the more descriptive the term the higher the value tends to be, as well as the length of the domain (shorter is better), and the extension.
That being said, there are many sources available that will offer appraisals for a fee and will claim varying degrees of "science" behind their valuations. Any domain appraisals should be considered as a guideline and used in conjunction with one's own experience and relative to offers previously received for the domain.
However, there are industry recommendations for determining a domain name’s value by evaluating and measuring the domain against several logical, relevant, and well-accepted criteria within the domain industry.
1) Top Level Domain (TLD) – This refers to the extension at the end of the domain. Common TLD extensions are .Com, .Net, and .Eu. Because some domain extensions are perceived to be easier to remember, or more popular, these domains will possess a higher value.
2) Domain Length and Word Count – Because memorability plays a large role in domain name values, the fewer the number of characters in a domain the higher the value. The longer the name, the less memorable the domain tends to be. Is the domain unforgettable? Easy to remember? Or impossible to remember? Generally speaking, domain names containing 1-3 words will be appraised at a higher value.
3) Alphabetic vs. Non-Alphabetic Characters – Adding to the “memorability” aspect of a domain name, those domain names that contain numbers or hyphens are less likely to be remembered – and thus their value is diminished.
4) Plural vs. Singular – Many domain names have both a plural and singular version. Depending on the domain and its uses, one version may have a broader appeal than the other – thus increasing its value. There are some domains that only possess either a plural or singular version, and those domains will demand a higher value.
5) Search Term Popularity / Search Engine Optimization Potential – There are certain words or terms which the public uses more often within the Internet Search Engines. The more common the word or phrase, the more the demand and value for the domain name. For example, more people search for the term “real estate” than “chair cushions”, therefore a domain containing the words or phrase “real estate” would be appraised at a higher value.
6) Marketability or “Brandability” – The essence of a domain is that it will be developed into a profitable and viable business, so the greater potential a domain name has to become a “brand” the greater its value. Does the domain name possess the ability to appeal to a large, medium, or small market, and would it appeal to the whole market, a major portion of the market, or only a minor portion of the market?
7) Domain Age – Like a fine wine, the older the domain name is the higher its perceived value. This is because those domains containing the most common words, phrases, and topics were generally registered early on in the birth of the Internet. An older domain name that was also previously developed may have some residual value in the form of “links” and page rank.
8) Language – The more common the domain’s language the more potential the domain has for a Commercial Application with wider appeal. This metric also measures the domains ability to be easily pronounced, and transcend through potential language barriers.
9) Market Demand (Broad or Niche) – This measurement looks at the number of potential buyers for the domain name. It also takes into consideration the number of registered and developed alternative “Top-Level Domains” for the name. Does the domain name appeal to a large, medium, or small market? And are there a large number of Internet Advertisers willing to pay for the specific word, phrase, or term?
10) Clarity – This metric may be more subjective as it refers to the domain name’s ability to describe that which the user should expect from the site. Depending on the “Market Demand” and “Search Term Popularity” does the domain name describe the content perfectly? Does the domain name describe the content well? Or is the domain more abstract whereby it does not describe the content at all? There are exceptions to this rule, for example amazon.com has nothing to do with the Rain Forest in Brazil.
11) Subject Matter – Is the topic of the domain name questionable? Is it offensive, political, or adult in nature? The subject matter of the domain may directly correlate with its marketability and commercial potential.
12) Geographic Target – Domains that contain references to a geographic location are known as “GEO’s”. These domains are measured by the type of domain (product, service, etc.), and the population of the location referenced within the domain name. The anticipated growth of the population, if the location is a tourist destination, etc. can also result in a higher value of a domain name.
13) Abbreviations, Substitutions, and Spelling – Domain names that can be abbreviated or if a domain with a similar message can be developed with a substitute word or phrase will be valued less than a domain name that exists with the least amount of “competitive” domains. The spelling of the domain is also important. While slight misspellings may garner some “type-in” traffic, they will never be valued as high as the domain name with the correct spelling.
14) Seasonality – Similar to the GEO Domain, the value of those domains that reference a seasonal product or service will vary depending on the broadness of the audience.
15) Pop Culture or Trademark – Those domain names referencing a fad, trend, pop culture topic, or trademark may have limited appeal based on the timeline of viability or risk of trademark reference.
For many domain sellers the question becomes whether or not it is more important to sit on the domain and wait for a potential sale, or to set a reasonable price that is more likely to initiate interest and provide them with instant cash flow to support and increase their business.