How to Calculate What Your Domain Is Worth
The domain name Voice.com sold last year for $30 million. It was an all-time record for a single domain name sale.
While sales for millions of dollars are extremely rare, there’s an active market for domain names. Many domain names change hands for thousands of dollars, although some can be worth more.
If you own a handful of domain names you aren’t using, there’s a good chance someone will email you out of the blue asking if you’ll sell one.
Here’s what you should do if you get a request to sell one of your domains.
How to Respond to the Initial Inquiry
There are a couple of things you should do when someone reaches out about buying a domain name.
First, try to qualify the buyer. Is it a big company? A budding entrepreneur? All salespeople try to qualify their buyers to make sure they’re serious and capable of buying what they’re selling. This is no different with domain names.
Second, respond to keep the sale moving forward. There are two ways to do this:
- Ask them to make an offer
- Quote a price
There’s a lot of debate about which approach to take. People usually like the other party to make an initial offer. After all, you don’t want to quote a price of $5,000 if the buyer is going to make a starting offer of $10,000!
If the buyer contacted you out of the blue and you haven’t listed the domain for sale, it’s fair to ask the buyer to make an offer. You can inform them that you haven’t thought about selling the domain before, and tell them you’re open to offers.
If you’ve marketed the domain for sale, it’s probably better to quote a price to open negotiations. But what price should you give?
Valuing Your Domain Name
Domain names are tricky to value. They are completely unique. There is only one of each domain name available. That’s why someone reached out to you about buying the domain name—they can’t buy a copy of it!
Here are three resources you can use to figure out how much to ask for your domain name.
Estibot is a free and automated domain name appraiser. Automated domain name appraisers are controversial. The key is to not worry too much about the specific value that Estibot says your domain is worth. Instead, look at the supporting information Estibot provides.
For each domain name, Estibot displays:
- If the domain is registered in popular extensions – If your domain is example.com, are example.net and .org both registered by someone else? If a domain is registered in multiple extensions, it’s a good sign that there’s a demand for the domain.
- Comparable domain sales – Estibot has a database of public domain sales that it’s aware of. While no two domains are the same, this helps figure out what similar domains have sold for.
- Search analytics – Domain names with more searches and competition for search ads tend to be more valuable, all things considered.
NameBio is a free database of comparable domain name sales. Although Estibot uses its own database of comparable sales in its valuations, NameBio is a standalone database with over 1.9 million sales and has excellent search features.
NameBio search parameters include:
- Placement (is the keyword at the beginning or end of the domain)
- Patterns (letters, numbers, etc.)
- Price range
- Date sold (newer comparable sales are more relevant)
As an example, if your domain name includes the word “intelligence”, you’ll find that domain name sales so far in 2020 include:
- IntelligenceService.com for $712 at GoDaddy
- Intelligences.com for $3,205 at NameJet
- IntelligenceBrief.com for $2,088 at BuyDomains
- WorkplaceIntelligence.com for $4,188 at BuyDomains
Knowing where a domain name sold is important. Sales at GoDaddy and NameJet are typically expired domains purchased by domain investors. Sales on BuyDomains are usually companies wanting to use a domain for their business, so these are more relevant for calculating prices.
The part to the left of the dot in a domain name is called the second level domain.
Estibot considers how many extensions a second level domain is registered under, but you can get more detailed information using dotDB.
Plug a keyword into dotDB and you’ll see how many extensions a second level domain is registered under, as well as other registered domains that include the keyword. Using our “intelligence” example, dotDB discloses that the exact domain “intelligence” is registered in 184 extensions.
It also shows hundreds of other domains that have the word intelligence along with something else in them, such as AbilityIntelligence.com and AccountingIntelligence.com.
Enter your full domain name to check how many extensions it’s registered in and how many similar domains are registered. The more domains, the more in-demand your domain name might be.
Decide What It’s Worth to You
These tools and metrics should help you home in on an appropriate price for your domain name.
But there’s a bigger question: what’s it worth to you?
Think about how much the domain name means to you. Do you still hope to use it in the future? Do you currently use it, meaning that selling it would require changing domains (and associated printing, website, and marketing costs)? Does it hold sentimental value?
Think about a bottom-line number that makes sense. Then ask for more than this, because the buyer is likely to negotiate.
Closing the Sale
If you are able to strike a deal, it’s time to collect your money and transfer the domain name.
It’s important to protect yourself whenever transacting over the internet. Consider using a domain name escrow service to secure the transaction. The escrow service will hold the buyer’s money until you transfer the domain name, and then forward the funds to you.
It’s exciting to find money in your couch cushions. Selling a domain name you registered but never used gives that feeling.
And you don’t have to wait for someone to come to you. Take a look through your domain names and see if there are some you’re no longer using, then read this handy guide to selling your domains.