Dotkeeper’s Tips #4: How to value a domain. Part 2.

Part 2. Last week, Dotkeeper started to present our advice on the subject: How to value a domain? Among other things, we talked about a domain’s age, the volume of traffic on its websites, and the sales history of similar domains. Today we’ll continue on the same theme.

Last week’s blogpost (“How to value a domain. Part 1”) summarised some important factors for the buying or selling of already registered domains – you can see there are a lot of things you should look at if you want to be sure of making a solid purchase or sale. Factors such as traffic volume on a domain’s website, its age, how the domain was used previously, the length of the domain name, and the possibility of owning the .com domain are all examples of what should be taken into account when making a valuation. You should expect to put some time into the background research stage of domain trading!

Before we continue, we want to highlight a reminder that is well worth repeating: domains are hard-to-value assets that are worth whatever a person or company at a specific time is prepared to pay for it. We won’t present a simple formula here, but rather offer some basic considerations that you should take into account.

Is the keyword registered under another TLD?

The rule of thumb in the valuation process is that the more top-level domains (TLDs) that a phrase or word is registered under, the higher value that domain has. You should also check the owners of the other domains – is it the same party that owns them all, or a group of different owners?

Are there established websites with the same keyword?

Let’s take a hypothetical example of a booking site of some sort in Norway, that is thinking about acquiring the already registered domain, www.booking.no. One would expect that, through their business research, they would become aware of a rather well-established website www.booking.com. This means that they would face competition in their marketing and communications, and find that search engine traffic (both organic and potentially paid-for) will become more expensive.

At the same time, it is reasonable to expect that the introduction of over 1,000 new TLDs will result in many different companies appearing with the same keyword, but with different TLDs, for example, in relation to different geographical locations using TLDs such as .london, .nyc etc.

Do you or someone else own the .com domain?

Today, .com has an extremely dominant position in the field of domain names, so if  you intend to acquire a domain under, for example, .se when .com is owned by another actor, you should give the matter some extra thought.

What is the TLD of the domain you want to register?

Sweden is a small country and the number of .se domains is small compared to the number of German of Chinese domains. To find out how many domains there are with the suffix of the domain you want to value, visit www.webhosting.info which presents statistics of this kind.

How many letters are in the keyword?

No doubt about this one – the fewer characters a keyword contains, the more attractive the domain. For proof of this, consider how many companies shorten their names down to 3-letter combinations

What will you do with the domain?

The budget you set for buying a domain should be based on how you plan to use it. That’s the key consideration, and it’s the reason why we often find expensive domain sales on the second-hand market surprising.

When I grow up…

The launch of 1,400 new alternatives to the well-known TLDs such as .se and .com, make valuation of existing domains even more complicated. A consequence of the introduction of new TLDs could be that existing domains that don’t have websites will see their value fall considerably. It’s become fairly simple to tap into search traffic using available domains with relevant new suffixes (.how and .data for example).

If you agree on the price but the domain is in use…

It can often happen in purchases of already registered, in-use domains, that the buyer will, for a certain period, let visitors to the domain know where they can find the website of the previous owner. In the same way, it is common for parties to reach an agreement about allowing existing email accounts to live on for an extra year or so.

If you are agreed on a price…

It is a good idea to use a specialised service so that both seller and buyer can feel secure. For this we recommend the market leading www.escrow.com. There are many stages to this somewhat time-consuming process, but it’s largely worth it if you’re dealing with an unknown person in cyberspace.

We hope this has made you a little wiser!

Read the previous entries in the Dotkeeper’s Tips series for more helpful advice. ; När du köper en redan registrerad domän” (link in Swedish) and “How to value your domain. Part 1”

Do you have questions about specific domains or do you want to have a personal consultation? Contact me directly at marcus@dotkeeper.com or call me at 0709- 708776.

Next week we will write more about the operating environment for domains. We promise that it will be much more interesting than it sounds!