Length Does Matter

The fact of the matter is that length is a determinate in domain valuation. Generally, the shorter the domain name, the higher the value. The idea is that people are more likely to recall domain names that are shorter in length. The ultimate goal of any business (whether on-line or not) is to create a strong brand that people will remember even after they leave your site. Simply put, short names are easier to remember than long ones.

Dot Com Rules

Because of the popularity of the ".com" top level domain, domains ending in ".com" typically command higher values. As new top level domains gain in popularity, the top level domain will play a lesser role in determining the domain's value and the second-level domain name ("drugs" in "drugs.com") will be the primary driver in determining the value.

Meet the Competition

There are two competition-related elements when considering the value of a domain name. First, is there another registered domain name that is exactly the same, except the top level domain name is different (i.e. "eggs.com" and "eggs.net"). Does the competing name offer similar services and is their name also a registered trademark? If so, the domain that is being valued may face the risk of a trademark infringement lawsuit is the domain is registered and a site is created. Naturally, this lowers the potential value of a domain. On the other hand, if there are a number of competitors that offer similar services but have sufficiently different names, an existing on-line market could already be established. Naturally, if the market is saturated with other competing sites, the market may have an overabundance of suppliers. Remember that the richness of the market for using the domain drives the value of the domain name itself. So having competitors (but not too many) can increase the value of the domain.

Summary

Assigning a value to a domain name is a complex and fairly subjective process. Standard practices do not exist and hundreds of companies offer appraisal services so buyer beware! If you are serious about appraising the value of your domain name, consider getting a second opinion. If possible, do as much of your own research to determine the value of your domain. Visit domain auction websites to review the value of other domain names and take your time before you buy or sell your domain!

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