Domain Valuation
From 1998 on

 

    I wrote most of this article back in 1998, things change on the net and as such I've had to re-write and ad to this as I saw fit.  Maybe I didn't add to it enough, but hey, people get busy.  For reference, the yellow is 1998-1999, the red is 2000-2005, and the blue was written in 2006.  These are my opinions only, make up your own mind after some research.
 
  As with any other commodity, a domain name ultimately is worth what someone is willing to pay for it.  Some may call this a basic law of Capitalism.  Another popularized law of Capitalism is known as the law of supply and demand.  This law is interestingly played out in domain sales due to the fact that domains are unique.  Having stated this obvious fact, there are several factors which positively or negatively effect the potential value of a domain name.
    The first, as stated is availability.  As the best names are spoken for, the price can be determined by how badly the buyer wants to buy and how badly the seller wants to sell.  The second way to determine how much a domain is worth are the  present or possible uses.  A domain such as windowcleaner.com is without a doubt worth less than jewelry.com.  The primary reason, of course, is since jewelers can profit more from a good site, they should have to pay more for a good name than a window cleaner.  If your site is called elizabeth.com and you use it for your personal homepage it will be worth less than banking.com because there is a lot of money to be made in banking.  This is common sense.
    Endings such as com, net, org, etc. influence domain value.  Com, as a rule, is much better than anything else maybe because it was the first ending used on a mass level and it is more widely recognized than net, org, or any other ending.  Net is more valuable than org, etc., etc., etc.
    When a name is short and memorable it effects price.  For instance soccer.com is more valuable than dzilg.comSoccer.com makes sense and is more valued even though it has one more digit.
    Specifics vs. generalities is a difficult factor to consider for domain value.  Specifics and generalities can be both good and bad.  Georgia.com would be of higher value than senegal.com because georgia can be used by a person living in the state or country of Georgia, while not many people use the internet in the country of Senegal.  General things like computer.com will be worth more than slug.com even though the word slug is a lot shorter than computer.  Computer.com has more potentially profitable uses. Addition- After reviewing this paragraph, I thought of something.   ANY country domain name, no matter how obscure the country is right now, will be worth a ton of money in the future.  Sorry about the confussion.  My opinon was that Georgia.com is more valuable than Senegal.com is NOW but this very well could be wrong in the future!  Country domain name values will shoot up as world wide internet use goes up; that's not an opinion, that's fact!
    The last factor of worth is present domain development.  Development, too, can be a positive and negative factor.  Most buyers wish to buy a domain that is clean or never used.  Which would you rather live in:  a townhouse that was just built or a townhouse built 20 years ago with an odd odor in the kitchen that won't go away?  The same is true of a domain.  Most people won't want to buy a domain that was a result of a failed business attempt.  Besides having already, in the internet's infancy, failed in business, the site may also have unrelated rumors, search engine submissions, newsgroup articles, etc., floating around the net which you may not want to be connected with.  A site that is doing good business and making money confuses me as to why it would be for sale, but it does happen.  Just keep your eyes open if this is what you want (an established business.)  Clean, fresh, "new" domains with an understandable object (artsale.com) that are short are simply the best ones to have.  Good luck shopping. Addition- Oh yeah, "Generic, Generic, Generic" has the same meaning for the internet as "Location, Location, Location" does for the real world.  This was very valuable information, I hope you payed attention.
   
All the experienced domain buyers are waiting for me to talk about domains with natural traffic.  Domains that have natural traffic do exist, go after them rather than trying to make a snazzy catchy name that everyone "should like."  Besides names that already have some traffic are so much eaiser to develop.  People see that a website  is being built and then they come back to the site to see what's going on.  I could have talked about domains with traffic years ago, however I never really wanted to talk about how you find those domains.  That really is where you should do additional homework, but if it is common, generic, and has to be, then it probably does have some traffic.  It's when we get creative that potential natural traffic disappears.  
    And then there is the amount of traffic vs. the use of the domain.  THIS IS COMPLETELY FICTIONAL SO DON'T SUE ME, let's take two random domains, one is dishwashing.com and the other is logodesigning.com.  Let's say that dishwashing.com gets 100 people per day and only 10 people per day for logodesigning.com.    It is easy to see that even though there is significantly more  traffic at dishwashing.com, logodesigning.com is much more valuable.  This is because there WILL BE more customers to it than dishwashing.com.  This is because there is more need for logo designing, who pays people to do dish washing (over the net?)  Oops, maybe now there will be people to send your dishes to, to wash, the internet is crazy like that.  More additions to follow. 
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The domain names listed above are simply examples or illustrative tools and The Domain Barn is in no way connected to them.  By using the domains listed above, The Domain Barn is in no way trying to hurt or help their ultimate perceived value primarily due to the fact that the above is simply an educated opinion.

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