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Aug 17, 2012

Domain Valuation - 3 Major Factors that Motivate Buyers

Did you know that some domains can be worth millions? In fact, Gambling.com had a $9 million dollar price tag attached to it and Sex.com has actually been sold for a whopping $13 million! With such sky-high prices, you may wonder how some domain names can be worth millions, while others are valued bleakly low. It’s crazy, right? Let’s learn more about the major factors that affect domain valuation.

What Is Domain Valuation

Domain valuation is a mix of science and art. Most of the time, domain names have particular and measurable attributes on which to base an appraisal. The science part would be getting such attributes. For instance, the amount of traffic a domain generates, simplicity and popularity of domain name, Alexa traffic rankings, backlinks, etc.

Enter art. Beauty is in the eye of the beholder and sometimes a domain is valued based on the buyer’s perception. This answers the question, how much a buyer is willing to pay for your domain? 'Name' domains are the classic example. So if the buyer’s name is “Paris”, she might pay $100 for paris.com but I bet you would not even pay $10 if your name is “Trevor”.

3 Major Factors that Motivate Buyers

This article will discuss the 3 unique motivating factors that shape the buyer’s purchasing decision. What motivates buyers to buy a domain? How is domain valuation perceived by buyers?

Brandability – domain valuation is influenced by the emotional value that a buyer associates with a domain name. Strong brands instill a good feeling and are memorable. The best way to know whether a domain name infuses a positive emotional response is by applying the radio test. Would your domain be memorable and easy to spell when heard over the radio? If yes, then your domain will mostly get higher valuation.

Familiarity – Domain names that contain familiar words are valued higher than their counterpart. A domain name must be short, simple, memorable, easy to spell and easy to type. Common searched keywords or key phrases in search engines clearly indicate familiarity and popularity. It’s also best to use descriptive names that best depict your site’s purpose. For instance, if your site is all about caring for poodles, you could use poodlecare.com. This will act as a preview of your site. Other classic examples include bonsaitree.com and downloadgames.com

Intent – The use of generic, clear descriptive ideas is effective and has higher domain valuation. Such domains get high click-through rates in search engines when potential buyers are looking for related searches. On the other hand, vague and confusing domain names get the opposite results. Non-generic domains could mislead users. 

Conclusion

These are just a few examples of influential factors that motivate buyers to purchase a domain. Other factors include: domain age, top-level domain, commercialization, number of searches, pronunciation, typographical errors, misspellings, use of numerical, recent traffic, selling price of other similar domains, and a lot more. This only means that there is no sure-fire recipe to a higher domain valuation.

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