Evaluating a Domain Name

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I am in the process of evaluating a domain name I am thinking about buying, and I thought I would share some of the considerations I make as I go through the process to determine how much I am willing to pay to buy the domain name. I am sure I’ve shared a number of these points in the past, but I thought it would be good to write down the things I am considering as I go through this evaluation process.

If there are other things that you consider that I didn’t share below, I invite you to share them in the comment section. Your thoughts can help make this more robust and helpful to others. If I can think of anything else after publishing the article, I will add it because I am sure there are some things I look at when determining how much to pay for a domain name.

Evaluating a domain name to buy:

  • Search volume – I use the Google Keyword Tool as well as a general search of Google to make sure people actually search for this keyword vs. other keywords.
  • Advertisers on Google – When I search Google, I am also interested in seeing how many advertisers there are for the keyword. The more advertisers there are, the more prospective buyers there probably are. This does not include dictionary words or common phrases that could be used as brands.
  • Number of companies that do this or offer this – I want to make sure there are enough companies offering the product or service that might want to buy the domain name. Fewer companies that offer the keyword product or service, the more challenging to sell. This does not include dictionary words or common phrases that could be used as brands.
  • Past sales – I like to search NameBio and other resources (including Google) to see if this name sold previously and for how much. If I buy a name for resale, I don’t want a prospect to quote a substantially lower previous sale because that might make it difficult to sell for much more.
  • Comparable sales and listings – I look up what other, similar names sold for, and I also look at marketplaces like Sedo and Afternic to see what similar names are listed at to see if the name I want to buy is a good deal.
  • Sale listings or auction listings – I also use Google to search for the exact domain name to see if it was previously listed for sale or at auction and didn’t sell. Information like this may also be good for negotiating with the owner (ie “it didn’t meet a $10,000 reserve price at auction, so I am not going to pay $15,000 for it today.)
  • Other extensions registered and by who– If other extensions are registered, it shows interest in the keyword or phrase, which might indicate added value. This also may indicate who would be interested in the domain name, especially if other TLDs are developed by companies in that business. This could also be a good indicator of potential TM issues.
  • USPTO TESS – If I am not certain a term / phrase is completely descriptive, I will generally search TESS to see if there are US trademarks that could impact my ownership of the domain name. If I still have concerns but wish to buy the domain name, I will ask my general counsel and/or an IP attorney for an opinion.
  • Evaluating the landing page – If there’s a for sale link or graphic, I need to figure out why others didn’t buy the name before. Development or partial development may have been a deterrent to inquiries, and that is a good thing if the domain name is ultimately being re-sold.
  • Valuate / Estibot / Colleague valuation – I sometimes like to get a third party valuation to get an outside opinion on value.
  • Gut Feel – This is probably the most difficult thing to express, but I come up with a value in my head and use that to evaluate whether a domain name is a good deal or not.

27 COMMENTS

  1. Another thing I like to do is see how many domains are registered using the term in their domain, besides the exact term registered in other extensions, like domaininvesting has 35 domains registered using the term according to namedroppers.com, if companies have developed sites on effectivedomaininvesting, internetdomaininvesting, domaininvesting101, etc. they might be good prospects…

  2. Evaluate social value
    ( keyword).blogspot.com
    (keyword).tumblr.com
    Linked.com/(keyword)
    (keyword) typepad.com
    Soundcloud.com/(keyword)
    Etc
    Also search the app store for the keyword ie snore will be an app attached to a developer without that matching name

    Try prefix
    My(keyword)
    Abbreviate if you have new York plumbers check ny plumbers Atlanta singles singles Atl

  3. Really good points to keep in mind before buying a domain name. I like the one about social media presence the most. However, a name like symphony.com (which apparently sold for 370k) doesn’t meet any of the criteria mentioned here but still sold for a colossal price. Also, there are thousands of 3L, 3N, 4N, etc. which have sold for huge profits without meeting any of your mentioned criteria.

    Sometimes I wish some of you guys would just use common sense and market trends to do business. Else newcomers will always have something sour to say about you.

    • These are just some of the tools I use to evaluate whether a domain name is worth pursuing for me. This is not a set of criteria I use to determine whether a domain name is good or bad. I use many of these things on LLL.com names – like USPTO, companies who are called that, previous prices, whether it’s being advertised for sale…etc. Yes, some things like search volume are not as applicable to those kinds of domain names.

      To make it more clear that it’s not a set of criteria, I didn’t mention the amount of search volume I would consider “good” just that I look at search volume. I didn’t really share what the criteria is that I look for when evaluating a domain name, primarily because it changes depending on the actual name.

      The fact that there are thousands of companies with the “symphony” name makes this domain name exceptional. I actually inquired about it recently, but I wasn’t going to pay 6 figures for it because I am not needing it for my brand.

      I mentioned a couple of times “This does not include dictionary words or common phrases that could be used as brands.” because with a name like Symphony.com, none of that even matters. As you said, common sense, or a “gut feel” for me, is the most important thing with names that can be used as brands. For example, I spent ALOT of money on Lilac.com because it’s a flower and also because I can imagine a company wanting to spend a lot of money to brand themselves as Lilac.

    • Well, your reply clears up a couple of things now. Great topic for discussion anyway. I’m certain we are all “now” learning a bit more about domain investing and sales than we did just a few months ago. Thanks Elliot.

    • My apologies if I was unclear.

      As writer, editor, and publisher, sometimes something is very clear to me but I don’t have a second set of eyes on it to make sure it’s clear to others.

      I appreciate your feedback.

  4. I also like to double check and ensure there are no crappy backlinks on a domain that may have had a website previously. It’s rare to find a domain I want that has any backlinks but I still have the backlink check on my checklist, just in case.

  5. I wonder how people can trust Domainindex and Estibot. Both are horrible in reading 2-words combination. Probably their algorithm is not tuned to Oxford or Merriam-Webster dictionaries. Just 10 minutes old example: tobehead is read as ToBeHead or even TobeHead instead of ToBehead = cut off the head.

    • Agree – and common sense should dictate whether those tools are reading the name right.

      I don’t hold much stock in the values they give, but if a name I like comes up at a $2,000 appraisal, perhaps I need to dig deeper to see why it’s so low.

  6. I think that experienced domainers should rely upon their FEELINGS – something that is developing inside and growing along with the age. Sometimes the name having no value 3-5years ago starts gaining popularity only because of political, social or economical changes that occured in the world/country last year. So, Google search results are of the most importance serving as a kind of a public mirror.

    • Yes, but unfortunately, if I wrote a post about how I rely almost exclusively on my gut feel, it wouldn’t be all that helpful for people who may not have that gut feel (or confidence in their own gut).

  7. Grow up, Elliot!

    Value of the domain names is not in keyword. This is the most common mistake domainers do.

    Same apply to all valuation tools Valuate / Estibot, etc. – all just useless stuff.

    Believe in yourself. Your gut is your best adviser.

    • if the value of a domain is not in keywords then rush out and buy ;ljsdfp[oujwe[0rjqw[euj.info

      the value of a website may be in content or backlinks but give me a break what else has a domain going for it if not keywords

  8. Partially agree with you: if you are in the Industry you have to play certain rules. But your current post is identifying very interesting problem (nobody noticed before?): a dozen of bullets (parameters or tools) you mentioned above, over the past several years became sacred icons that DICTATE domain name popularity instead of helping to DETERMINE it. Third-party analysis is not independent anymore. It’s like buying PC you cannot stay independent from Microsoft.
    It is easy to explain: all of those “tools” involve huge and very INFLUENTIAL businesses. As a result we observe the shift of domain name value from common-sense side toward … you know what!

  9. Your tips are past-based and ignore the future.

    What about the upcoming trends, technological and others?
    Some of those domain names will be priceless, yet you can only get a hint of it from the news release, and perhaps Google Trends.
    In cases like that, Estibot and Co. produce idiotic results.

    As for the gut feeling… it depends how inteligent are you, to spot those terms/phrases.

    • Perhaps you can share a list of future trend names that have sold since I haven’t seen many public sales reported or heard of many in private?

      I have not taken an IQ test, so I can’t comment on intelligence associated with my gut feel, but I’ve been pretty successful at selling my domain names.

  10. You see, most of you agree with me, follow your instinct.
    I might be called many prune names on the blog but at least I know and you know that I know about domains and not “BUllS”

    Give credit where credit is due!!

  11. “Evaluating the landing page – If there’s a for sale link or graphic, I need to figure out why others didn’t buy the name before. Development or partial development may have been a deterrent to inquiries, and that is a good thing if the domain name is ultimately being re-sold.”

    Look at the seller as well. Broke guy that needs to pay rent more likely to let go as long as there is a profit. Personally I have domains I only paid reg fee on that receive a handful of offers month after month in the 1x,xxx range that I politely decline as I don’t need the money and my valuation puts them well above those offers to the end user. Patience is your friend if the quality/offer frequency is there.

  12. if google is to believed all that matters is content, so why are so many domainers tripping over themselves trying to obtain great keyword domains.

    the truth is simple, they believe that keywords in a domain matter.

    right now this minute, i am sure that anyone can buy for reg fee something like mdkeiodnaodjafao.com and put excellent content on it,,, so why don’t they.

    because rodeo drive is where you go to buy the best stuff and google and the content crowd and the backlink crowd can say what they want, but and this is a very large but, emd or great keyword domains matter, even average keyword domains will be great when the internet population explodes.

  13. Elliot, tx for your posting

    Query: how / where does one check for prior backlinks, to avoid negative penalties by G?

    Also, may wish to add to your list of considerations the ‘holding’ and ‘opportunity’ costs associated with a prospective purchase

    Given an assumed double digit desired return on investment – assuming, for sake of argument the targeted return was 25% ROI (VC’s generally quote using a 35% +/yr target internal rate of return when considering investing in a company)one would need to calculate the ‘breakeven’ cost assuming a certain holding period, which could be months or even years if looking at moonshot domain names (ie future trend names).

    Example, for an assumed 6 month resale period, 12% needs to be added to the acquisition cost, just to break even if sale was concluded (money received at end of month 6). Another way of looking is to consider the assumed 25% required ROI as being an ‘opportunity cost’ of holding a domain purchased for resale.

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