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Domain Valuation Components - The 7 Cs Model

Feature Explanation Value
Commerce Necessary +++++
Contents Good, useful contents for the users and for the search engines to index ++++
Change Contents need to change frequently, both for the users and search engines to keep coming. +++
Community Community-forming potential +++
COM .COM are better than all the others. National .COMs are also quite good. ++
Clarity The domain, the site, the title and the contents need to convey a clear definition of what the whole thing is about  
Characters The shorter, the better +

Domain Appraisal Concepts

Most companies in the Domain Trade business agree that empty domains have a value based only in its name, while developed domains have an added value that depends on contents, search engine (SE) ranking, traffic, and real and potential income. For Site Appraisals, we use our interactive, online, free domain valuation model. Very often clients ask: "How much is my Domain Name worth?" This is a valid question, as our clients don't want to grow a domain that has little initial value. There are many domain valuation systems. A common guideline is the three C's: Characters, Commerce, and .Com. Each of these is important individually, but together they give guidance as to how much a domain name is worth. We rate each name on each criteria from zero to four stars, four being best.

Characters

There is no doubt about it. Short names are better than long names. They are generally easier to remember and spell and are more impactful. Five characters or less (not including .com or .net, etc.) deserve four stars. Six to 10 characters get three stars, 11 to 15 characters get two stars, 16 to 20 characters get one star. More than 20 characters get no stars. An example of a one star name is OnTheWayToThePark.com (Note that these examples do not necessarily reflect names available at GreatDomains.com or elsewhere, but are for illustrative purposes only.)

Commerce

Ultimately, the value of a domain name is driven by its ability to deliver traffic and revenue to a business. This determines how much a company would pay for a domain name. The size of the business opportunity most apparent for the name drives the value. For example, cars.com is more valuable than camping.com. Names that are simple, very well-known phrases or words without an obvious business use are also valuable since these can be easily branded. An example of such a name is Monster.com.

Names with potential trademark issues are generally worthless. People who spend good money on names that are the trademark of a company are wasting their time and money because these companies are going after these owners. They must do this under most countries' trademark rules or they risk losing their trademarks. Think about that before you register Coke.XXX in a new registry.

Names that are variants or related to the most used version of the name in commerce are also diminished in value. For example, cook.com is more valuable than cooker.com and good.com is more valuable than quitegood.com. Examples of four-star names for Commerce are Loans.com, Food.com, Homes.com and Drugs.com. These are clearly of broad utility and are extremely rare. An example of a three-star name for commerce is Escrow.com, very strong, but in a somewhat smaller industry. Amazon.com, prior to its development, would be a three-star name based on its brandability. An example of a two-star name for commerce is StoreCoupons.com, a strong name, but with even more limited appeal, given its niche nature and potential for revenue. An example of a one-star name is UsedLinens.com. A zero star name for Commerce is CantTrustUs.com. These ratings are, of course, are a matter of judgement, but we suspect most objective raters would generally be within one star of each other.

 

.Com
Many people want to live in exclusive Beverly Hills, New York City, Paris, Singapore or Hong Kong. That's what drives up value. On the Internet, everyone wants to live in the .Com neighborhood. It's the exclusive top level domain that says "I've been in this business a long time, I am a serious player, and I know what I'm doing." It's the instant branding that drives up the value, pure and simple, because all the other top-level domains generally work just as well. Many Internet companies have recently changed their names just to get the .Com in it. A good example of this is computer software retailer Beyond.com.

Therefore, we give .Com names a four-star rating. Another acceptable top level domain is .Net which gets two stars, but this is very diminished below the .Com. All other top-level domains get a one-star rating, provided they function on all the worldwide domain servers.

Based on the above criteria, one can estimate the value of the domain names they own or wish to purchase. The first criteria is characters. This one is easy. Just count the characters in your name and apply the rating system noted above. For the commerce rating, step back and be objective. If you are the seller, put yourself in the shoes of a buyer, and vice-versa. Also, get the opinions of associates who can be more objective than yourself. Then use the chart below to estimate value for a .Com domain name or make the adjustments below for other top-level domain names.

$ US Dollars

Characters
4 Stars

Characters
3 Stars

Characters
2 Stars

Characters
1 Stars

Characters
0 Stars

Commerce: 4 Stars

500k to 10 million

300k to 5 million

50k to 1 million

10k to 250k

0 to 50k

Commerce: 3 Stars

200k to 5 million

50k to 1 million

30k to 500k

5k to 50k

0 to 20k

Commerce: 2 Stars

10k to 150k

5k to 100k

3k to 75k

1k to 40k

0 to 15k

Commerce: 1 Stars

5k to 50k

3k to 25k

3k to 25k

1k to 20k

0 to 15k

Commerce: 0 Stars

0 to 20k

0 to 15k

0 to 10k

0 to 10k

0 to 10k

Since trading is much thinner in other top-level domains, estimates of value are more sketchy. However, we estimate a .Net domain could command up to 25% of the above valuations and other top-level domains could command up to 10% of the above valuations. These guidelines are not applicable after a site has been developed or if additional assets are being transferred, such as a trademark.

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