Curious why some domains sell for millions while others are worthless? We break down the science of domain valuation, covering length, keywords, extensions, and comparable sales. Keywords: domain valuation, domain appraisal, digital asset pricing, premium domain value, domain investing, comparable sales.

Domain Valuation 101: What Makes a Name Worth Six Figures?

To the uninitiated, the domain market can seem baffling. Why did Voice.com sell for $30 million, while a seemingly similar name is available for $10? Is it random? Is it just hype?

The answer is no. Domain valuation is a science—an assessment of digital real estate based on specific, tangible metrics. Just as a property appraiser looks at square footage and neighborhood data, domain investors evaluate specific criteria to determine the fair market value of a name. Understanding these metrics is essential for any business looking to acquire or sell a digital asset.

1. The Extension (TLD)

The first rule of valuation is simple: The extension matters. As discussed previously, .com is king. A keyword in .com might be worth $100,000, while the exact same keyword in .net might be worth $5,000, and in .xyz might be worth $100. The valuation drops precipitously once you leave the .com ecosystem because the commercial demand and resale liquidity drop with it.

2. Length and Brevity

In the domain world, less is more. Short domains are easier to type, easier to remember, and look better on business cards.

  • 2-Letter domains (https://www.google.com/search?q=LL.com): Extremely rare and valuable. They almost always command 6-7 figures.

  • 3-Letter domains (https://www.google.com/search?q=LLL.com): Also highly liquid and valuable (typically mid-to-high 5 figures to 6 figures).

  • One-Word domains: The holy grail. Words like Fund.com, Cars.com, or Team.com are "Category Killers" and command the highest prices in the industry.

3. Keyword Search Volume and CPC

For descriptive domains, value is often tied to Google traffic data.

  • Search Volume: How many people type this word into Google every month? A domain like CreditCards.com is valuable because millions of people search for "credit cards."

  • CPC (Cost Per Click): How much are advertisers willing to pay for this keyword? If advertisers pay $50 per click for "insurance," then Insurance.com is incredibly valuable because it attracts high-value organic traffic.

4. Brandability and Pronounceability

Not all value comes from keywords. "Brandability" is the measure of how well a name sounds as a company identity. Does it pass the "Radio Test"? Is it catchy? Valuation here is more subjective but relies on linguistic patterns. Names with alternating vowels and consonants (CVCV patterns like Domo or Vava) are highly prized because they are universally pronounceable across different languages.

5. Comparable Sales (Comps)

Professional appraisers always look at "Comps." This is the history of similar domains that have sold recently. If you are trying to value BlueSky.com, an appraiser will look at what RedSky.com or BlueSea.com sold for. Sites like NameBio provide databases of historical sales, serving as the "Kelley Blue Book" for domains.

6. Age and History

Older domains (registered in the 90s) often carry more weight. They may have existing "backlinks" (links from other websites pointing to them), which provides an immediate SEO boost to whoever buys them. A domain dropped yesterday is worth less than a domain continuously registered since 1996.

Conclusion: The Art and Science of Pricing

Domain valuation is where data meets intuition. While search volume and length provide the hard data, the "brand potential" requires a visionary eye.

A six-figure domain is not expensive; it is valuable. It represents a marketing powerhouse that saves millions in advertising spend over its lifetime. When you understand the mechanics of valuation, you realize that buying a premium domain is not spending money—it is exchanging currency for a more appreciating asset.