Our Methodology Sets Us Apart

Since DomainAppraisal.org’s inception in 2007, we have been continuously updating our methodology and data analysis methods to pinpoint the true market value of a domain name. The applications of our appraisals vary greatly due to their inherent objectivity and accuracy. Our appraisals are designed to instill confidence in organizations and individuals alike. The accuracy stems from the application of our methodology through a regimented, standardized process in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP).

Research

Our methodology begins with the research and collection of data pertaining to our industry leading factor base. Depending on appraisal purchased, the number of factors used in the analysis will vary. The Basic Appraisal uses 15 factors, the Premium Appraisal uses 25 factors, and the Enterprise Appraisal uses an industry-leading 30 factors. The data is collected through a standardized process that allows for consistency across appraisals. The methods, third-party tools, and expert appraisers are constantly monitored for consistency and accuracy. Since our valuations are not strictly formulaic, a contextual and comparative analysis is performed on the data collected.

Analysis

Contextual Analysis

The contextual analysis examines the impact of factors that are not easily quantified such as current market conditions, industry trends, as well as external factors such as traffic generated through an existing website, potential trademark issues, and possible end users. The purpose of the contextual analysis is to provide insight into how the current situation of the domain name and current trends affect its value. The contextual analysis of a domain name is a key differentiating component between an automated appraisal and a professional appraisal.

Comparative Analysis

The comparative analysis examines the various factors that have the ability to be quantified such as keyword search volume, CPC (cost-per-click) advertising cost, TLD (top-level domain) and domain name length. Following the examination of the quantified factors, a comparison is performed between the domain name being appraised and similar domain names that have previously sold on the open market. The comparative analysis utilizes a database of domain name sales to create a correlation between domain attributes and selling price. Once a correlation is determined, it is applied to the appraisal to add market-proven reliability to the appraisal.

Valuation

Once the factors have been analyzed, the fair market value is determined. The fair market value is in the form of a range. The reason a range is used instead of an exact value is because the probability that the outcome will match the expected value is very low. The range covers a large part of the fair market probability range. It is still possible that a domain name could be sold for a value outside the range. A specific situation where this is a possibility is when an end-user might purchase a domain name for far more than its fair market value. This does not mean that the fair market value of a domain name is equal to the purchase price that an individual is willing to pay. The company or individual interested in the domain name might have specific needs for the domain name which cannot possibly be taken into account when determining a domain name’s fair market value.

Certification

After the appraisal value has been determined and the appraisal report has been created, a senior manager validates the data collected and approves the domain name value. Once the appraisal has been approved, a report including all of the appraisal information is delivered via email.

Industry Leading Factors Base

Contextual Factors

Marketability

A domain name’s marketability refers to the ability of a domain name to be successfully applied to a specific industry. The factors that contribute to the ability of a domain name to be marketed are, the meaning of the keywords present in the domain name, memorableness of the domain name, branding potential of the domain name, and the ability of the domain name to be pronounced by a native speaker.

Current Traffic

External traffic factors consist of attributes associated with a domain name because of an active or previously active website. These factors consist of backlinks, Google PageRank, Compete rank, Quantcast rank, and Alexa rank.

Our valuations are on domain names and not the websites. Applying our services to entire websites is a very different service. In fact, it has little to do with domain names and a lot to do with businesses, in general. In the case of a domain name with substantial external traffic factors, we want to value the domain name by itself, simply because that is the service we are providing. The rationale behind our stance on external traffic factors is that if a domain suddenly ceased to host a website, the traffic to that domain name would not cease, but descend gradually. Through readily available methods, that traffic could be exploited and money could be made from that domain name, raising the fair market value of that domain name. Value determinations are made based on the expected rate of descent, current traffic, and future traffic estimates.

Commerce Potential

The potential use of a domain name for commerce affects the value of that name. The amount that the value is raised depends on the ease with which it could be used to sell a product or service. Factors that indicate the commerce potential are monthly keyword search volumes, CPC advertising cost, historical search volume trends, and seasonal search volume trends.

Comparative Factors

Domain Name Anatomy

The anatomy of a domain name is the set of attributes that determine the lexical value of a domain name. The anatomy is the foundation that domain name appraisals are based on. It provides the baseline for comparative analysis. The majority of free appraisal tools perform a strictly formulaic evaluation based on domain name anatomy and do not take into account other important factors. Included in the anatomy are the TLD, age, length, number of words, number of hyphens, number of numbers, whether it has a prefix, whether it has a suffix, and whether it is plural. All parts of a domain name’s anatomy can be used to compare it against other previously sold domain names.

Industry Strength Indicators

Indicators of industry strength provide a basis of comparison from an advertising standpoint. Depending on the industry, the value per visitor can vary greatly. Indicators that can be compared against previous sales are CPC advertising price and advertising saturation. Industries with high CPC advertising prices and high advertising saturation tend to yield more valuable domain names.

Traffic Potential

Indicators of traffic potential are important because they permit comparisons to other developed domain names and can indicate the expected success upon development. Indicators of traffic potential consist of term popularity, incoming links, keyword search volume, Compete rank, Quantcast rank, Alexa rank, DMOZ directory listing, and Yahoo directory listing. Domain names in industries with high volumes of traffic and/or type-in traffic tend to sell for high amounts relative to comparable names belonging to industries with less traffic.

Our Mission

Our methodology was created with the intentions of providing transparency and consistency to the largely-speculative domain name appraisal industry. Being an independent appraisal company and having nothing to gain from inaccurate appraisals, we can provide unquestioned objectivity with our methodology and valuing of domain names. With the majority of companies who offer appraisals either not specializing in appraisals and/or offering conflicting services, it becomes increasingly difficult to guarantee an objective and accurate representation of a domain name's fair market value. Additionally, most appraisal companies do not educate their customers on their appraisal methodology, factors, and rationale used to determine a domain name's value. Without transparency it is difficult to gain a clear understanding of a domain name's value composition. We work very hard to provide our customers with as much insight and understanding about our methodology as possible and to create a new standard for the domain name appraisal industry.