Do Domain Names Increase in Value (and for What Reasons)?

A regular question related to domain names is if their value increases over time.

So, do domain names increase in value? Domains can increase in value over time. The factors that can make domains more valuable are: Web Traffic, Domain Age, Quality links to the domain, Industry growth, and Scarcity of good domains in certain categories.

We will examine all those reasons in detail and present also some additional ones that affect domain names value in general.

What Makes A Domain Name Valuable?

Web Traffic

Web traffic is the number one reason that can contribute to a big increase in a domain’s value. More traffic for potential buyers means that they can sell their products or services to more people or getting more ad revenue. The kind of traffic is important too, traffic from countries like the United States, Canada or the United Kingdom has more value.

Domain Age

The age of a domain name is sometimes an indicator that has good value. There is an on-going debate if a domain that is many years old has a positive impact on Google rankings when you actually create a website. The reality is that if you manage to register a brand new domain name with the usual price (10$-15$) now most probably it will not have good reselling value. Domains exist for decades and the majority of the good domain names are already owned by individuals or companies.

Quality Links

When reputable sites point to a certain domain that can help to increase search engine rankings and make the domain more valuable. For example, consider that a big news site links back to your domain. Of course, you need to have a live site created with that domain (or you used to have in the past).

Industry Growth

When a new industry arises or a current one has grown, the domains with keywords related to the industry rise in price. A good example is bitcoin and other cryptocurrencies. Some years ago this industry didn’t even exist but now the domains with related keywords are very expensive.

In general domains with keywords related to finance, insurance, health, online services, legal services, and real estate tend to have bigger value than the rest.

Scarcity

Sometimes the lack of a certain category of domains can increase their value over time. Domains that contained only 3 letters with any combination increased their value when all were already registered at some point and sites started to use them.

If you were clever or lucky enough and registered a domain like that early then you had the chance to gain a great return to your initial investment.

Domain Extension

A .com domain with the same keyword as some extension like .net .org etc has at least 10x more value. It is the domain extension with the most registrations and the most trusty one to the eyes of internet users.

Advertising Cost in Different Search Engines or Social Media

Big or smaller companies that use search engines like google or social media like Facebook for their advertising efforts spend their budget based on the clicks they get or the impressions (how many people see the ad).

If the industry is competitive and a lot of companies bid for certain keywords then the advertising cost rises. If you have a domain that contains these keywords then normally the price should be higher (exact match of keywords is pricier).

Overall Potential as a Brand Name

If a domain name is an imaginary word still can have a good value. The thing you need to consider is how long it is if you can pronounce easily and only with one way, sounds nice and it doesn’t refer to some nasty or bad meaning.

Of course, this kind of assessment can’t be 100% objective but at least you can have some key points to check against and ask feedback from others too.

Length

There is some connection between the length of a domain name and its value. Shorter domains are easier to remember, they can be used to represent initials, they are rarer and faster to type for users.

How Do I Know If My Domain Is Valuable?

Firstly you need to know that there is not an absolute way to estimate a domain name’s value exactly. What you can do is to check against the previous factors I mentioned (extension, age, traffic, links, industry, length) and some other suggestions that I will mention now.

Domains that contain additional words or articles before or after the keywords decrease the value a lot. For example the domain insurance.com worth much more than theinsurance.com.

A good rule of thumb is to check previous sales of similar domains. You can visit that site for more information about recorded domain name sales namebio.com/.What you see as selling prices if you visit different domain marketplaces can’t be considered as a good reference point since many domain name owners set the prices too high.

The domain valuation tools usually don’t provide so good results and I believe that previous recorded sales and some common sense can evaluate better the price of a domain.

What are the most expensive domains?

Here is a table from namebio website with the top 100 domain names sales of all time.

Source: namebio.com