Domain Name Appraisal & Valuation

Methodology

Standard Valuation:

Domain-name valuation is both an art and a science. The art comes from knowledge and experience in understanding the factors that influence the value of a domain name, while the science involves statistical techniques to quantify the importance of these factors. Statistical models also provide a measure of how reliable an appraisal is.

Factors used by various service providers include the number of characters, the extension, and the volume of keyword searches. Each company has its own sets of predictors. These factors are the variables that predict the demand for a domain name.

Statistical models use the relationship between these factors and prices of domain names that have been sold to determine the price of a given domain name at a specific point in time. These models provide a scientific method of estimating value based on comparables.

The standard appraisal services do not take directly into account the contribution of a trademark to the appraisal value, as trademark valuation requires extensive domain-specific calculations and data collection.

DomainMart is the only domain-appraisal service that uses statistical models. Others use arbitrary weights for each factor. As an example of the difference between DomainMart’s model and models based solely on experience, DomainMart does not find the number of characters in a domain name to be a significant predictor of domain-name value. Thus, the number of characters has a weight of zero in DomainMart's model.

Custom Valuation

This option is typically used for appraising active Websites. The standard valuation method is to use discounted cash-flow techniques, which requires access to privately held information on traffic, revenue, and costs associated with the business.

Fees

	Fees Per Domain Name*
	Ad hoc Approach	Statistical Model	Cash Flow Valuation		Expert Witness
			Parking Benchmark	Historical Profits
AfterNIC	$9.75-20	NA	NA	NA	NA
DomainMart	NA	$50	$300	$150/hr	$250/hr
Sedo	$19-39	NA	NA	NA	NA
*For a large number of appraisals, you should contact the service providers directly.