Why are some domains more expensive than others, despite having the same number of characters or the same TLD? There are several factors that determine the varying prices of domains.
To give just a few examples: The value of a domain can be influenced by its length, how memorable it is or by current economic or social trends. While domain prices in the four-digit range or higher might at first frighten off potential investors, an acquisition could prove to be well worth it when taking a second look. A seemingly expensive domain can be used optimally for marketing purposes, e.g. to achieve better search engine rankings, or simply as a financial investment.
Regardless of what you use your domain for, its price depends on several factors. Some of them are constant, such as the length of the domain. Others can vary, such as which keywords are currently trending. These factors differ in importance depending on the purpose of your domain. You should, however, have an understanding of all of them.
Seven factors that determine the price of a domain
Domains can vary greatly in price. It’s not always immediately evident why one is expensive and another is extremely cheap. In most cases, one or more of the following seven factors is responsible for domains with hefty price tags.
1. Short domains
Brevity is key – this is especially true for your choice of domain. Short words are generally easier for people to remember and accordingly to use whenever they need them. Herein lies the fundamental problem of domains: Everyone wants a short domain that quickly engraves itself into the minds of their users. As early as 2013, no more four-letter .com domains were available for registration and two-digit and three-digit domains were gone without exception even before that. The same goes for the German ccTLD .de. So, it’s no surprise that the majority of short domains have high price tags. The age-old rule applies here: Supply and demand determine the price.
2. One-word domains
Domains like “moebel.de” or “whisky.com” are well-known. Being memorable makes the connected websites popular. There’s no question about it: Due to the dwindling availability of conventional domain names and the resulting need for coining new words or phrases, one-word domains require a great deal more creativity during the name finding process. However, they also stand out from the crowd, which ultimately makes them popular domains with a high market value.
3. Keyword domains
All a domain once had to do was to contain a keyword to get a high ranking. Although those days are long gone, keyword domains are still in great demand. Even though Google, thanks to the Exact Match Domain Update of 2012, now considers the content of a website more important than its name, if you combine a keyword domain with good, well-maintained content, it can gain an advantage over other domains in Google’s ranking.
Keyword domains in the upper price range are therefore not uncommon, even today. Technically, prominent examples like “amazon.com” and “alibaba.com” are also part of this keyword domain group. That’s why users looking for information about the Amazon river or the fairytale figure Alibaba normally get results for the online shops using the same name. It’s unlikely that Amazon and Alibaba are aiming for this effect, but rather decided on these domain names for branding purposes.
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4. Clear domains
The price of a domain can also be influenced by the question of whether users make a connection between the content of a website and the domain name. Take this example: An online shop for shoes will probably generate more clicks if its domain name has the word “shoes” in it instead of a word with no reference to the product – at least as long as the brand hasn’t yet worked its way into consumers’ heads. A look at two of the most expensive domains illustrates the current relevance and prices of such domains: diamonds.com sold for $7.5 million while business.com went for a whopping $350 million.
5. Current trends
Domain prices can also strongly depend on current trends. Cryptocurrency is a good example. While nobody had ever heard of Bitcoin, Ethereum etc. a few years ago, they’re a hot topic today. This means that terms and word combinations related to cryptocurrencies have become extremely popular domain choices.
This clearly shows that when a certain topic becomes popular, the price of domain names that have related keywords increases.
6. Customer budget
An important point that shouldn’t be overlooked with regard to domain prices is the individual customer’s willingness to pay a certain price. Just because a domain has potential doesn’t mean the demand is high enough to allow for a certain price. Instead, potential customers might even shy away from buying an excessively expensive domain. In the end, it all comes down to individual decisions. One potential buyer might consider a six-figure sum for a certain domain to be a good deal while another would only consider paying a few hundred euros for the same domain.
7. Top-level domain
TLDs aren’t all the same. They demonstrate significant differences. Their price depends on how well-known a domain is, as well as what the TLD says about a website. A country-specific TLD can indicate where a company is located. Other TLDs provide users with information about what kind of website it is e.g. if it’s a company (.biz, .com), a non-profit organization (.org) or an educational institution (.edu). The TLDs’ language should also match the domain name. For example, present.de is not a good match for a website targeting English-speaking customers because it uses a good English keyword, but the wrong TLD.
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Whether or not a domain is worth its money is hard to say in advance. In most cases, the price already gives you clues about how valuable it is – whether because of its length, its uniqueness, the clarity of its name, the ranking advantages it offers or current trends. Having said all this, how good a domain is depends on the registrant. Even cheap domains can be strategically useful if you know what to do with them.
What other considerations are important for domain evaluations?
Using Google Trends, you can check in which regions and at which times domains are most frequently searched for. It’s also a good idea to check whether the user name of the domain is up for grabs on social media.
Assess the value of your domain with Domain Price Check
It’s not easy to keep all the relevant criteria of a domain in mind when choosing a domain. Tools like the Domain Price Check offered by InterNetX can take over some of the work for you.
Our Domain Price Check gives you all the relevant information in one go and also lists alternative domains that are still available. The free Basic Version can perform 15 checks per month. Depending on your needs, it might be worth paying for a subscription.