Mike had asked this question in a thread, it's worth a complete guide itself.
Originally Posted by SEO_Mike
Hey Brar, could you give us some tips on how to value domains that we own or are looking to purchase?
A Domain's Value is as much as the buyer is willing to pay for it. No seriously, a company which goes by the name of J. Walter Thompson or International Business Machines may be willing to pay hundreds of thousands or millions for JWT.com or IBM.com but the current reseller price of three character domains is 8k-10k.
So talking of "rules of thumbs", there are two kind of prices for a domain - 1. Reseller Pricing 2. Retail Pricing.
is something that an end-customer -- who has interest in actually developing the domain for long-term rather than flip it -- is willing to pay for it. And this value worth your negotiation skills. Which is why the tips and guides section will have a LOT of focus on domaining negotiations.
is the price that a speculator is willing to pay you for the domain. Obviously, we speculators want to maximize our profits so we low-ball. But here are certain factors which can help you determine the valuation of a domain in reseller market --
a. Traffic. The higher the traffic, the more the value of domain. Now obviously the best way to find if a domain has traffic is to taste it or see the stats -- either from the previous owner or using third party services like alexa.com or compete.com.
Another way to find about the traffic -- should you not have access to stats and neither would you want to taste the domain -- is to see how many times the keyword is searched. One stat which domainers use often is Overture Score. Well, in my experience, wordtracker score works as well.
Basically, if you have an exact match domain, you can be sure that a lot of people will not search the keyword in search engines but rather just type in the keyword with .com. The higher the number of searches, the more is the probability that people will type it in.
b. Revenue. If the domain is in a niche which has high paying keywords, then obviously the value of the domain goes high. If the domain has pre-existing revenue, it is usually sold at 12-15 times the monthly revenue.
c. Geography. If most of the traffic is from China, the value of domain is very low since that traffic doesn't make much revenue. However, if most of the traffic is from US / UK -- and the keyword is targeted at them -- the value is higher.
d. Buzzwords. The more popular the buzzword is, the more value it usually fetches.
Those are the points which I can think off my mind right now. If I can think of anything else, I'd add it here.