A domain name can be worth a lot of money. However, do you know that many domain names are actually overpriced and over-rated?
How is a domain priced in the first place?
1) Branding - This is, perhaps, the most important factor when it comes to pricing a name. A brand is very important because it determines the commercial value of a website. A name with a reputable brand can generate revenue. People buy from the website because they trust the brand. In other words, if you have an old domain that many people already know about, you may be sitting on a goldmine.
2) Keyword rich - A website is nothing without targeted traffic. As we all know, keyword rich domains are easier to rank in the search engines. For this reason, names with the exact keyword phrases in them can be worth a lot of money. If you pick a very popular keyword and manage to register a domain for that phrase, you may end up selling the name for thousands of dollars.
3) Potential - Every name has got some kind of potential. If it's a domain that's related to a highly profitable niche, you are in luck! The name can be worth a lot of money. Many people sell domains based on potential alone.
4) Back links - SEO can be an expensive affair when it comes to link building. You may need to spend a lot of money building back links to a website if it's new. So some people actually prefer to buy an old domain that already has some back links pointing to it. These links are worth money. They are often incorporated into the value of the name during a sale.
5) Page Rank - Page rank is Google's way to depicting an authority website. A domain with a high page rank commands a higher price because the owner can sell links and make money with it.
The key problem with valuing a domain is that it's very hard to measure the name in monetary terms. After all, it's just a URL sitting there and not earning any income. Everything is based on assumptions. But what if the assumptions are inaccurate?
That is when domain names get overpriced. Always eager to sell the names for a higher price, these name owners exaggerate the potential of these URLs. They even use web based tools to help them inflate their valuations. Don't fall for such schemes.
When assessing a domain, use your common sense. Ask yourself if it makes good business sense to invest money in the name. A new domain cost just $10 to register. So if you are asked to fork out hundreds or even thousands of dollars for an aged domain, do think twice before putting down good money.
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