7 Questions to Ask in Finding the True Value of a Domain

by Paul Wilson

 

domain_for_saleYesterday, a friend came to me with an interesting question. His company was approached by a small competitor wanting to sell their website. They competitor said they would sell the website for just over a million. My friend was charged with finding out if the website was worth that much.

Due to sensitivity, I can’t share the site but I can share the questions I asked to help my friend gauge whether it was worth buying the website. Do understand that these questions come completely from a web marketing perspective. I know there are other questions you should ask, to find the full value. However, the below questions are a good guide to get you started.

1. What is the domain? When it comes to SEO the actual domain name is important. If the domain is a high traffic keyword than it is worth more. Many people in the SEO world think that exact keyword matching is dead when it comes to domains (and with hyphens it is). For the past year I have tested this notion and found it is not true. If you have an exact match keyword as a domain, you will find that it is 10 to 40 times easier to rank on that particular keyword depending on your niche. The best thing you can do is to use a free keyword tool and check out the traffic the domain has as a keyword. This will determine a lot the value of the domain, particularly, if the domain has nothing hosted on the site.

2. What are the organic rankings? There are several great tools that will show you what the website is currently ranking on in Google. Both semrush.com and keywordspy.com will give you a glimpse, for free, of ten keywords the site is ranking on. I personally have a subscription to semrush.com and feel it is a great tool to have in your SEO arsenal. Generally, though, both tools are several weeks to a month behind and should be used as more of a historical glimpse than current. Yet, it still gives you a glimpse on whether the company is doing SEO and if they rank on any high traffic keywords.

3. What are the backlinks? You can tell a lot about a website by looking at what other websites link to it. First, of all, it is easy to see if the site is popular or if it has paid links (believe me, it is really easy to tell the difference). More importantly, it is good to see how the company is being visible to others. In the case of my friend, the website under review had banner ads all over the web. Banner ads always equate to monthly payments to other websites. So, if you purchase a website do you have to maintain the cost of the advertising? If so, that should bring down the valuation of the website. There are a lot of tools to see the backlinks of a website. For quick use I like backlinkwatch.com.

4. What is on the site? A more poignant question is, “What value is the site offering?” Is it bringing in X amount of leads or is it purely a content site? If it is a content site, what type of content does it provide? I am more curious about whether it is interactive or not, than what the content actually is. Does the site have a forum, blog, wiki, or is all the pages static? This is important in assessing the community built around the website. If the owner of the domain has an active forum, where the targeted demographic congregates and interacts, than the site is worth more. If the site is bunch of static pages that have not been changed since 1999, than the value is considerably less.

5. What partnerships does the site have? This is a question that a lot of people overlook, but is really important. A dating website that has a strong relationship with a single’s activities website can be quite valuable than merely on its own. An important factor is seeing how this relationship is established. Is it the owner’s best friend? If so, is he going to be as willing and generous as he was to the previous owner? Strategic partnerships can be very beneficial when structured right. Make sure these relationships are in place before settling on a final price.

6. What is its history of the site? I learned a very hard lesson at the end of last year. I purchased a website and didn’t know that it had been previously penalized by Google. The penalty had been handed down to the person who owned the site before the gal I purchased it from. The domain was making a recovery but it still had serious issues. After several months of Google not acknowledging my groveling and sniffling, I had to shelve the domain for later use. A very expensive lesson that could of been avoided had I seriously looked at the domain’s history. There is a lot you can do to check the domain, but the bare basic is to see the history through archive; viewing the historical traffic with Alexa; and checking the whois for a better understanding.

7. What is its traffic? This question is last because, as you can see from the other questions, traffic has a lot of variables. However, if the site has high organic traffic than you should be able to hit the ground running with the site once purchased. If it has little to no traffic, than you have a bargaining chip to lower the price. If the seller is serious than they should be offering you access to their analytics. Yet, you can also use spyfu and alexa to gain a very rough estimation of the site’s traffic.

Domain buying, at times, can be very difficult. There is no established procedure that offers a fast and true value of a domain. A good domain buyer, though, can find those “diamonds in the rough,” and be able to finagle a decent price. Hopefully, these questions will help you achieve this. Best of luck! ~Paul W.

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