Trading domain names is growing

International marketplaces such as SEDO.com and DAN.com offer domainers (domain traders/brokers) a platform for trading these domain names. How exactly this works can be found in this article.

Fixed and periodic costs

Potential buyers are not always aware that they have to pay for an existing domain name and how the valuation of a domain name is determined. The reference framework is usually the cost of initial registration and periodic renewal. The fact that an existing domain name represents value and that there is trading in names, is often unfamiliar territory.

Unknown makes unloved

Slowly but surely, you can see the market in Europe maturing. However, the present sentiment is still the lack of understanding of what is happening in this market place. This also results in misunderstanding around the fact that you have to pay for an existing domain name, and often this is more than expected.

Domain name as a virtual storefront or office

The lack of understanding often results in resistance against the aftermarket. In general, people do not yet realise that a domain name is more than just a registration on the internet to start a website or webshop. To explain it, we use the comparison of a domain name with a storefront or office. If it is in a prime location, you will pay more rent or a higher price than in a rural area. This is also true for a good domain name: think of it as your virtual store on the internet.

Squatters beware

The argument that you occasionally hear is that domainers are guilty of "cybersquatting". However, this is outdated. It is true that not every party adhered to the rules in the early days of this type of trade. There are also still malicious actors and criminals who are out to deceive, but the average domainer can be compared to the role of a real estate agent. That is why there are very large international players in the market.

Scarcity in domain names

Registering a new name is quite a challenge, especially when you want to register a domain name with an extension such as .nl (ccTLD) or .com (gTLD). That is why you see more and more generic Top-Level Domains (gTLD) on the market, such as .org, .shop, and .xyz. Scarcity is one of the reasons for the valuation and, therefore, the price.

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When searching for an available name, you may come across a domain name that is for sale. In many cases, you will see a form or an advertisement linked to the domain name. In these cases, you can almost be certain that the domain name is being offered for sale by a domainer, either directly or through a marketplace, platform, or a portal like Dovendi.

Factors that determine value

Ultimately, the value of a domain name depends on many factors. Here are some that you can assume will significantly increase its value (and, therefore, the purchase price):

• Is it a short name or abbreviation?
• Is the name easy to remember?
• What extension (TLD) does the name contain?
• Is there still traffic to the name?
• How long has the name existed?
• Does the name fit well with a (temporary) action or product?

The final price

These factors determine the value, but they are not absolute. Ultimately, it often comes down to good negotiation skills and a price that both the buyer and seller feel comfortable with.

Worth the investment

Ultimately, you can conclude that a well-fitting name is always worth the investment. A small reassurance, in America, a good domain name is worth a lot and you only pay a high price there. From thousands to millions of dollars.