Domain appraisal tools are garbage. Here's why:
Are you looking to buy a domain and wonder what it should sell for? Or do you want to buy domains & resell them? Chances are you'll stumble across domain appraisal tools. They're existing pretty much since there is a market for domain sales. Their promise - using algorithms to estimate how much a given domain is worth. But does it work? Short answer: no, they are garbage. If you want a long answer, continue reading.
Why did I even test those? Because I’m working on Indiebrands I have a lot of interest in finding good ways to price our product. And to do it we need to understand the market. But on my mission to find the best appraisal tool I quickly realised it will be more complicated than expected:
Impossible to research
Originally I wanted to test 10 different domain appraisal tools and that's where I meet my first obstacle. I could only really find 6 Tools that are somewhat "useable" and even this took me 2-3 hours browsing more than 200 different pages.
Searching for domains appraisal tools on google sums it up perfectly. Google features a list of 10 tools sourced from a blog post from 2018. 3 of those lead to a dead website, one removed their domain appraisal tool and another one is a website not ranking domain names but active domains based on their traffic on certain keywords. So even the featured post on Google only has a 50% success rate. As you can imagine all other blog entries had similarly bad results. The worst definitely was the one linking me to a website that had its last update in 2003.
Talk about a beautiful page.
The Data collected
Finally, I can test the different tools I researched for hours. I tested 11 of our domains. From 5 letter to 9 letter domains & including the TLDs .com, .io, .co, .so. The tools I used are GoDaddy, Nameworth, Estibot, Freevaluator, Epik, PC Domains. You can find a rating & a little paragraph about each tool at the bottom of this article.
This is where I "learned" those 11 domains are either worth $ 585 or $ 80,650. Can't help but think of the different price targets for Bitcoin. Already it's become pretty clear why the industry isn't sold on those tools. This is also why I stuck to only testing 11 different names instead of more. Which inevitably leads to some data being not perfectly well comparable. So don’t expect this to be a “scientific study” - the purpose was to test if there is the expected lack of quality. And this question is answered.
This statistic alone should clarify why domain appraisals tools are bad. As much as I want to believe that we’ll sell those domains for $ 80.000 I’m pretty certain this won’t happen. And on the other hand, if we only sold them for $ 585 we wouldn't be in business. For context, we have those domains listed for a total value of $ 5,900.
As stated above the domains I tested with wasn't 100% comparable. For .so we only tested with single word domains "forums.so" & "funny.so". If we would have the same domains with .io & .co GoDaddy would suggest the most expensive ones are .co followed by .io with .so being the last. The logical explanation for this can be found in the popularity of those TLDs. And .co outperforms .io based on websites registered and websites in the top 10.000. As we found out in our article researching alternative TLDs.
It’s important to note that the 7 & 8 letter domains I've tested all had alternative TLDs. To have comparable data I should've tested with the same TLD and in the best case just use either single word domains or only non-word domains. If it were executed like that you could simply see a little decline in average price per letter added.
All the data is accessible in this public spreadsheet.
Don't just take my word for it
While researching this topic I've questioned several communities focused on selling and buying domains. They aren't big fans of those tools. Here's what experienced sellers had to say:
"They are crap. All of them. I’ve had paid appraisal of domains they appraised for $1500 sell for 5-7 figure payouts. So they add zero weight to the actual value of any domain. The name is only as valuable as it is to the buyer. So don’t use any appraisal tools and definitely don’t pay for an appraisal"
"No appraisal tool is perfect. The only thing that matters is market demand which is impossible to quantify. But you can get an idea and then make your own judgement from there."
That was pretty much the general consense about name appraisal tools. Additionally, I stumbled across an article on Toughnickel.com talking about this topic. They included a voting system questioning the quality of those tools. The results probably won't surprise you.
Yes, that's right only 4% think they're accurate. Which raises the question: Is it possible to build a tool better than what’s on the market? Maybe you could even profit along the way. Either through traffic and ads or by building it as a SaaS.
How do build a domain appraisal tool?
After testing all of those tools I’m pretty sure that a good coder with some experience in data science could definitely do it. Since it doesn’t seem to me that those tools take more into consideration than the five aspects I listed here:
- length of the domain
- TLD - the more popular the TLD the higher the price
- Different dictionaries to figure out if the domains include a word or not. English obviously having the biggest weight
- Pronounce ability. This could be quite a challenge. GoDaddy seems to be the only tool that takes pronounce ability into account.
- If you're really going for it: compare the tested domain to previous similar transactions. Something not exclusive to GoDaddy but they do it best.
There you go. Weight them correctly and you have yourself a domain appraisal tool. It should be possible to get pretty close to GoDaddys quality but overtaking them will be hard.
The different Tools compared
GoDaddy is by far the best tool out there. If you want to use a domain appraisal tool then use GoDaddy. They have the most advanced features and also have the most data to build upon. But it's far from perfect. As with every appraisal tool you just get vague estimations. In my opinion, GoDaddy rates .com domains a little too high yet underestimate good names with alternative TLDs. Overall the only tool I'll probably ever use if I'm going to use one.
Where Estibot shines is in the presentation and their reasoning. They've built up a clean looking page & it looks like they take a few things into consideration. But their estimations are simply lacking, estimating nearly all domains I tested as > $100. And after you've estimated two domains a day you're lured into paying to continue. Something I might even do if they'd offer a better product than that.
Nameworth is probably the worst out there. They’ve built different Tiers to estimate domains but all of those are disconnected from reality. Estimating domains like bytoro.com at $ 24,500. Besides that, they're unable to estimate domains with alternative TLDs to .com. But they have an interesting approach to giving an estimation of how high the chances are to sell in a certain span of time. Because of that and that their evaluations make it look like I’ll be a billionaire in no time I had some pitty with them and therefore they got a least 1/10 points.
Differently from Estibot and Pc Domains, Freevaluate doesn’t just stick the same price tag on almost every domain. Something one would expect of every tool but you'd be surprised. Although this is definitely a plus some of their estimations just don't add up. The estimated tojoa.com for $ 19.800 but tewik.com for just $ 900. To me & most other tools, they should have a similar price. Why Freevaluate chooses the absurd $ 19.800 didn’t add up. Also, I find it quite misleading to name a product "free" if you have to pay after 3 evaluations. Don't get me wrong, it's absolutely fine to charge for a SaaS - also for domain evaluation. But don't call yourself "free" if you're not going to keep that promise.
Not even worth talking about honestly. According to Epik, all 11 domains should be worth $ 585 while we listed them for a combined value of $ 5,900 and compared to competitors those are reasonable prices. Some names were simply evaluated at $ 0 even great names like tojoa.com (which obviously should cost $ 19.800) making it obvious that they don't include brand-ability/pronounce-ability in their estimations and also don't take the length of a domain into consideration. Which doesn't reflect the market, since those two things can definitely be motivation to buy.
PC Domains has similar issues as Epik. Every domain we tested that wasn't a dictionary word got ranked at > $ 100. At least they didn't just write $ 0 but still, I would expect them to take more into consideration than just a dictionary. Might as well use dict.cc for my evaluations.
Having tested those tools myself & taking feedback from the community around domain sales the conclusion is pretty obvious. There's no need to use domain appraisal tools. They can be used as a rough guideline but at the end of the day, you yourself should price them. Domains are worth as much as people are willing to pay for them. And similar to how antiques are only worth a lot to collectors, domains can only be worth much for the person that has use for it. So your goal is to find the person that can actually use the specific name you have. The easiest way to achieve this is to reach as many people as possible