Domain Name and Website Valuation

Abstract

Web domain names represent the gateway to Internet connections and access to specific websites. Their value depends on several parameters, as web traffic or search engines, and is typically calculated with ``quick and dirty'' algorithms freely available on the web. The value of a web domain depends on its capacity to attract traffic, i.e., visitors, and to transform them into cash-generating customers. All domain names are unique, and so there is no standard valuation method, especially if they are appraised within an IT bundle of related intangibles. Comparable transactions represent a benchmark for valuation, considering even the hypothesis of licensing the domain name to get a reasonable royalty. A more detailed appraisal should consider not only the stand-alone value of a domain name, but rather its synergies with collateral intangibles as websites, digital brands, or M-Apps. Considerations about domain names can be easily extended to websites that represent the contents of the domain. Valuation of domain names and websites, in many cases, tends to coincide.