The commercial value of a domain depends on many factors that are not easy (practically impossible) to become an algorithm, because many of these factors are not quantifiable. This is why people talk about “gut feeling” or “experience”.
Similar sales play a role, but the most difficult part is to figure out which sales are really similar. Having a similar keyword does not automatically make a domain “similar”. This is not quantifiable and is based primarily on experience.
Number of searches plays a role in some cases, but not in all cases, being a relatively small part of the domain’s value. This is because the domain demand is not about “what people search”, but about how business people name their websites, depending on what sort of websites these are. Nowadays, startups often prefer brandable names over exact match keyword names, because they want to make a name of their own, to create a brand, to be different. Besides, nowadays Google’s ranking no longer depends so much on domain’s name, this is why domains with searches have dropped in value.
As for “what market wants” and “what professors say”, it is all very simple. Either you make sales and then you are happy, or you make no sales and lose money. This is the practical criteria about being “right” or “wrong” about domains. This is why sometimes we say that a domain’s value is equal to what somebody (anybody) is willing to pay for it.
Also, domains are a statistic game, since successful domainers usually sell around 2-5% of their portfolio annually. Dropping domains is perfectly normal for a domainer, because market trends can change, their own vision and plans change etc. Dropping domains is like selling stock to rebalance the portfolio.
The domain usually represents a company name. For example, plenty of people may search for pc speakers, mouse pads, action games etc. Domains like mousepads.com may be used to generate leads, or for an affiliate website. But a company will (almost) never call itself “Mouse Pads Ltd” or “Speakers”, “Action Games”. A company will tend to call itself “Software Solutions Ltd”, or “Computer Supplies”, or “Data Store”, or something like that. So the main company domain that they want is softwaresolutions.com etc., with nearly no searches.
There are many, many thousands of companies in this field. So they bought all obvious names like softwaresolutions.com , and even mousepads.com – and what do they do next?
1. They can go to longer names. They can call themselves Zero Digital Solutions, Nirvana Data Store and so on. Dull, long domains that are hard to type and remember. These are not our clients, the potential names are too many to register them and have a decent ROI.
2. They can go brandable. Something like datafocus.com , cyborgica.com , gigahub.com , gameric.com, coolbit.com etc. Remember, there are many thousands of companies – and good brandable names are limited. This is why brandables sell.
And yes, fair quality brandables are registered by domainers for $10, or change hands for $20-30, and then 2-5% of them sell for $1,500, especially with some good marketing. This is a working business model that will not get you rich, but might get a reasonable return for the effort invested. In reality, $1500 is not that much money for a company. They do not want to sit and search themselves what domains are free this evening. Instead they choose from the best domains that were gathered over many months or years of hoarding by experienced domainers.back