How Much is My Website Worth?
This blog entry was posted on September 3, 2007.
A website or blog is worth exactly what someone is willing to pay for it. This is just like valuing any business that you may want to sell. There are many formulas and factors that go into a valuation. It also depends if it is an eCommerce website, an informational website or a blog. Valuation is a key tool to use in your business blog marketing or Internet marketing business.
In buying or selling any business, one of the biggest determiners of value is gross revenue and rather than net profit. This is because the buyer of a business can make changes to improve profitability, but it is much harder to change sales volume. A typical business is valued between 50% and 200% of total annual sales. The final value is based on industry, asset values, profitability and future cash flows.
Website Valuation Methods
Revenue method: For websites that have an income stream such as eCommerce, Google Adsense or other advertising, the business valuation model using 50% and 200% of total annual sales is pretty accurate. I always start using one year (100%).
Factors that affect valuation include website architecture, SEO, visitor traffic, traffic sources, Google PageRank, branding, industry stature, content quality, diversity of income streams and income potential.
Traffic Method: Use the average PPC values for (top 10 placements) for the primary keyword phrases and multiply this times the average yearly traffic to get an estimated value.
A website that receives 15,000 visitors per year with an average PPC value of 35 cents per click would have an estimated value of $5250.
Creation Method: What would it cost to recreate the website including design, SEO and programming costs? This is generally the most conservative of the valuation methods.
Usually a combination of all 3 methods is used. You may use 50% of the revenue method, plus 30% of the traffic method plus 20% of the creation method. This gives a starting point. The final price is always determined through negotiation between buyer and seller.
Related posts:
