What is a Website’s Value?
I’ve purchased a few websites over the years from previous owners, and “How to determine a web site’s value” has always been a part of such discussions leading to a successful transaction (or not).
There is considerably more information available nowadays, but the common theme is what you and I have understood about evaluating the worth of most any item: The final value of a website is determined between a buyer and seller.
Regardless, following are some tools, tips, theory, technical and practical info on ways to enter a discussion about website value.
Profitable Websites vs. Websites that are Not.
Although the ways to value a website are quite varied, there is a dividing line between websites that make a profit and those that don’t.
1) Websites that cannot prove profitability are subject to greater whimsy in terms of valuation between buyer and seller.
2) Websites that can prove profitability can be more effectively valued, but the ultimate worth is still subject to many factors that have varying degrees of importance between buyers and sellers.
In either case, sellers tend to believe their sites are worth more than some hypothetical reality, and buyers tend to believe they are worth less than some hypothetical average, so establishing some basis for discussion at least can allow a discussion to occur.
Free Tools for Website Valuation
There are a number of free tools for determining a website’s value, including:
Independent of the relevance (or not) of such free tools, which arbitrarily assign value to criteria associated with a website, here’s the most useful I’ve encountered.
This tool includes user-input data as part of its evaluation. I also like the tools comparative analysis against a database of actual website sales.
“This tool values your site based on what hundreds of similar sites have actually sold for. As it’s a tool that is grounded in reality, it can offer an reliable estimation of your web business’s value.”
Theory and Technical Info on Website Valuations
If you want to gain insight into the subject of website valuations, I recommend the following two articles. They are both somewhat lengthy (6 pages each), but offer a good theoretical and technical overview.
The first link is what I consider to be a relatively simple and generally useful overview of the theory of website valuations.
What’s Your Web Site Worth? By Georgina Laidlaw.
The Ultimate Web Site Valuation Guide By Clinton Lee.
The second is more technical, and is an outline of what is behind the ebizvaluations.com tool above.
In the end, the final value of a website is determined between a buyer and seller. But the preceding info can help both buyers and sellers understand a broader spectrum of variables to consider for discussion.