Over the years I’ve purchased a few websites from previous owners. Determining a website’s value has always been the central topic that leads 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 any item: The final value of a website is determined between a buyer and seller.
Regardless, following is some practical info about a website’s 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.
VALUING A WEBSITE BASED ON REVENUE
One general rule for determining a website’s value is multiplying the monthly revenue into the future for 2 to 3 years. The idea is to establish a “range” of value. For example, 24 months and 36 months multiplied by its monthly revenue (let’s say $1,000 per month) would be $24,000 to $36,000.
WEBSITE VALUE CALCULATORS
Not all websites have revenue. They still have value based upon traffic, social media following, email subscribers, web ranking and more.
There are a number of free tools for determining a website’s value. Just do a search for “Website Value Calculator” and you’ll find a bunch.
These tools may be interesting in regards to starting a conversation. But do not rely upon them as a sole reflection of true worth.
In the end, the final value of a website is determined between a buyer and seller. “How motivated is the seller?” And “How interested is the buyer?” will always be factors that inform a successful transaction or no transaction.
Avid hiker, bicyclist, motorcyclist and long-time advertising pro. Founder of Skyworks Marketing, Nonprofit Fire and Our Ventura TV (cable TV). One career highlight was working on a small team that built a business from nothing to over $100 Million in 3 years. Skyworks Marketing provides lead generation and video advertising services. We create custom marketing funnels that provide the highest-quality leads and sales.