How Much Is Your Website Worth?

35 replies
I was curious about the value of my website, so I typed "how much is my website worth" into google and there are dozens of sites that will calculate the value of your website. The problem is that the results vary, to say the least. On one of the website value calculator sites, my site is supposed to be worth $16, another it is $876, $495, $1486. How can you really find out what your site is worth?
#website #worth
  • Profile picture of the author vishal1996
    Banned
    You cant accurately calculate how much is your website worth, but you can calculate how much is your business worth by its market capitalization. All u have to do is turn your blog into a business and then calculate its value.
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  • Profile picture of the author ChrisBa
    The best way is to post it on a buy/sell site that specializes and see what people are willing to pay, that is one of the few accurate ways to find out.
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  • Profile picture of the author Zach Booker
    Ignore all those tools.

    The safest bet is to simply take what a site earns per months and times it by 10-18.

    You'll almost always have a buyer if you price it between that range.

    In some rare examples, think Twitter, a site that makes nothing is worth a large amount of money. The only way this will apply to your site is if it is getting large amounts of traffic - but you just aren't monetizing that traffic.

    Take care,

    Zach
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  • Profile picture of the author dforthster
    it depends how much money you earn from your site a month.
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  • Profile picture of the author Kenster
    At the end of the day your web site is not what people are buying, they are buying a business or buying cash flow or cash flow potential.

    So the more realistic value of your web site should be calculated like you would calculate the value of a traditional business if you were going to sell it...

    Estimate your gross potential revenue or how you are or can monetize the site, calculate the costs associated with that monetization and then discount the pro forma free cash flows to get your present value valuation. This is just like the typical discounted cash flow valuation model businesses most commonly use to buy sell their business.

    Or look at comps, similar to what other business do. Find sites similar in potential and other similar sites and look what they were selling or bought for.


    Again, internet businesses are a bit different than traditional brick and mortar valuation because normally web sites are bought more on potential than on actual data, but the valuation theories are similar.
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  • Profile picture of the author 2hostbd
    investment is necessary to achieve good position
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  • Profile picture of the author CPATrendPhil
    These tools are extremely inaccurate. Honestly, I've sold about 50 sites when I was a flipper. I would purchase sites cheap (fire sales), monetize them better, and hold onto them for a year. Then sell for 10-24 months revenue depending on the site, the buyer, etc.

    To me, it's ALL about the revenue when buying/selling a site. Traffic is important too, but revenue revenue revenue!
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    • Profile picture of the author Kenster
      Originally Posted by CPATrendPhil View Post

      These tools are extremely inaccurate. Honestly, I've sold about 50 sites when I was a flipper. I would purchase sites cheap (fire sales), monetize them better, and hold onto them for a year. Then sell for 10-24 months revenue depending on the site, the buyer, etc.

      To me, it's ALL about the revenue when buying/selling a site. Traffic is important too, but revenue revenue revenue!

      Yeah, just like a valuing a business, the focus is on finding the NPV of future cash flows. The thing about internet sites though is that they are more about potential than about current cash flow. People buy based on what a site can do, with less emphasis on what a site IS doing...compared to a traditional business valuation.

      In my opinion of course. Though i've never been a flipper
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  • Profile picture of the author CPATrendPhil
    I will agree and disagree with you on that Kenster.

    I'd say that the majority of people in the buying market out there are looking to purchase for current revenue, whereas the sellers are looking to sell for current + potential future revenues. Which makes sense, the buyers want it for less, whereas the sellers want more (and often overvalue their sites as they get attached to them).

    However, there are SOME website buyers who are legitimate investors and are willing to spend more than the standard 10x-12x monthly revenue that most buyers like to spend, because they see the huge potential of a particular site, or they know that they can monetize it better than the original/current site owner.
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    • Profile picture of the author Kenster
      Originally Posted by CPATrendPhil View Post

      I will agree and disagree with you on that Kenster.

      I'd say that the majority of people in the buying market out there are looking to purchase for current revenue, whereas the sellers are looking to sell for current + potential future revenues. Which makes sense, the buyers want it for less, whereas the sellers want more (and often overvalue their sites as they get attached to them).

      However, there are SOME website buyers who are legitimate investors and are willing to spend more than the standard 10x-12x monthly revenue that most buyers like to spend, because they see the huge potential of a particular site, or they know that they can monetize it better than the original/current site owner.

      See the buyers I have spoken to obviously want to pay the least they can get away with, but they find sites that have current revenue and are looking to take it over, do something to it to significantly increase revenue. Maybe they have a backlink strategy they think can multiple the revenue 5x or more without much work.

      So their strategy is to find sites that aren't taking advantage of the potential of their sites. Diamonds in the rough if you will. So, effectively, they are looking at the potential of a site more than the current revenue, they just want to make sure there is current revenue so they know they are working off a good base.


      But I guess like anything else there are all kinds of buyers. Some are investors jsut looking for cash cows and others looking to take small sites and blow them up.

      Like most strategies in the IM world...different strokes for different folks!

      ~ken
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  • Profile picture of the author clorets01
    Kenster got it right, its about your revenues.

    One common method of valuation is to multiply your yearly profits by a factor which will depend on what the market is ready to pay. Usually you have 5x - 10x multiples. ie your blog makes 100K a year in profit, multiply 100K by 10 = 1M.
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  • Profile picture of the author KC-Coop
    Yeah these tools are inaccurate - I would agree with what's been said so far.

    Look to sell it for 10-24 months worth of profit - if you can sell it for the upper hand of that then someone sees clear potential in it.
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  • Profile picture of the author misterwrecker
    Your site is only worth as much as someone is willing to pay.
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  • Profile picture of the author Carlsbadd
    I would say that a cheap effective way to get backlinks is to input your site on as many of these appraisal sites that allow it. Other than that follow the advice of others here.
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  • Profile picture of the author Rock Solid
    Not only does the income generated matter, but the niche and the potential longevity of the site are critical, as are the type of business it's in. Adsense sites that require no maintenance or work but consistently generate are valued higher, whereas a blog that requires a few hours a day might be worth less.

    Check on Flippa and look for sites that are similar or generate similar revenue, check within the ended auctions too and try and find some of these for a comparison.
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    • Profile picture of the author Kenster
      Originally Posted by Rock Solid View Post

      Not only does the income generated matter, but the niche and the potential longevity of the site are critical, as are the type of business it's in. Adsense sites that require no maintenance or work but consistently generate are valued higher, whereas a blog that requires a few hours a day might be worth less.

      Check on Flippa and look for sites that are similar or generate similar revenue, check within the ended auctions too and try and find some of these for a comparison.

      Yep, do some comp analysis. Find comparable sites and you will be able to see a general range of what youre looking at!
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  • Profile picture of the author manybl
    the best way to calculate how much your site is worth is usually 10 months income so if you earned $10 a month it would be worth $100
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  • Profile picture of the author Chris Worner
    I honestly don't know where some people in the IM community get their business selling advice from.

    Why would you sell a $1mill a year website for less than a million dollars? or 2 or 3 million dollars?

    You do understand that an online business's value is in how automated it is?

    Most people don't want to do work, they would rather pay for an established turn-key self managing business making money then have to work to build the business up.

    Depending how automated your business is, it can increase the value 10, 20, even 30 times!

    Take the $1mill a year website, selling it at $10mil would net the purchaser 10% annually, that is a far better ROI than what the banks offer, and believe me, there are a lot of wealthy investors looking for an opportunity like this, if you know where to look.

    But hey, if you want to sell yourself short then by all means ignore this post.

    Just sayin!

    Respectfully
    Chris
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    • Profile picture of the author Kenster
      Originally Posted by skyfox7 View Post

      I honestly don't know where some people in the IM community get their business selling advice from.

      Why would you sell a $1mill a year website for less than a million dollars? or 2 or 3 million dollars?

      You do understand that an online business's value is in how automated it is?

      Most people don't want to do work, they would rather pay for an established turn-key self managing business making money then have to work to build the business up.

      Depending how automated your business is, it can increase the value 10, 20, even 30 times!

      Take the $1mill a year website, selling it at $10mil would net the purchaser 10% annually, that is a far better ROI than what the banks offer, and believe me, there are a lot of wealthy investors looking for an opportunity like this, if you know where to look.

      But hey, if you want to sell yourself short then by all means ignore this post.

      Just sayin!

      Respectfully
      Chris

      I do agree but one thing to be mindful of is that internet sites are much more volatile and risky, so the rate of return demanded will be far higher than a bank could offer. This is true if its an inactive cash cow investment.

      Again I think this comes down to the idea of the potential of a web site. Investing in web sites is an investment but its almost always an active investment. Thus web site purchasers are interested not just in bidding on a given multiple of current income, but on potential of the site. If they can bring a site that makes 1k a month to 50k a month, they would be willing to pay much more than any of the aforementioned guidelines. As a seller, you should also make sure you are looking at the potential of your site as well and not sell yourself short.
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  • Profile picture of the author itzpaul
    I don't really believe in those tools. Their fun to look at but they're all based on a specialized formula based on their own calculations. It doesn't include future or more in depth details about the website itself.

    For this reason, I would use your own knowledge to make a true calculation of the value of the website.
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  • Profile picture of the author webdango
    General Guidelines:

    'Real' business = ~18 months of revenue
    Website = ~12 months of revenue

    That's becasue websites are seen as rickier than 'real' businesses (stores, services, etc...).

    Now there's always the possibilty that you'll run tinot tha buyer who wants your site bad and will pay more for it.

    I have a site that makes about $5K a year, and I got an offer for $7,500 becasue it happend to be in a niche the guy really enjoyed and was interested in. BTW this was a community site about 8 years old that I started and still run as a hobby, not a built for income site.

    I turned him down.
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  • Profile picture of the author jordanberg2311
    i dont really believe in website valuation, its like stock market, is it?
    You cant get an exact figures there. Some people willing to pay more for it, some thinks it is a trash. Supply vs demand is another factor too.

    Maybe those flipper can value better and more accurate.

    Site valuation website is cheap, they can just buy a script and launch the website just like that.
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  • Dont they say, 6 times the average monthly revenue?
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    • Profile picture of the author CPATrendPhil
      Originally Posted by CleaningPro Bournemouth View Post

      Dont they say, 6 times the average monthly revenue?
      Well there's several things to look at when determining the value of a site. I always have purchased sites from the 'site flipper' standpoint, where I look at the current value/future value and make an offer.

      If a site is established for over 1 year, that significantly increases the value. If it is making $1,000 per month for one year, I will offer $10,000 - $12,000 (1 year revenue).

      If a site is 3 months old (and something I see great potential in), and made, for example, $300 in the first month, $600 in the 2nd month, and $1,000 in the 3rd month, I'd do an average of the three months, which in this scenario is approximately $634 and I would offer 4-6 months revenue (you always have to feel out the seller with a low ball-ish offer if you're a buyer), but never go higher than the predetermined range you have for the site, unless you really see incredible value in it. If the owner didn't want to sell, I'd tell him to hold onto it for another 6 months and ask me again then.

      The reason a younger site is worth less is simply because it doesn't have a track record of earnings, and many sites can simply die off. If the traffic is 90% search engine traffic, that's extremely valuable while it's receiving that traffic. But often times sites are sandboxed, penalized, etc. and your traffic will drop off completely. So you should always be conservative when buying a site.

      Just because a site is making some money for the first couple months of it's existence doesn't make it an established site, at least in my opinion. I view any site without at least 6 months of steady earnings to be a turnkey site.
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  • Profile picture of the author netoctane
    It's amazing how a simple question started the best thread I've read so far on WF.

    How much is my website worth?

    The Eternal question

    The buyer is sold on the future:

    - Buying to Flip

    If it's a niche site that solely depends on Google traffic then you take a risk if you buy too high and anything changes. You bet on the future. In this case PPC & Organic

    I'd go with Phil's approach.
    You make your money when you buy. Find a deal and Baam.
    Sounds like you made a killing ;-)


    - Buying to Grow

    Kenster points to balance between traditional brick-and-mortar valuation without forgetting that, at times "web sites are bought more on potential than on actual data"

    If it's a business you know you can build upon and add more distribution channels. Like Advertising your offer on CPA Networks, commercial email, media buys, social media, PR and drive more traffic, Again you bet on the future.

    You don't know what the buyer has in mind, how skilled an operator he is and what resources he has available.

    This is especially true online.

    Someone can "steal" a site and blow the numbers up beyond what You ever thought YOU could do.

    The numbers validate what point you grew the business to but they are really buying the potential.

    If you had no vision for it -- why would you buy?

    You've got to believe that you can take it from 0 to 60

    - Buying to Invest

    We hear of crazy valuations for companies with non existent revenues.

    Twitter anyone? April 08 - $75MM, Jan 09 - $250MM - Sep 09 - $1Billion.

    Other companies that IM'ers are familiar with but most people have never heard of, like CPA network Clickbooth.com

    2005 - $755K
    2008 - $96.4M with 55 employees -

    That's $1.7MM in revenue per employee!

    Compare that to an analog business let's say Starbucks.

    $60K per employee/yr
    20 employees per store

    You would need 80 starbucks locations and 1600 employees to generate the same turnover.

    Imagine the capital and the support structure to operate 80 retail locations?

    So Skyfox7, Rock On - I'm with you:

    "If you want to sell yourself short then by all means ignore this post."

    As in, DO YOU understand what you guys are selling?

    Do you REALLY understand the value of those digital assets?

    PAUSE

    PAUSE AGAIN

    Nothing beats your digital real estate. Nothing can.

    An analog TV will never be better then HD.

    You're not seeing anyone switching their digital cameras for 35mm film any time soon.

    There is another twitter coming. There will be a Facebook killer down the road. It's inevitable.

    Teenagers see FB as a chore. The coming one will be mobile.

    Probably spun by a 13 years old kid with an iphone.

    Who knows, maybe your kid or the neighbors kid right next door.

    And that's what the VC's are buying, the future. And so should you.

    They are edging their bets on 10,20,30 deals and only need one to pop.

    It's like pre-construction prices on multiple real estate developments.

    And you only need one location to be a hit.

    With Social marketing becoming the epicenter of the internet, it's not only VC's grab anymore. It doesn't necessarily cost millions to launch a new idea.

    If the idea adds to the conversation and provides value it will stand on its own.

    Is the idea strong enough to become a brand?

    But the real key?

    Know when to sell.

    Is it on autopilot? Are you ready for a new challenge?

    Are you selling too early?

    Feeling the itch to start something new?

    Like everything in life - it's all about timing.

    A fellow CPA industry insider sold his network for over $50MM to a San Fran firm in 2008.

    Today, he would have been begging just to get an offer.

    Instead he's cruising South America and winning every fishing tournaments.

    Sure beats working.

    Make sure you sell for the right reasons and before you jump ship to the next thing hear me out.

    "The grass isn't (always) greener" ;-)

    I like Misterwrecker's wisdom:

    " Your site is only worth as much as someone is willing to pay. "

    Or is it

    "Your site is worth what YOU are willing to sell it for"

    I lean towards the latter.

    Go BIG.

    Follow your gut.

    To your success

    M


    **I'd love to get some feedback/perspective from other warriors on when is the right time to sell? and Why? Rants. War Stories.



    Reference Links:

    Clickbooth.com Valuation
    IntegraClick -- Advertising & Marketing

    Starbucks
    Starbucks' Customer Service Commitment Can't Stop Store Closings But Employees Still Create Branded Experiences That Keep Loyal Customers Satisfied
    Average Revenue per Employee

    Skype
    Breaking: eBay Completes Skype Sale At $2.75 Billion Valuation
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  • Profile picture of the author Kenster
    Nice post Netoctane!


    Valuation is an interesting concept. I have studied traditional business valuation as it relates to the corp finance world and one thing I am always amazed at is this....

    There are very complicated computer algorithyms, valuation spreadsheets, etc that are created by very smart investment bankers that try and find the closest true valuation of another company. They looks at current stats, future potential, the industry landscape etc and include very small variables in the models. At the end of the day, each investment bank may come up with a significantly different valuation (and I mean significant!) so it makes you wonder why even go through such a complicated process to start with.


    Especially when it comes to web site valuation, there is no one valuation for any web space. The value to you as a potential buyer may be completely different than the value to me as another competing buyer. This is less true in a purely investment web site, but these are rare. Many people buy sites to enhance them, build them, grow them etc. Different buyers bring different abilities to the table to they value the site differently.

    As a seller, all you can really do is get a range for what you think your site may be worth based on any of the aforementioned tools and by doing a comp analysis. Then all you can do is try and get as many potential buyers to the table. The one with the highest personal value of your site should prevail.

    Its interesting that a site is only worth what people are willing to pay for it. A car that has a valuation of $20,000 is only worth $15,000 if you need or want to sell it now and thats all that people are willing to pay for it now.

    In a perfect scenario, you would put your site up for auction and let every potential buyer in the world bid up the price. Then again, it aint a perfect world!

    ~ken
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    • Profile picture of the author netoctane
      Hey Warriors,

      I'm looking at this deal for an established site - Thought it might be interesting to get some feedback in light of the conversations in this thread.

      This deal is offered through a broker - I've bit.ly'd the links so his deal doesn't get indexed.

      Functioning business with revenue / Generic Category Killer

      Link

      85 paying customers for the directory range from 299/year to 899/year.
      In addition, the site has generated website development & optimization contracts. All of the business has been organic.
      "Wellness Center/s" is in the DBA of 100,000+ businesses.

      The business comes with; anticipated 50K in gross profit over 14 months, customers, domain, sales kit, database of 50,000+ full contacts, custom cms built for seo, thousands of hours in SEO completed, hundreds of unique articles, 200+ unique visitors per day, and a robot to find & email potential clients to signup

      In comparison to domains/businesses on the market- this should be considered a steal. Our customer's only reason for selling is a high 6-figure acquisition he is working on, and the needed cash flow.

      Link 2 2.0 site already designed....

      What do you guys think it's worth?
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  • Profile picture of the author Aaron Elliott
    Realwebsiteworth.com I find is great. The value is actually not far of when comparing it to sites that just sold on flippa. But the best thing about that tools is the backlinks to site and visitor info is pretty darn close. More often than not the tool under values the website/traffic.

    Website worth tools normally are useless because they simply estimate traffic, then use that to work out how much ads are worth, however if your an affiliate of course you could be making 10000 more.
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  • Profile picture of the author black.infinity
    i think value = content and good SEO website . When u have good of both you can sell any price u want
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  • Profile picture of the author mscofield
    My site is a still lacking of contents,but it is in the first page for some of the keywords and i can sell it of worth 200$.
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  • Profile picture of the author chiwawa
    It depends on your capitalization and how much you earn monthly but you cant accurately calculate how much you site is worth
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  • Profile picture of the author blogdecor
    Such tools are just estimated ones. But one such website is mysitecost.com which gives your website worth approximately.
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