How Do YOU $$$Value a Website?

by JeremyL 8 replies
I just read a thread on someone auctioning off a website and it made me curious to find out what a warrior's viewpoint is on how to put a dollar value on an existing website (if you were to sell one, I guess)

Visitors? sales figures? IP? market niche? back-end technology / admin tool?

What gets the bee in your belly buzzing?

Cheers
Jeremy
#main internet marketing discussion forum #sell website #value of a website #web sales #website
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  • Profile picture of the author ebooks4u
    I would like to know how much traffic the website gets before I buy one.
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    • Profile picture of the author JeremyL
      Sure, thats important. When you think about traffic though, do you have a sliding scale in mind for Dollar Value vs Traffic?
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      • Profile picture of the author schabotte
        Things I would consider when evaluating a website and its worth.

        • The current traffic figures
        • The cost to maintain those traffic levels
        • The type of traffic it gets
        • The technical complexity of maintaining the site
        • The market and my belief about how long the market will be around - i.e. a fad or an evergreen site
        • The current income level - its conversion rate and my belief in what I can do to increase that conversion rate based on current traffic figures
        • And of course my estimate of ongoing operating costs for the site - both cash and time.
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        • Profile picture of the author peteinoz
          its more about the market you are selling to..

          one market = 1 price
          another = another price
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          • Profile picture of the author Andy
            Hi Jeremy,

            One more thing you might want to consider is the quality of the traffic.

            Search engine traffic is often considered the best you can get but there are plenty of keywords that generate mostly non-commercial traffic. In other words... people who visit are not ready to buy!

            For example "Free Hamster Recipies" may have marginally commercial value since most searchers are looking for freebies.

            God bless,

            Andy
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            • Profile picture of the author GuruGazette
              I've sold websites off and on since 2000, and here's the most important ingredients:

              - .com domains sell best (fastest and most money)
              - the shorter the domain the better BUT with readable english language words and/or something catchy and memorable.
              - no dashes or numbers in the domain increases price
              - is it listed in major search engines
              - is it listed in major directories like DMOZ
              - does it have backlinks? If yes, how many and where from. (Lots of links don't matter if they're all from scraper/spam sites)
              - does it come with a built in list? Subscribers or customers? (Freebie vs. Buyers)

              SOMETIMES content and design matter, and they help when they're good. The topic sometimes helps too, and if there's revenue that's always a plus. Any good domain investor knows they can get revenue from a site that meets the major requirements noted above though.

              Tip: Alexa stats are worthless in mainstream markets because they're based only on visitors who use the Alexa toolbar, and most mainstream consumers have never even heard of it.
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              • Profile picture of the author fm1234
                When I look at a site to buy, my considerations in order of priority are:

                1) Is it producing revenue? If yes, how much?

                2) Is it producing profit? What are the specific fixed ongoing expenses?

                3) What is the specific administrative load, ie. not "just a couple of days a week" but what is the actual procedure for running the site?

                4) How much space and bandwidth does it currently consume?

                5) What is the source of the traffic, including both the means by which it is generated and the geolocal source?

                6) What is the domain name and who is the registrar?

                If I get straight answers on those questions, I ask myself follow-ups:

                1) Can I leverage existing sites, lists, blogs etc. to increase sales/traffic?

                2) Can I/my staff run this site? Does it fit into existing workload or will I need to expand to run it?

                3) Can my own server space handle the space and bandwidth requirements?

                4) If needed, do I have or can I get a better domain name? If so, are there measures in place to cover the effects of changing the domain name?

                5) Can I see an exit strategy?

                Usually by this point most potential sites have been discarded; however, if I'm still looking at it we come to pricing questions:

                1) What is the asking price/current bid?

                2) What are similar sites going for at the major marketplaces?

                3) How much would it cost me to just build a competing site from scratch?

                Anything that's made it to this point I put an offer on based on the revenue plus my own estimation of the value of the organic First World traffic, and (if any) the value of the domain name. If it's an auction, I usually reduce my true estimate by about 25% to give me some wiggle room in case I'm outbid.


                Frank
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                • Profile picture of the author JeremyL
                  Hi Frank, Kathy, Andy,

                  Thanks for your detailed responses.

                  As you have shown Frank, there should be a very detailed due diligence when looking to buy a website, like any business.

                  Great stuff!!

                  My aim on this thread was to indeed compile such a due diligence checklist for purchasing a website in the hope that it may assist others who are considering this.

                  Thanks to all of you who've contributed so far. Please keep ideas coming if you feel there's something else to consider.

                  Best regards
                  Jeremy
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