What’s the Best Way to Calculate the Value of Your Website?
“Worth” is a difficult thing to define. My father often told me that something is only worth what someone else will actually pay for it – but if you’re trying to sell your website, what’s a reasonable figure to ask for or expect at auction?
Right now, I’m fairly certain I could sell my little niche gaming blog for about $20k. How did I get to that figure? Now that’s the million dollar question. Let’s look at the options.
The Easy, Useless Way: Online Tools
Let’s start by doing this the wrong way: using sites that try to estimate a site’s value. It’s quite funny really – most of these are worthless. Their quotes are wildly inaccurate. To prove this, I tried the top 5 Google results for “website value estimator”.
WorthOfWeb calculated the value at around $5.5k – which is roughly what it would make in 2 years if I were running the rather pathetic Google Adsense as my revenue source. I’m not – I sell ads directly to advertisers through BuySellAds.com, so my CPM rates are far, far higher – despite a relatively small number of page views.
The tool pulls its pageviews data from Alexa.com, which is itself only an estimation. So you have an estimated number of pageviews giving an estimated potential ad revenue multiplied by an arbitrary number they’ve made up. Fantastic!
SitePrice.org gave me $10k, again apparently based on potential Adsense income and PageRank (PR).
YourWebsiteValue.com gave me a grand total of $0. Payday!
WebsiteLooker.net reckoned the site at $1.8k
URLAppraisal game me a whopping $49. Not thousand: just dollars. Better than zero, I guess.
Most of these sites offered affiliate links to absurd “make money online” courses and free ebooks, so do be careful when clicking around – and absolutely do not sign up for anything, unless you want your inbox bombarded daily by scams.
The truth is that if you’re not currently generating a revenue from your site, coming up with a reasonable figure is quite difficult indeed: the question becomes “how much could this site make if it had a few Adsense blocks on it?” multiplied by an arbitrary number of years. Take an average of the first two tools listed above, and you might get a reasonable value.
The Hard Way: Actual Research
The best way to judge the value of a website is to compare with previous site purchases. I use Flippa.com, an online auction site for websites and domains. I’ve sold a few domains and blogs I’ve given up on there for $500-$1000 each over the years, and I know the figures are reliable. Here’s what I’ve found.
1-2 years Profit
If the site does have an existing (verified) revenue stream, it’s an immediate investment for potential buyers. Assuming all the other variables check out, it’s reasonable to expect anywhere in the region of 1 to 2 years worth of revenue as the final sale value – depending on the reliability of that revenue source and amount of effort required to maintain in. The purchaser is almost guaranteed to turn a profit after two years, or sooner if the maximum revenue potential hasn’t already been realised. This is the most reliable evaluation you can get.
Age of the domain
Older domains are worth more, because supposedly Google places more trust in them. It’s difficult to put a precise value on this, but if all other variables match, nudge your expected price up a little if your domain is older; adjust downward if it’s newer.
The “public” PR value of a site is contentious among SEO circles as to how much value it does actually portray – the number is sometimes only updated every 6 months to a 1 year, and may even be different to the internal PR used by Google to rank sites. That said, it still remains a primary factor when making a “domain only” sale. For PR4 domain only sale, expect in the region of $1000. PR3, maybe $500. Less than that is essentially worthless, so look to other factors like existing revenue stream.
You can see up to date, real examples at the “just sold” section of Flippa [No Longer Available] or “ending soon” [No Longer Available]. I’ve picked out a few examples here and tried to explain the sale value.
The first example is an automated SEO tool, claiming $300/month in revenue. It only sold for $2500 – much less than even a years worth of potential revenue. Why? The site is only just established – so that per month revenue figure is unreliable; it’s also a completely new domain, with no back links, and no PR value. It has potential certainly, but will require a lot of work yet to be fully realised.
The second site is an exact match domain with 176 articles of content, but upon closer inspection you’ll find the articles are complete nonsense, probably copied and spun through an automated tool. The site has a PR value of 0, no revenue, and no verified analytics. Even $40 is probably overvaluing it: this is the kind of site Google, and users, absolutely detest. Pure web spam.
The last example is a technology blog making a small amount of revenue (though not claimed on the listing), PR2, with < 50k monthly pageviews. The was bid was $405 at the time of writing, but I would expect this to go up to at least $1000. It has potential and was previously making good revenue, but likely got hit by Google algorithm updates that obliterated traffic – such has been the way for many lower quality blogs. The fact that the site owner has filled it with Adsense and yet claiming no profit on the auction stats means it’s probably doing so badly that it would even be detrimental to mention revenue at all. In the right hands, however, it could be a useful domain.
To be honest, I would never sell my own site; it’s a healthy income stream for what amounts to very little effort, and I would be silly to get rid of it. In fact, a few more of those and I could retire comfortably. Over the years, I’ve sold domains and complete sites only when I’ve become throughly bored with them and stopped updating for 6 months or more. The only practical reason to sell a profitable site is if you can no longer handle the workload. If your site isn’t currently making money, you need to be honest about it’s potential and look from the viewpoint of the purchaser (or read my free ebook , which doesn’t require you to be spammed and can be read completely online, because I’m paid to write these by my employer and don’t make money by selling you things – madness, eh?). Unless the buyer can monetize the site without detriment to the traffic, it’s simply not a good investment. At that point, the sale becomes about using your content or even just the domain as a marketing tool. That is, they’ll buy everything, and inject links to promote all their other sites.
Have you ever sold your website, and what did you get for it? Do you regret not trying to monetize it yourself? Share your stories in the comments!
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