How to determine the value of a website - gHacks Tech News

How to determine the value of a website

If you do own a website you probably wondered about the value of it. With value I mean the amount of money that someone would be willing to pay for it. The following information can be very helpful if you need to sell your website, want to buy one or get approached by someone who offers money for your website.

It actually happens quite often that webmasters receive mails from companies or individuals who want to buy their domain. Let us examine some factors that play a role in determining the value of a website project.

Several factors play an important role: The domain name, (unique) content, the age of the domain, the pagerank, visitors, pageviews, revenue, daily work and dominance in a certain niche. The value is determined by analyzing all factors which leads to a price range in the end.

If you want to just quickly calculate it and get only a rough estimate you can simply multiply the earnings with a figure between 6 and 24. That would be the revenue for the next 6 to 24 months. It depends on the site if you use a figure near 6 or 24. Proxy sites for instance normally receive only 6 or even less times the monthly revenue while sites that have earned solid revenue for years will most likely be closer to 12 or more months of revenue.

The revenue method is not always working that well of course. What if you want to buy or sell a website that never used ads on their pages, it would surely not sell for $0. The price for such a website depends on other factors, the most important ones are in my opinion: Content, Traffic, Daily Work, Pagerank and ways to monetize the site. Let us take a closer look at all of those factors:

  • Content: Content is important. Content not only describes the type of a website, for instance sports forum, technology blog, but also how unique the content is. Good unique content for instance raises the value of a website while copied content is something that you should stay away from. Who needs a website with a youtube video downloader script if there are thousands sites that offer such a script as well ?
  • Traffic: One important factor. How many unique visitors visit the website daily? Where do they come from? How long do they stay on the site? Traffic that is coming from search engines is more valuable than traffic from most other sources. It is very easy to purchase thousands of unique visitors that push your stats but do nothing good for the site besides that. They come and go quickly.
  • Daily Work: A website that requires no work at all is better than one that requires many hours of daily work. The first one is better simply because it leaves more time for other websites or activities. Even if you can work 18 hours a day you will reach that limit pretty soon and that means you will have to make a decision to either sell a website, hire someone or reduce the daily workload on another site.
  • Pagerank: Pagerank might not look important at first glance and it has lost much of its appear in recent time. It is still an indicator of the quality of a site. You should not just buy a site because of its pagerank, but if a site you are interested in has a pagerank of five, six or more, then it is a good indicator of its quality.
  • Ways to monetize: Some sites can be monetized pretty good while others pose serious problems. Forums for instance aren't good money makers while blogs or product websites are. You can probably use a very conservative figure of $4 per 1000 impressions on most websites.. Many other ways to generate income exist. Sell direct advertisements, use affiliate systems (work best with product related sites of course), ask for donations, sell a product and use CPM systems for instance

Now, how do you determine a value of all those factors? One way would be to take the ways to monetize the website plus the pagerank and calculate the possible revenue that you expect and multiply that with a figure between 6 and 12. I would probably use a figure closer to 6 and see how the owner reacts.

Unique content can push the price up quite a bit. If the website offers something that no other site offers you could have to pay for that as well. It is hard to determine the value of content though. Just expect a price close to 12 or even more times if the content is really unique and attracts the interest of a large number of visitors.

Other factors play a role as well. Has the site been penalized by Google, or has its traffic dropped recently because of a Panda / Penguin refresh or another change made to the search engine algorithm?

It is now also important for how long a site has been ranking for particular terms, and if it has a clean backlink profile or shows signs of spam links that drive it to the top for a short period of time before it is kicked to the bottom again.

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Comments

  1. lyndonmaxewell said on April 5, 2007 at 7:59 am
    Reply

    Interesting. This is definitely a good post on judging developed websites. Websites are like developed properties with value in them.

  2. Ron W said on April 5, 2007 at 7:16 pm
    Reply

    That’s some good stuff. Makes me think our price quote tool needs a bit of updating:

    http://rank.linkworth.com (kind of plain)

    T L A has a cool calculator too..

    http://www.text-link-ads.com/link_calculator.php

  3. SEO said on April 5, 2007 at 10:34 pm
    Reply

    Also try http://www.adsbay.co.uk/Link_ad_price_calculator.php which i think is more accurate than all the link pricing tools I have tried, but all these tools only calculate the value of internet advertising space, not the value of the website its self, which is what this post is about!

  4. Tom said on December 3, 2008 at 12:02 am
    Reply

    You should also consider http://www.websitefact.com , maybe not so accurate but they have a lot of useful info on how well your site is performing!

  5. Cricbeat said on November 28, 2011 at 8:11 pm
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    I was thinking of selling my website for some time now, some suggested that I should go for ( Monthly revenue x 24) that is 2 years revenue in one go but I think that’s a bit too much monthly revenue x 6 is a fair estimate but still confused.

  6. fabio said on August 27, 2012 at 2:01 pm
    Reply

    Great Post!
    Very useful, thanks
    Fabio

  7. Alex said on September 3, 2012 at 1:20 pm
    Reply

    Here it is an website evaluation algorithm I developed myself:

    http://www.webuka.com

    I have used Google PR, Alexa Ranking, Alexa back-links and Compete Ranking as input parameters.
    Enter your URL and you will have a financial evaluation in a few seconds. (your website market price and your potential monthly advertising income).

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