So, you think that your website is probably worth a little over $1 Million, right? Unfortunately, it probably doesn’t (but, hey, maybe it will someday!) Until we get there though, I say we should first learn how to honestly calculate the true worth of your website, especially if you plan on selling!
In case you’re not a regular here at Romania Experience, you should know that I recently sold an authority website for five figures. When I told some people that I trust how much I got for the site, they said I sold it for way too little, which was not true. See, the fact is that people tend to get really attached to their blogs or websites so they find it difficult to objectively calculate the real worth of a website. Even if you spent 1,000 hours writing with your soul, your website might not worth a cent. Sad but true!
When a person wants to calculate the value of a website he or she must pay attention to a few important aspects:
1. How much money does the website make and what are the prospects for the future
This is by far the most important factor when deciding upon the value of a website: how much money does it bring in. More important, how much money do you anticipate it will make in the next 12 months? And even more important, how much work should the new owner invest with the website to generate that income. Most of the buyers are lazy folks who don’t want to write a single article (or they want to outsource everything). This means that they will cut from the profits writing costs – and these can get pretty big.
2. How many people visit the website?
Generally, the more traffic a website gets, the better. If your unique visitors number is impressive, you can ask for a big chunk of money because 1 million people have the potential of bringing in a lot more money than 10,000. Of course, these numbers go well hand in hand with the niche of the site (1 million visitors from a website with funny photos could bring you less than 10,000 visitors on a website that sells luxury watches).
3. How old is the website and how stable is income/traffic
If one of your posts just went viral, it doesn’t mean that you will always get that many visitors. People who buy websites for a lot of money want some sort of guarantee that traffic won’t drop as soon as they get that site, and that guarantee is offered by having stable income and traffic for at least 3 months.
4. How difficult it is to run the site and what are the costs of running it
The website I sold required quite some maintenance with a minimum of 30-45 minutes required per day to manage it (and this does not include too much content writing!). Buyers usually pay more for a website that works on auto pilot or requires little work and less costs. The more work is required to maintain the website, the less people will be interested.
Many people still care a lot about the Page Rank which is in their mind a proof of domain authority. The domain I sold, which had a peak of 2 million visits in one month with close to 5 million page views had a Page Rank of 2. Myth busted! However, having a higher PR usually means that you can get a few extra bucks from it. Real connoisseurs, though, don’t really look at Page Rank.
OK so, how to calculate the worth of the website?
The question I always ask before deciding upon a price is: How much would I be willing to pay for this website if I had all the money in the world? Think like a business man and consider it an investment. Here are the numbers:
Let’s say that my website is making $1,000 per month for six months now and traffic is about the same for the past six months. I anticipate that traffic and income will remain about the same for the foreseeable future and I only have to post once per week in order to keep the website running. I only pay for hosting $6 per month and that is it!
Value of this website? Between $12,000 – $24,000
Let’s change things a bit here and let’s say that we have the signs that the website’s traffic will grow in the near future and the income could be $2,000 by the end of the year.
Value of this website? Between $15,000 – $30,000 (if you find somebody to believe that the traffic and income will actually rise)
Let’s change things a bit more: let’s say that in order to run your website, you have to spend about 4 hours per day writing articles, networking and answering e-mails. You also have one staff writer that gets $200 per month and your other expenses rack up to $50.
Value of this website? Between $3,000 – $7,500 (and you can consider yourself lucky if you get that 7,500!)
The Bottom Line
People usually say that the easiest way to calculate a website’s worth is to find the average earnings for the past 6 months and multiply by 12 or 24. However, people now are less and less willing to block a large chunk of money for 2 years (or more) unless the website in question is really good. So unless you have a brandable (or already a brand) website with a nice growth potential, I would say to set the minimum value you’d accept for your website at 7 times the average income of the past 3 months (3, not 6!) and be happy for any extra dollar your get.
In my case, I sold the website for the earnings I estimated it would’ve brought me in 10 months if I kept working hard (meaning around 4 hours of writing per day). This freed up some time for other projects and put some safe money in my pockets so I am really happy with the deal also knowing that the buyer has all the chances to see the website meet his expectations!
So what do you think now? Is the value of your website close to what you were initially having in mind?