Finding out how much your website is worth can be difficult at times because placing a value on it is tricky. It all comes down to how much someone is willing to pay for the website suggested. This can take a while to uncover and determine the ultimate value, but with a little help from this guide, you will be able to sell your website to the one who makes the best offer.
In this thorough guide, we walk you through the step-by-step process that can be taken in order to sell your website.
- In general, how much is a website worth?
- What are some factors that could affect the value of a website?
- Ways that you can increase the value of your website
- Some of the best tips you could use to sell your website
- If you are looking into purchasing a website, here are some tips that you could benefit from
How Much is a Website Worth?
If we are looking to fully determine a website’s worth, the term “website” must first be defined. For starters, the term website refers to that of a digital business. The website itself is considered the business, instead of being looked at as an asset for an offline company. With that in mind, the next question posed is how one can calculate the value of a website.
The Earnings Multiplier Calculation
This calculation is a type of financial metric that can frame a company’s current value and the value of all of its stock. Simply put, the value of a website will most likely be regarded as costing between 24 and 36 times the monthly revenue of your business, which is a calculation that’s known as an earnings multiplier. For example, if your website is bringing in 1,000 each month, your website could be worth somewhere between 24,000 and 36,000.
Sure, this calculation might not take into account all aspects of your company’s net profit, investment time, and your business’s structure and breakdown of traffic sources, but it will be the best option. At least by using this multiplier calculator, your company will have some sort of way to figure out how much your website could be worth.
Again, an example of this could be a website that has an organic source of online traffic instead of generated traffic, which in turn, will give a higher value to the website because of the costs associated with customer acquisition. In the next sections of this guide, we will further explain different website values and ways that your company can positively affect the overall worth.
What Are Some Factors That Could Affect the Value of a Website?
If we told you that many websites sell for less than $100,000, would you be surprised? This is true and can be the case due to the various factors that go into the final website price. The bottom line is that a website is only worth as much as what someone is willing to pay.
Of course, there are tools out in the world today that can allow website owners insight into a rough estimation of how much a website is worth. In addition, using the calculator above will also tell businesses a lot. Still, the most realistic test is how much a potential buyer is willing to offer and if the seller is eager to sell at market value.
In most cases, the website owner will then retain their assets and begin to receive monthly revenues instead of making a sale day of. Unless the intended buyer is willing to pay more than the market value. Realistically, the sale price of a website can sit between the market value and the website’s anticipated value, or how much they wish to sell it for.
Are you looking to sell a website that was generated?
Many different websites will use different forms of monetization when it comes to putting the values on a website, and many still rely on programs such as Adsense, to generate the majority of revenue. If a website you are interested in selling or buying relies upon programs to determine potential earnings then things are different.
For instance, with programs such as Adsense, it is easy to sell or purchase a website. All you must do is input the name of the domain into the search engine and from there, see the monthly revenues that the website generated. After seeing this information, you can then apply a multiplier and gain a small insight into the potential worth of the website in question.
Now, we will look more into the factors that can potentially affect the value of each website you are interested in and even those that you’re not.
The Net Margins and Net Profit
One of the largest key drivers of a website’s value is net profit. Net profit can be defined as the actual profit of each website after working expenses have been paid. The best way to determine net margins is to divide the website’s revenue by its net profit.
For example, Net Profit / Revenue = Net Margins
Looking at the revenue of a website alone can sometimes be misleading, which is why the net profits and margins are the most commonly looked at factors when coming to terms with a solid website value. To put things into perspective, you could be turning over sizable revenue, but if the website generation is high because of the cost paid for it, the actual earnings that the business makes could be surprisingly low. Keep in mind that websites are usually bought as an investment, and the buyer will need to know that there are valid ways to make money in the future.
The bottom line is that the higher your website’s net profit is, the higher the value of your website will be. Of course, it’s best to keep in mind that margins will differ from sector to sector, however, it is expected that eCommerce websites have net margins of around 20% to 30%. In some rare cases, this net margin can reach as high as 80%.
Traffic Source Splits
Here, a website’s value gets more complex. Luckily, the impact of a website’s traffic source split is even more closely tied to its net margins. A website that has most of its site traffic through organic searches, thanks to a successful SEO strategy, will have lower expenses but even higher net margins. Websites that successfully have these two things will rely less on paid advertising for customer interests.
In this case, there must be an understanding between the buyer and the seller as to how website traffic splits could affect the overall value of each website in question. In a perfect world, Google Analytics can give each buyer and seller a clear and concise picture for each website. Data insights will then come into play, and be provided to each buyer, in order to assist them in determining the split of website traffic across a website.
Finding a Websites Paid Traffic Cost
With all that information in mind, one must balance the organic traffic with all the website’s paid traffic acquisition costs. This number can be estimated using advertising research tools. When doing so, it’s highly important to not focus on the costs in isolation. Remember, paid traffic is a key channel to all businesses so if these paid channels are driving a solid return of investments, there shouldn’t be any problems with this.
For example, if this split is 17.5 million organic hits against only 127.4 thousand paid hits, then this website has a ratio that shouldn’t bring up any concerns in a sale.
Ask yourself this question, if you were to sell your website tomorrow, how easily could you transfer the business to its new owners? This consideration shouldnt be taken lightly and never forgotten. Point blank, the easier a website is to transfer, the higher the chances are of making a sale.
If you flip this around, you could find that your website might be less if there are added complications with a potential sale. Here is a list of the things to consider when it comes to transferring your website.
- Are you able to make a straightforward change in website management?
- Will all systems be in place for an easy transfer? Even if this means that this new team will be in charge of the day-to-day changes of each website and business?
- Is your website built through an open-source CMS, that has the potential to be easily developed by a new team, or is it built up on a customer platform? Sometimes, if a website is built on a customer platform it might be difficult or even expensive to migrate away from support in the future.
- Are the website’s customers being brought into the business itself, or would they have bought into the owner and company executives?
There are plenty of factors that play a large role in these considerations, but the bottom line is that the easier it is to transfer each website to new owners, the quicker and better the deal will be. Additionally, it will be easier to command a higher asking price. Simply put, disruptions and issues cost money, and the more ways that this can be avoided, the better.
Are you wondering what the future market opportunities look like for your website? Have you taken your website to its peak growth? Or, do you feel as though there are opportunities that still exist making it easy to drive revenue and expansion?
Again, each website has countless growth opportunities and is highly likely to attract a higher valuation than one that has maximized these opportunities. This rings more true if a website’s current foundation and processes with future investments just in marketing alone.
In terms of monetizing your website, this will have a large impact on its final evaluation with a buyer. If your website relies on a single method, it may be seen as high risk, because sometimes unexpected changes may occur. If you are a site that combines various revenue streams it is usually seen as less risky in terms of investment, and can usually ask for a higher price.
Future Competition for Your Website
In order to maximize the value of your website, you may be asked to sign a clause of non-competition, which is made between the buyer and the seller. This contract will state that the seller won’t launch a new business website, or business, that will compete directly and cause problems with the website that was just sold.
Many of these contracts are rarely indefinite and will always be negotiable. All one needs to remember is that preparation before entering into such an agreement will absolutely boost the value of the website. Think about it like this, the buyer will want to pay more in order to protect their investment.
Ways That You Can Increase the Value of Your Website
Increasing your website’s value before selling it is the million-dollar question that most sellers are asking. Here are some tips that we can give, allowing you to optimize your profits.
Switch up the traffic sources- It should be your key focus when building up your website’s presence. Diversifying traffic sources is the best option. If your business is able to demonstrate that your website has a strong percentage of new customer views from organic searches instead of paid sources, then the price skyrockets. This will show that your website depends less on paid traffic, which is highly beneficial. Sure, organic traffic isn’t immune to every algorithm update, so the importance of multiple traffic sources becomes imperative. In addition, building storm social media presences and key email lists need to be built, in turn, driving up views.
Securing different social profiles and domain variations- Your website is worth more when your business owns plenty of domain variations, on top of social media profiles that relate to each domain. Trust us, it will be detrimental to your business if you’re speaking with a potential buyer and they find out that others own the .com or .us domains of your website. Remember, it’s all about the complete package and making sure your buyer feels secure in their purchase and future revenue.
Building a brand that has a stellar reputation- There’s a difference between selling a normal website and selling a complete brand through a website. When you are building a brand, you will also be building a reputation, which will need to be a positive one in order to ask for higher prices. If you can show potential buyers that they will be paying for a quality brand within a website, instead of just a website, then you will be in a far better position to increase the price.
Purchasing a brandable domain or grabbing a premium domain- Yes, this may sound simple but sometimes a .com isn’t going to be the best option for buyers. The domain matters, whether that be a .com, .net, or .co. Each domain needs to be able to be branded, and it will vary for every buyer.
Diversifying the methods for monetization- If you find your website having different streams of monetization attached, then you are minimizing the risk for any buyer. With this minimal risk, you can increase the asking price for your website.
Some of the Best Tips you Could Use to Sell your Website
There are countless things one can do to make their website sale go smoothly, and here are the most important tips.
Being prepared and ensuring that all information that is needed for the buyer can be presented and discussed around the sale. It is important to be able to speak freely when making a sale and having the ability to answer all questions asked. The seller will need to prepare access to analytics, or be able to send reports, of all earnings made from the website.
Using a network is the best option for selling your website so that your website is not up for open sale on different markets. Reaching out to the key contacts who can aid in selling the website, discussing in private the next steps, and then seeking out those who are interested.
Being responsive to all that reach out regarding your website will help load in the selling of your domain. If a buyer wants to purchase your website quickly, they will want things to be as fast as possible, including your replies and answers to any logistics questions.
If You Are Looking into Purchasing a Website, Here are Some Tips That You Could Benefit From
If you have a website and are finding yourself wondering how you know you’re making a sound investment, then these tips
By digging deep into the history of each site, the more you will know. As a buyer, knowing the site’s history will be ideal because that will give a great insight into the risk factors that could be present. Be sure that speaking with a specialist to analyze each domain’s performance from both an SEO perspective and organic perspective will speak volumes.
Chatting with the website team will be highly beneficial before purchasing the domain. Seeing if the team will offer support, and if the website can be easily changed is going to speak volumes about the long-term investment of each sale. The chemistry within each website’s team can be the factor that will make or break future success.
Analyzing a website link-building tactics is another important tip for those interested in purchasing a website. Who wants to buy a website that has been using black hat link-building tactics? You don’t want to be a part of this, and then find three months down the road that your website is highly impacted by changing algorithms. If you believe this is the case with any websites, you can hire a specialist to run full link audits before purchasing. If there are any concerns that come up, you then are able to speak with the website sellers and deal with anything that needs clarification.
Now’s the Time, Sell Your Website Today and Do it Right
It’s no secret that buying and selling a website is a small feat, but with the information in this guide and the tips we have given, it can be made easier. This is an exciting time for the buyers and the sellers, which will most likely result in great things for both sides.
The main idea is that one must understand how to place a value on each website, which is very important to do correctly. Initiating key conversations with the sellers is a crucial process, and asking for the best price from the buyers is just as important.