Have you ever wondered how much is your website estimated worth at any given time? As a part of any business, we have assets that generate revenue or asist us in our daily tasks or in our business goals. And our websites are also assets.
Some generate revenue, through eCommerce, ads, or affiliate programs. Others generate awareness, like commercial pages and landing pages. Either way, they are worth something, and as with any other asset connected to our business, we should know what that worth is.
Also, calculating the worth of a website works differently depending on the nature of the said website. For example, an eCommerce shop is called based on the sales it produces each month A platform promoting ads is valued based on its ad sell potential.
Finally, promotional websites that do not sell goods or services, and do not support ads are always valued based on their estimated potential. But what does this all mean for your business?
Estimated worth based on earnings
eCommerce websites are quite often valued around 24-36 times their monthly earnings. Meaning, if your website profits around 7000$ monthly, the estimated selling price could circulate between 160 000$ – 252 000$.
This calculation, of course, does not include the time and money invested in building and marketing the website or the traffic it generates. This is just to have an overall idea of how much your website is worth.
Estimated worth based on ads potential and website rank
As a non-eCommerce site, there are other ways to generate revenue, ads being just one of them, so instead of looking at earning, there are other factors taken into consideration in the estimated worth calculation. For example, how much visitors does the website attract and whether the monthly traffic is paid or organic, where organic traffic is a logically better selling proposition.
Another factor taken into consideration – which is highly influenced by organic traffic – is your website rank or traffic rank. Put it this way, if Google sees you have a great amount of traffic every month, including those periods when you don’t run ads, it will think of you as a high authority and rank you accordingly.
Needless to say, the higher your website rank, the more valuable your site has.
Finally, your domain is also a crucial part of your estimated worth. Even if your website is new, and not really highly ranked, you may still have a gold mine on your name if, by luck, you got your hands on a really valuable domain name. For example, domains close to well-known brand names can be desirable for top-rank businesses looking to avoid typosquatting.
In contrast, if you have a really well-optimized website but your domain is hard to remember or it sounds unappealing, your worth might be dragged down, simply because advertisers won’t see your potential.
What affects the website’s estimated worth?
As a business and website owner, you should learn how to optimize your website to appeal to the potential buyer’s desires and increase your market value. There are three main key motivators that influence a valuation from your potential buyers’ perspective – risk, potential, and transferability.
You need to keep in mind that not all valuations are equal. Also, there are formal and informal evaluations. The formal category includes a loan from a bank, partnership litigations – simply said legal valuations. The informal valuations are not legally binding, yet still bring value in the form of insights into your business, market position, and help with the future selling process.
Market value vs. Owner anticipated value
As we said, there are many tools available that calculate the website estimated worth for you. Most of them claim to have top dollar accuracy, however, you should lower your expectations when getting these estimations since the tool does not buy your site, the buyer does.
A lavish formula usually gives you a solid amount for your website, but there is no buyer behind it waiting with a bag of money, therefore the formula is useless if your buyer is not willing to pay the price. Your goods, in this case, your website, as worth as much as the market is willing to pay for them. You cannot rely on the tools rather than on potential buyers.
The main objective when getting an estimated worth evaluation is to foresee what would your website’s value be in the marketplace and then using the numbers as a ballpark amount of what you should expect from the buyer. This is what we call the market value.
Another important side of the coin is the value of the business owner. As mentioned, the estimated worth valuation consists of two parts, the marketplace value, and the owner’s anticipated value. Simply put, the price the market might be willing to pay for your website might not meet your expectation.
The goal here is to somehow merge the two values and come to a consensus that would make you happy and you would still find buyers.