How to Calculate What a Website is Worth
Website Valuation Methods
Your blog or website can be your business. And as with any business, you can sell it for a profit. But before you offer your website for sale, you need to estimate what it is worth so that you don't sell yourself short. There are many techniques for website valuation, but the most important variables in determining your site's worth are its income, traffic (income potential), number and quality of backlinks, domain name, programming, and content.
(1) The first component of your website's value is easy to find, simply look in your records to find the net income from the past 12 months. Compute the total revenue from ads, affiliate commissions, paid reviews, ebook sales (if you are selling an ebook) and other sales. Then subtract the money you spend on maintaining the blog, such as hosting, domain name registration, and payments to your webmasters or writers. Call the net income N.
(2) Next, determine the number of unique page views for the past 6 months and multiply this by 2. This will give you an estimate of 12 month's worth of traffic. Using the most recent 6 months will give you a better idea of current traffic patterns. Traffic is like income potential. Call this number T.
(3) Consider the time you have spent creating backlinks via article directories, blog comments, and agreements with other webmasters. Gaining backlinks from high-quality websites such as news outlets, government pages, and educational portals is a major achievement and something of great value to a potential buyer. You can estimate the value of each backlink to be between $0.50 and $20 depending on its quality and how hard it was to obtain. Call the total value of backlinks B.
(4) Appraise the value of your blog or website's content. This includes articles, posts, images, videos, programs, and anything you sell from your blog (such as consulting services, programs, e-books and content). Call this number C.
(5) Estimate the time and money spent programming and designing your site. The time you spend coding, designing, troubleshooting, compiling, and creating backlinks to your website is worth $25 to $50 per hour. Don't forget to add the value of programming, designing, and backlinking services that you purchased. Call this total P.
(6) Lastly, estimate the value of your domain name. If you own a particularly well-named domain, your website may be worth a lot of money for that reason alone. A short url with a good keywords and a .com ending is worth more than a long domain name with poor key words or a .net or .info ending. Well-named domains can go for $100 to $5000. Call this value D.
Use the formula N + (0.02)(2T) + C + (1.2)P + D + B to compute a rough estimate of your site's value for the past 12 months. This formula estimates about 2 cents per visit ($20 per 1000 visits) and a 20% profit over the cost of programming and designing.
For example, suppose that your 12-month net income is $6,000, your 6-month traffic is 400,000 visits, your content worth $1500, your programming worth about $3000, your domain name worth $400, and your backlinks worth $100. Then your website or blog's value for the past year is about
6000 + (0.02)(2)(400000) + 1500 + (1.2)3000 + 400 + 100
This figure may be low if your website is growing, or your content is unique. Keep in mind that ultimately, your website is worth whatever someone is willing to pay you.
© Had2Know 2010