If you’re an investor then you probably know how to value a startup, stock, business, company or whatever it is. But the valuation of web properties (and blogs) is entirely different when compared to a real business.
Okay, I’m NOT going to review any of those stupid website valuation tools or free domain appraisal services as they’re completely absurd. They all value a website based on Google PageRank and Alexa Traffic and show inflated traffic estimates based on that. At least they could have used SEOmoz stats while valuing a domain name and its link profile but they don’t.
[quote]The only person who could value your domain or website is you![/quote]
You decide whether to sell or not. If someone offered X dollars for your website and you think that your website will be able to generate more income than that then it’s not a good idea to sell!
Why You Should Value A Website Before Buying/Selling
No matter if you’re a buyer or a seller of a website, you should know how to value it, right? Now, why do someone buy a website from you? Well, it’s simply because your website have some value and someone wants to buy it since he don’t want to build it from scratch. A website’s value depends on its traffic & traffic growth, revenue & revenue growth, type of website (blog, services, e-commerce etc.), domain name & its age, link profile, third-party stats (Alexa Traffic Rank, Google PageRank, SEOmoz profile etc. to some extent) and of course its brand name.
(Buyers) You Shouldn’t Buy A Blog…
Let me repeat it once again. You should never buy a blog unless it’s got commercial value. It means you should buy a ‘business’ and not a ‘blog’. Weblogs are just personal journals and is popular only because of its author and his/her effort. If you buy someone else’s blog (even if it’s making hundreds of thousands of dollars a month) it’s more likely that the earnings won’t sustain for long time.
The best example is NetBusinessBlog.com which was started in January 2007 (the year I became serious about blogging). It was a popular Internet Marketing blog at that time and was sold for $13,000 in the same year. If I’m right it had some 25,000 RSS subscribers. Today, the blog is dead and is parked.
Buying & Selling Websites: What Factors Should You Consider?
Your domain name is the face of your online business, right? So, how good is your domain name? Is it short, easy-to-remember, brandable, and moreover a .com? If so, then it deserves a premium.
Search Engine Optimization (SEO) Value
How good is your website’s Search Engine Optimization (SEO) profile? If it’s a blog then are your blogposts in Top 10 if you search the title of your posts in Google? If so, then it must be performing well on search engines or at least have the potential to perform better.
Traffic & Its Source
Now, where does the traffic come from? Is it mostly search engines (organic/paid) or referral or direct traffic? If it’s mostly search engine traffic then your website must be performing well on search engine results page (SERP) and can be monetized easily according to your website audience as the most quality traffic comes from search engines and not from referral sites or social media. Also, how’s the traffic growth? Has the traffic improved constantly over time?
Now, how about your website’s profile? Does your site have a good Alexa rank and a natural PageRank or is it manipulated by buying paid links and posts? Also, how about the SEOmoz metrics – domain authority, page authority, backlink profile, search engine rankings etc.
Monthly Revenue & Source
Monthly revenue is perhaps the most important factor that someone considers when buying a website or a business or anything. Everyone follows one simple thumb rule to value a website or a blog. If the asking price is less than or equal to 6 times its monthly earnings then the website is already sold. Otherwise a reasonable valuation would be 10 – 12 times your monthly earnings.
Now, where does the revenue come from? Is it advertising, donation, subscription, products, or services? Has the revenue also improved consistently over time?
If your website has registered members then they have a ‘customer value’ as they keep coming back. For example, Facebook. The valuation of Facebook was over $100 bn at the time of IPO (which is 100 times its annual earnings).
If your website’s 80% traffic is from search engines then what is its value? The simple method to identify the traffic value is by finding the top keywords that is driving traffic from search engines and analyzing its Cost Per Click (CPC) value from Google AdWords Keyword Tool.
Let’s say, your website for sale is related to “payday loans” and you’re getting monthly unique visitors of 1,000. Let the average CPC for keywords related to payday loans be $1. So, it means that your monthly traffic is worth $1,000.
Okay, now how about the content and its quality? Are they poor, unique or completely original? If it’s of low quality then it doesn’t deserve much valuation as future search engine algorithmic updates may penalize it. If it’s original then it’s more likely that it will perform better with each algorithmic update.
Rebuilding From Scratch
Okay, the final valuation method is rebuilding the website from scratch to where it is now. So, you need to assess the cost to build the website once again from scratch. That is, from designing to content creation to time factors to marketing. In short you need to analyze the effort, time and cost required to create the website again. And don’t forget to value your existing backlink profile as a natural backlink from an authority domain in your niche is priceless.
What’s Your Website Or Blog Really Worth?
Flippa (most popular marketplace for buying and selling websites) offers a free website valuation tool. But again, it’s not reliable and shows somewhat weird stats unless we enter traffic and revenue information. Once we enter the traffic and revenue stats it gives better valuation. From my analysis I noted that they’re just valuing websites based on its earnings (i.e. 9 – 18 times its monthly earnings).
Okay, So How Do We Value A Website?
It’s very simple to get an accurate valuation, thanks to Flippa itself! How? Well, you can use the Flippa Advanced Search and track the listings which have been sold which is the best way to value your website.
1. Filter The Flippa Listings
First, enter the keywords (the niche of your website for sale) and filter the Flippa listing to match the profile of your website (make sure that you selected “Won Listings” under “AUCTION STATUS”).
2. Analyze The Won Listings
Analyze “Won Listings” in the search results and find the website which have similar profile as yours like domain age, PageRank, visits, revenue, Alexa rank, link profile etc.
It’s as simple as that!
Now, Where To Sell Your Website
Okay. You want to sell your website or a blog, right? So, where should you list your website? You can list your website on marketplaces (buy & sell), forums, or using a “for sale” banner on your website. Let me review the most effective ways to sell your website/blog.
Flippa is the number one marketplace for buying and selling websites. It is a dedicated website for buying and selling websites (supports escrow) and have over 200,000 registered users with thousands of users online at any instant. It’s among top 1,000 sites according to Alexa. Since there’s a listing and success fee only serious sellers uses Flippa. The listing fee is $29 and the success fee is 5%.
According to Flippa,
Over $400,000 worth of websites sold weekly (examples include Mark Zuckerberg’s Facebook predecessor Facemash.com as well as Retweet.com, s9.com, and Qwitter). More than 4,000 bids for websites are placed each week. Over $60,000,000 in websites sold since we started.
If you own a good brandable domain name then you can consider Brand Bucket. If your domain name is awesome then they will list your domain with a professionally designed logo and help you get it sold. They accept and offer only quality (short, memorable, non-keyword, brandable) domain names. It’s like a marketplace for creative domain names only (unlike a Sedo, Pool, Namecheap, or a GoDaddy).
Digital Point Forum [Free]
Digital Point Forum have over 500,000 registered members. You can list your Domain Names for sale or Websites for sale there for free. It’s a perfect marketplace for selling blogs, niche websites, domain names and websites whose value is less than $3,000.
NamePros is a community for domain name owners. They have a Domain Name Marketplace where you can list your domain names for free. Domain Names for sale are categorized as Fixed Price, Auction, Bargain Bin (priced less than $20), ccTLD Domains, etc.
You can buy and sell domain names/websites at WebsiteBroker marketplace. It is free to browse the websites for sale but listing (standard) costs $9.95 for 90 days and premium listing costs $14.95 (domain names) & $29.95 (websites) which gives more exposure for your website. There’s no commission for successful sale of domains or websites as all you pay is the initial listing fee.
Image Credit: Free Digital Photos