Are you an online entrepreneur? If so, then one of the hardest and most significant business decisions that you will ever have to make in your career is to decide on selling your website. Before you eventually sell it though, have you thought of valuing your website or finding out the website worth?
Often people tend to create a website with the sole purpose of using it as an additional source of income, without realizing the fact that website valuation is highly necessary and a part of the job. However once a selling deal is through, even if they realize that they didn’t get the accurate price or a proper value for the website, there would be no point to revert. Hence, what is necessary is to conduct the process of website valuation from the very beginning to avoid an unsatisfactory deal.
Determining website valuation is important before selling
For all Internet entrepreneurs selling their website is a business venture of high importance today and hence they lay a lot of attention on determining the website worth as well as keeping a focus on the website financials.
Often when a website is done with the primary purpose it was supposed to serve, the website owner starts feeling that it is high time to sell it off. He may also be guided by different entrepreneurial directions in which he may want to move at that point of time. Otherwise, the owner may also think of selling it off if a site is only partially able to fulfill its original purpose. But there are a number of steps you need to consider before selling off the website. The most important of these is doing a proper website valuation in order to decide on the website worth.
Start by asking a question: how would you put a price tag on your website?
The experts are of the view that there are no precise ways or concrete formulas for determining exactly site worth or valuing websites. In fact, a lot of people in this business say that doing an accurate website valuation is nothing but a judgment call and depends on the situation. Hence it is obvious that all parties involved in a transaction may not have the same views as far as the site worth is concerned.
Common ways of determining website valuation
However, there does exist two specific ways in which one can try and evaluate a website and decide on its website worth. These two website valuation techniques are discussed here:
- The first technique is to consider the multiple of the profits and gains that the business brings in terms of website financials. A straight formula for website valuation is used in this case. The net profit of the site is brought into focus. 10X the net profit is taken to be the lower level bottom foundation of the ROI element in the total website financials. This website valuation formula for deciding a website worth is however too simple.
- The other factor for site worth calculation focuses on the cost involved in duplicating the site. In this process the site worth is decided on the basis of the assets and the inventory a website has. In case of a site the inventory in general comprises the quantity of images and content on the site and their quality, the applications that are bought, the customer list database and the scripts. The number of subscribers a site has also helps in determining the website worth.
Other factors for determining website valuation
Other than the two primary site worth factors mentioned above, there are a few others that can also help in calculating the website worth properly. These are the following:
- Considering the stature of a website in the industry and also taking into account its position as a brand name can help decide on the website worth. It is obvious that a business with an established brand name will have a higher website worth than a site that is not that well known.
- Target audience that a particular site caters to is also another significant factor that helps in calculating and determining website valuation.
Another element that helps decide on proper website valuation is the domain name of the site. Often buyers do not pay any heed to the current content on a site, all they look for is the domain name. Sites with their domain names in the keyword.com format have a higher website worth than those that have domain names in the form of keyword_keyword.com.