If I had a dime for every email I get with that question I would be rich…lol. O.K., I’m exaggerating a little but I do get asked this question a lot. It’s the first question that comes to mind for Internet Marketers who are looking to sell their first websites. Fortunately, the answer isn’t nearly as complex as you might think.
Before I discovered the Internet Marketing world I was in residential real estate. There is a saying in real estate: A home is worth what a buyer is willing to pay. That’s the answer to the question – your website is worth what a buyer is willing to pay!
The real question then is, what can I expect a buyer to pay for my website? Now we’re getting to the meat of the matter. There are websites that will give you estimated valuations of domains and there is even a website that will give you an estimated value of your website (not just the domain as most websites do). You can also hire a website broker to evaluate your website. These are great options, but how good are they and do you really need them?
Most of those automatic valuation tools are notoriously inaccurate and savvy buyers will ignore the valuations those tools spit out anyway. Hiring a website broker is the best way to get the most accurate valuation but it’s expensive to hire a broker and most won’t look at a website unless it’s worth several thousand dollars (i.e. a well established website with lots of traffic and revenue).
I argue that you don’t need any of those tools or a website broker to determine the value of your website. If you want to get all technical and business-like about it, then spend time looking through the past website sales on this site and browsing the solds on Flippa. Look for websites that have sold that are similar to the website you have in terms of the niche, age and quality of the domain, traffic, and revenue. You’ll quickly discover this is a lot harder than it sounds as websites are so unique that it can be difficult to find more than one or two websites that are even close to what you have.
I don’t do any of that. I try to make everything I do online as simple as possible and so far it has worked for me. People always want to over complicate things. My motto is K.I.S.S. – Keep It Simple, Stupid! Here is how I evaluate my websites…
Determining The Value of Established Websites
For starters, I only sell established websites so I can’t comment on how to evaluate a startup website but it’s pretty easy to do as most startup sites get anywhere from $100-$500. There are two categories of established websites – those that get traffic and make very little money (if any), and those that get traffic and make good money. I’ll evaluate the former first.
If I have an established website that gets traffic but doesn’t make much money at all (if any), I ask myself if I’m going to do anything to improve the revenue. If I’m not going to make an effort to improve the revenue, then I ask myself how much money I have invested in the website in terms of design and development costs, content generation, promotions, etc. If the figure isn’t that much – say $500 – I’ll sell it for whatever I can get for it and hope I can at least get my investment back and if I don’t, well at least it’s something!
If that figure is really high and I know I’ll never be able to sell it for that price, then I ask myself could I live with myself if I got only half of my investment back? If the answer is yes, then I’ll sell it on Flippa with a reserve of half the amount I have invested in it. If the answer is no, I don’t sell it. I either sit on it or I’ll make it a point to put more effort into it.
Now let’s talk about the other type of established website – the one that makes good money! Here’s the process…
Before I go any further, it’s important to point out that not only do I only sell established websites, but I only sell when I am bored with a site, haven’t worked on a site in months, or simply don’t have time for it anymore. O.K, on with the process…
First, I determine what the site NETS every month and then I ask myself, how long do I realistically think this site will continue to make this amount of money if I don’t work on it again? Because I’m a SEO guy, I’m always nervous about search engines algorithm changes so I estimate conservatively. I’ll usually estimate that I can maintain the income for 6-9 months – MAYBE one year.
Now the question is, do I want that money upfront in one lump sum, or do I want the passive, monthly income over the next 6-12 months (and possibly even longer)? I always want the money upfront because, again, I’m a guy who lives and dies by SEO so I don’t like to gamble. I’ll list the site with a 12 month reserve and see what happens. If it sells, then great!
If it doesn’t sell, then I’ll assess the bidding. If the highest bid was only 10 months revenue, then I might relist it and lower the reserve accordingly. If the highest bid was only 6 months revenue, then I’ll just hang on to it and enjoy the passive monthly income for as long as I can.
Bottom Line When Determining The Value Of Your Website
The market will ultimately determine what your website is worth and what you’ll get for it, but it’s up to you to determine what you’re willing to let it go for. You don’t need fancy tools or an expensive broker to determine the value of your website.
If you have a startup website with very little traffic and revenue and a domain that isn’t exactly premium, you can expect to get $100-$500. If you have an established website, who cares what you’ll get for it. The question is, what are you willing to let it go for?
The answer to that question will depend on your personal situation, your risk aversion, your investment in the site, how much it’s making, what your plans are with the site, etc. Once you have an answer, then list it with a reserve at that price and see what happens. The market will tell you if your asking price is fair or not. Once the market speaks, then you can decide if you want to keep it or relist it at a price that is more in line with the market. K.I.S.S.!