What Is My Website Worth?

Website ValuationIf 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.!

  • Christopher Arnfield

    Hi Travis,
    Thanks as ever for your reply.
    Regarding the sandbox, Mr Cutts himself, no less, has admitted that there is such a thing and that it does exist. He would not elaborate however!
    I did say that new sites would be subject to it `up to` 6 months.
    I have read a number of instances on forums recently, where perfectly good domains/sites have been set up absolutely in accordance with every possible nuance of Google requirements, yet they still do not appear in the SERPs for, lets say, 2 months.
    It seems that most of the SEO experts feel that this has been introduced by Google because of all the crappy mini-sites that proliferated not so long ago in the Adsense boom.
    Basically, they are giving themselves a bit of time to evaluate new sites. Do not misunderstand me in this respect, I entirely agree that the situation where one page sites were being thrown up everywhere leading to frustration for searchers, could not carry on and consequently, Google stepped in. I just think that having read all the comments from newbies who have bought some report or ebook/video about building sites and monetizing them, only to find they are not even listed for ages, it needs to be made clear from the outset that building websites is no longer just a case of powering up Ewisoft or Fantastico and throwing up a site and expecting it to appear on page 1 of Google tomorrow morning!
    Unfortunately, our self-styled `gurus` have engineered this myth to sell their various reports, ebooks/videos etc.
    One last mention. Thanks for the links to Ryan Malone`s website. It was very helpful and gives a slightly different approach.

    Regards

    Chris

    • Travis

      Chris:

      You make a good point when you say you cannot launch a site and expect it to show up on page 1 of Google tomorrow morning with some exceptions. I have launched GEO-based websites where they ranked on page 1 within 48 hours. Granted, they typically fall off of page 1 after a few days and then as the site ages it shows back up again. I suppose you could call that period a “sandbox.”

      I guess the bottom line for me is I don’t worry about all this stuff. When I build websites I only build quality stuff and I’m in it for the long run. I could care less if it takes my sites 2 months or 1 year to start ranking. I know in the end I will dominate my niche and will have a great asset to hold or sell:)

      The whole sandbox stuff is only a concern for those that think short term.

      Travis

    • If perfectly good domains were setup properly but didn’t appear in SERPS for months, blame that on the six year olds doing the SEO, not on the sandbox 😉

      It’s very possible to get ranked overnight for non-competitive terms AND to hold a decent ranking without falling off the fresh content cliff. If one knows how. It ain’t no myth and I don’t sell no stinking ebooks 🙂

      • Travis

        What he said;)

      • Christopher Arnfield

        Yes, I agree that the key is to find non-competitive terms. The point I was making was directed at those who are misleading novices into thinking that they can get a domain, set up a WP blog, post some articles and expect to be sat at #1 in Google next day and be earning thousands of Dollars/Pounds in Adsense or Affiliate earnings.
        The trap they fall into is that they look for a search term that is getting thousands of searches and try to compete!
        Incidentally, I was not intimating that you were selling these systems or eBooks, just that there are a nucleus of self-styled `gurus` who proliferate this type of junk.

        • Travis

          Chris:

          I agree with everything you are saying. Making a living online is no different than making a living offline – it takes work:) And there is no doubt there are a lot of “gurus” out there taking advantage of newbies, which is unfortunate.

          Travis

      • Very true. I had several websites and it never took me as long as 6 mts to get out of sandbox. My 4 days website is already indexed in google. If you use wordpress witch is loved by google and decent ping list than you will rank overnight for not only non-competitive keywords.

  • Christopher Arnfield

    Thanks for the replies. Just to reiterate, I did say that i would be building a site around the domain. I am not naive enough to think that just throwing up some site on an aged domain will be the panacea!
    My source has been known to me for a long time and I know from checking the domains that they have not been dropped and have had continuous registration since inception.
    If you are saying that given the choice between a brand new domain that will certainly be sandboxed for up to 6 months and a domain 10-12 years old with verified Page Rank and links, you would choose the former, I may be looking for advice in the wrong place.
    Regarding the website evaluation services available I have yet to find one reliable enough. The online calculators are a joke and most of the self styled experts in this field are charlatans masquerading as brokers. My 8 year old grand daughter has as much idea!
    It seems to me that it boils down to traffic and earnings that influence the value of a site. Mere potential will not necessarily bring the rewards that would make it a viable business.

    • Travis

      Christopher:

      I can’t speak for Clinton, but I don’t think he’s saying he’d choose the former given your specific scenario. Of course you would take the aged domain with VERIFIED PageRank and backlinks over a new domain. I think all Clinton was saying is that you have to be careful with aged domains because sometimes the PR isn’t always what it is claimed to be. In your case, it sounds like you don’t have to worry about this – which is great.

      I do want to disagree with you, however, regarding the sandbox issue. I have built many sites over the years and I can honestly say I don’t think any of my sites have been sandboxed. My sites will typically start ranking for various keywords within a month or two – and that’s building from scratch on a brand new domain. I’m not saying there isn’t a sandbox. I’m just saying I don’t think you can say that new domains “will certainly be sandboxed for up to 6 months” because that’s not true.

      Travis

  • Travis, thanks for the mention of ebizvaluations. We do also have a valuation section on our forums where buyers/other sellers provide feedback on a site’s value and how it could be improved prior to sale.

    Christopher, “very old PR sites” is a market heavily exploited by scam artists selling dropped domains. If a domain has ever dropped (expired and then reregistered) there’s a high chance it has zero PR but is still showing old PR on the Google toolbar … till Google next updates the publicly visible PR. Further, even if it doesn’t lose PR, the chances are Google is aware it dropped and will treat any site you create on it as a new site i.e. you don’t get any of the age benefit 😉

    • Travis

      Clinton:

      No problem. Your evaluation tool is pretty good so it deserved a mention. And thanks for giving Christopher more info on the whole aged domain business. Buying aged domains is all the rage right now and while I think there is some benefit to doing it, I always tell people you still have to build a site and treat it as if it’s new. So many people think all they have to do is buy aged domains and everything else just falls into place. As you’ve pointed out, it doesn’t work that way.

      Travis

  • Christopher Arnfield

    I have a good friend who is also one of the top domain sellers. He has asked that i do not mention his name because he is willing to sell me very old PR sites cheaply to get me started.
    For example, I can have a PR3 (Checked and validated) domain that is 10-12 years old for around $50-80. Having checked Godaddy etc , this is very cheap.
    So what I wanted to know, is, assuming that I build a WP site around one of these domains using say, Thesis theme.
    I personally have a few plugins I like to use, like Platinum SEO, slick autoposter, Google analyticator, Google sitemap generator, All-in-one-adsense and ypn. I also use some cosmetic plugins.
    My plan is to build these sites with a view to selling in the middle of next year.
    I am assuming again, these sites will pick up traffic quickly given the PR and links, and get into the top pages of Google.
    Have you any comments you can add that would help?

    • Travis

      Christopher:

      Buying aged domains and developing them is an excellent strategy and one that can work very well. The only thing I can add (without writing a book…lol), is that to be successful at this you’ll need to still apply the fundamentals – building QUALITY sites with solid content and continue to build backlinks.

      Aged domains will give you a head start but don’t assume just because they’re aged with PR it will be “easy.”

      Good luck!

      Travis

      • Travis, on the topic of buying an old domain and developing it – there’s one kick-ass tip on my forum that stunned even this old pro. Drive by and take a look: http://experienced-people.net/forums/showthread.php/1351

        • Christopher Arnfield

          As a word of warning, I should point out that there has ben what appears to be a policy shift by Google regarding parked domains.
          I had a parked domain, aged 2-3 years old with PR2.
          I had it redirected using a 301 whilst I decided what to use it for.
          I had been tipped off that parked domains on Godaddy in particular were losing their PR.
          I ignored this and parked it anyway.
          I decided this week to start building a website on it.
          Imagine, then, my dismay to find that Google has stripped it of its PR2 status! This confirms what has been rumoured around the `domainers` forums etc.
          You have been warned.

          Regards
          Chris

        • Travis

          Clinton:

          Wow…that’s brilliant! I had no idea you could do that. Aside from the awesome tip, I like the general message of that thread – parking domains is dead! You need to develop domains these days to monetize them to their maximum potential.

          Thanks for dropping the link. It’s good stuff!

          Travis