May I please know how to get an idea of the worth of a website on sale? I mean, if someone like you are selling your sites and I wanted to buy it, how would I get to know its worth?
1. On the basis of content it carries?
2. Upon its domain name or its popularity?
3 Or via Google Analytics?
Good question. It's a bit like saying what mark should a dancer get out of 10 for their performance. People will judge the performance differently and award their own mark. There is no definitive answer.
It's the same with the worth of a website. I'll pay far more than other people for websites in certain niches that fit my existing portfolio. Other people might pay a premium for sites that get traffic that isn't too reliant on Google.
Generally, what profit the buyer hopes to make has a strong influence on the price though. The profit a site is making at the moment gives a clue about what profit the new owner might make. I'd be interested in a site that makes no revenue but that has high traffic volumes if it's in a niche I know about because I have experience monetising that kind of traffic and know what I can get out of it.
To me it's a combination of many different things.
The Domains Age/Authority
The Domains Backlinks
The uniqueness of the content
The coding of the site
The ease of being able to add new content
The revenue
The potential of things I can fix on the site to produce more revenue/traffic
How the site fits in with my existing portfolio
Am I able to finish the project if it needs coding
How much I am willing to inject into links/content to build the site
The uniqueness/profitability of the niche
That's just a few and in no particular order.
Clinton (December 29th, 2010)
I evaluate a domain based upon three factors, which are very similar to any real estate and business:
1) The domain name: this is like the land that someone is going to build a business on. Location, location, location. A good domain name that is easily remembered (like Park Ave. New York), is going to be worth more than one that is not, for the simple reason it is more difficult (costs more money) to brand a name that is difficult to remember and or spell.
2) The technology that is on the domain: This would be comparable to the structure that is on a piece of land. Is the technology easily replicated? Is there some technology moat? Google is extremely difficult to replicate. Groupon is very easy.
3) The business model and the business activity: This would be the same as any brick and mortar business. Revenue, conversion, profit margins, growth, business moats, dominance, etc.
Some of these factors are more easily analyzed than others. The worth of the domain itself is one of the most difficult ones to appraise since there are so many factors and the industry is very opaque. There is no way to get genuine comps (like the real estate MLS), since so many deals are never made public and are only known to a few insiders. NameBio and DNSalePrice provide some assist with comps.
Hope this helps,
Clinton (December 29th, 2010)
My thoughts on valuation are in this thread if you're interested.
Thanks for the link Clinton. I found it very informative.Originally Posted by Clinton
One of the best ways is to look at what similar sites have sold for previously. This concept of comparables is also found in realestate. At the end of the day, its about "what the market will pay" and who shows up for the auction. :-)
Hi Simon, nice to see you back.
The problem many people have with comparatives is that it's difficult to make direct comparisons. We're not talking all identical properties down Acacia Avenue. For one, stats aren't public so even if there have been a couple of website sales in your exact niche you may not know the sales price and certainly aren't going to have access to all the revenue details.
How do you deal with that lack of info?
I spoke at a conference yesterday on that very issue! Stats are easily faked with many people paying for traffic and clicks, and therefore the stats disappear once the transaction has gone through. The only real way is to find out where the traffic comes from. Unfortunately that's a manual, time consuming process.
Income based estimates - if the site has been running for a few months, you can expect to sell it for 10 to 14 months earnings.
If it has been generating consistent income for a year, you might sell it for up to 24 months earnings. But if someone can see earnings potential that you haven't noticed, they might pay up to five years earnings for it ...
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