How to value a website

At some point most of us wanted to sell our websites. The perspective of selling a virtual item for real dollars is very attractive, but most developers get disappointed when facing the website market.

Before Adsense, the perspective was even worse, because not even high traffic websites achieved revenue. Thanks to Adsense, the advertisement serving program run by Google, things have gone better for webmasters, who can now collect some money. This advertisement serving was Google’s and Yahoo ‘s great success.

So, it is all about signing up to Adsense, place a little Javascript on the pages, and start making money. For example, PodcastDirectory.com gets 35.000 dollars per month for Adsense, and seatguru.com gets 15.000. Right, the first one has a million hits per month, and the second, 700.000. Humble websites with 400 visits a day (which are not that easy to obtain) can collect 40 dollars per month, luckily and with tail wind…

There is also a theme-related matter. A website in an “expensive“ field, such as medical malpractice, will get more valuable clicks than a website with poor advertisement opportunities, such as a personal blog.. If we multiply the monthly revenue by 18, we will get the approximate value of each website, following a pretty conventional valuation model.

Let’s suppose our site has no Adsense, either because we do not want to damage our image, because the revenue is not enough, or other reasons. Thus, we have a highly visited but profit-less site.¿How do we value it?

Websiteoutlook.com is an online free tool for website valuations. According to it:

PodcastDirectory.com is worth $60580
seatguru.com is worth $70200

This is less than the value coming from the real revenue, but is still pretty good for a website that pops up a number live and free, without asking for anything but the domain name.

See these SEO related sites:

seochat.com is worth $340,000
seobook.com is worth $342.000
webuildpages.com is worth $37,529
seoadministrator.com is worth $23,000
domaingrower.com (this site) is worth $2,379

If I was to valuate a website, I would ask lots of things. Firstly, how the website makes money, its development and maintenance cost, etc. And after offering my valuation to the clients, I would listen to their opinion, and, maybe, basing on it I would adjust my value algorithm.

Analyzing some small and medium size sites, own and from clients, I find that the automatic valuation comes quite close to the real asking price for the developed sites. The predicted values for very large sites (google, yahoo, microsoft, cnn, wired) are not related to real market values, as expected, because many other considerations apply, besides some site metrics.

So, what is this website valuation model based on? In the linked spreadsheet there are some details, as indexed pages, Alexa ranking, backlinks, and the relation between these values.

Website valuation data.xls

Another factor, not taken into account here, is web positioning. Websites positioned for SEO, that allows offering services, should have an increased value. To know, a positioning index should be established for each site for a group of keywords, as the one I suggest elsewhere, and multiply it by an activity-specific rate.

The site itself, WebsiteOutlook.com, has an Alexa rank of 11.000, 370.000 indexed pages, and, according to itself, it’s worth $217.000. The many indexed pages correspond to every search saved in a new page. They double as cache and indexed content.

Having figuring out their algorithm, we should be able to duplicate their valuable site, improve it, and also calculate the increase in value of any client website enhanced by SEO (Google ranking) and Domain Development services. Is is also a nice tool to establish link value, predict traffic and check the value of promotion campaigns.