Did you ever wonder how much your website or blog is worth?
A few months ago a friend of mine invested $100 into my website. He has his own company that’s worth several million dollars, so this was more as a joke. But the other day he asked me about his $100 investment, and if it has grown. So I had to figure out a way to give a dollar value to my website. After much research and negotiation I learned a lot. I’d like to share with you what knowledge I acquired.
First here are some factors that come in to play:
Your money and time invested
Revenue and profit
Multiple of Profit
The classic way to determine the valuae of a business is to use a multiple of the profit. Profits is simply: earnings – expenses.
Earnings: determine your yearly revenue. Do so by adding up your earnings from Adsense, Clickbank, Buy Sell Ads, affiliate marketing, sponsored tweets, etc. for each month.
Expenses: estimate how much time you spent building the site, hosting, domain name, marketing etc. for the year.
You can them apply a multiple to the earning which typically varies between 5 and 10 depending on how fast the business growing.
Does it make sense for an online business, website, blog to be valued in such a way? Not always. Look at a site like Twitter that has no revenues and is valued at hundreds of millions of dollars.
If you search “website valuation”, you will find a variety of tools designed to assess a website’s worth based on many different factors. They all use formulas based on on a combination of domain age, page rank, inbound links, Alexa ranking, traffic, indexed pages and compete rank.
As you can see every service has drastically different values. Clearly, online tools aren’t very helpful.
There is another method to determine the value of any product or service and it is simply to ask potential buyers how much they are willing to pay for it. This is why eBay is such great source to find out the value of about eveything.
So you have two options:
Look for a blog or website similar to yours that was sold and for how much. It’s not easy to come across such information, but if you put time in to looking it may happen.
Find a few potential buyers and ask them how much they are willing to spend on your site. Not sure how realistic that is either.