In online business, websites are also known as digital assets. A website is just like an online real estate. Every website has its own market value and ranking. The measurement of valuation is mostly used in website flipping business.
What is actually website valuation :
The calculation of a website profit by analyzing its traffic, sales, ranking, an entity is known as the valuation of a website. The more money it makes, the more valuable it is. Before selling a website, it is the essential process. If you are a website broker, then you should thoroughly understand the valuation of a site.
You should always perform a website valuation to determine how much your website is worth. There are several factors which are considered (increase or decrease) when calculating the estimate of how much the website is worth :
Website Business Model:
First of all, The profit of a website is dependent on its business model. How your website makes money. A business model is based on monetisation. A different business making methods makes your site more valuable.
Leading business models of a website :
- Content website
- Advertisement
- Affiliate And Product Review
- Membership
- SaaS Product
- E-Commerce
- Digital Products
If you own a content website, then what type of content your site have :
- Blog/Articles
- Directory
- Review Site
- Sponsored
Web Traffic and Alexa Ranking :
Web Traffic and Ranking factors measuring the website valuations. The higher the quality of traffic the higher the quality of the website. Alexa Ranking depends on SEO and customers engagements, sessions etc. Web traffic is measured by analytics tool like Google Analytics.
Domain name & entity :
A website is recognized by its domain name. A branded name is much valuable than a simple name. Professional brand names are easy to recall and remembered by peoples. So, before buying and selling, domain name should be valuable.
Website Authority & Age :
Website authority shows how much old is your site, how much its strength over search engines. The above factors affect the website valuation in several conditions. Sometimes, website traffic is not much higher, but their sales can high.
Calculating a website valuation :
Let’s take an example: we own a running website named Example.com which is 1 year old and have affiliate products. Our site receives 2800/Day Visitors and makes $4000/monthly. So our Gross Profit is $4000/Monthly. Our site expenses are Hosting and Software charges.
Hosting Cost: $ 65/Month, Other Software Charges: $70/Month
So, our total monthly costs become $135.
Website valuation is measured by its net profit. The valuation is also measured by a formula :
Net Profit = Gross Profit – Operating Expenses
Net Profit = $4000 – $135 = $3865 X 12 months = $46,380/ Year
So our Total Net Profit is $46,380 in 1 Year. So, we can sell this site at more than $80,000+.
Website Valuation is useful for bloggers and web entrepreneurs who wants to buy and sell profitable sites. Every web niche have different type of profit :
Most Profitable Web Niches :
- Personal Finance
- Health and Fitness
- Entrepreneurship and Leadership
- Startup and Business
- Motivation and Personal Growth
Website Future Growth & Vision :
If you run a small startup website, which have SaaS product, but you haven’t any vision and future planning. In future, your web business value may be lost. So, before buying and selling a website, future goal may be an important criteria.
Conclusion
Website valuation is based on web business model. Before selling and buying a website, you can measure the valuation and net profit of business. If you have any idea about web valuation topic, share with us in comments !!
