If you are asking yourself this question they you are maybe thinking about selling your website. Or you want to know what your website is worth so you can make the choice to sell it or not.
Let’s be clear here. The parameters of this argument are a valuation based on what a buyer would be willing to recompense you for your website. And those parameters are defined by sites that are owned as businesses or investments, not client’s websites.
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Now traditionally the value of your search engine rankings has been considered by the traffic amount x the adwords CPC. Market Samurai calls this their SEOV (SEO value) metric.
A simple method would look something like this:
Traffic x CPC = SEO Value
And example might be for Boston Injury Lawyer.
2000 x $40 = $8,000 per month.
Why Traditional SEO assessment is wrong
In the context of selling a website the traditional assessment of traffic x CPC is not relevant. Value is derived specially from profit generated by your website. All the assets combined generate profit and it is that profit that has value. In simple terms, your domain + traffic + content + your income do not equal your websites value.
Let’s state you had a website called howtomakemoneyonline.com and it was ranking number one for “how to make money online”
SEO assessment
Hypothetically. Let’s imagine there are 40,000 exact match searches for “how to make money online” at a CPC of $4.00 and that is the only keyword that you rank for. Assuming you are getting 40% of that traffic ranking number one in Google. Using traditional SEO value the website is worth $64,000 per month in SEO worth traffic value.
Website valuation method
Let’s say that the similar website generated $100,000 per year in profit from advertising and affiliate profits.
If you applied a multiple of say 2.5 times to that website the assessment would come back as $250,000.
One would argue that the website is worth $64,000 per month because of the traffic value. The details are that from a website buyers perspective the profit that site can make is what determines value. So they value the website at $250,000.
Tips When allowing for Selling Your Website
By definition, you should really be viewing your website as a business because that is what it is, an profits generating asset that generates income and profits.
So if you are thinking of selling your website then let’s canvas some website selling factors.
1. Make Your Traffic Defensible
Buyers want to reduce their risk when investing. Their main goal is to get a return on asset. The more risk an asset class the lower they are going to pay. Hence why government bonds are seen as the safest investment (lowest return). Generally buyers look for diverse income and traffic. That is why your traffic must be valid. This is summed up well by Matt McGee. As Matt points out having defensible traffic means having a range of sources including search, PPC, social media, direct traffic. This is a big challenge for search based sites that rely heavily on search engine traffic. Especially with the recent Google updates sites that had great value a few years ago have been completely wiped off the map and have no value today.
2. Establish a Selling Price
Do you really know what your website is worth? I’m sure you have some idea but there is usually a big difference between what you ‘want’ to get for your website and what you will ‘actually’ get for your website.
Traffic x CPC = SEO Value
And example might be for Boston Injury Lawyer.
2000 x $40 = $8,000 per month.
Why Traditional SEO assessment is wrong
In the context of selling a website the traditional assessment of traffic x CPC is not relevant. Value is derived specially from profit generated by your website. All the assets combined generate profit and it is that profit that has value. In simple terms, your domain + traffic + content + your income do not equal your websites value.
Let’s state you had a website called howtomakemoneyonline.com and it was ranking number one for “how to make money online”
SEO assessment
Hypothetically. Let’s imagine there are 40,000 exact match searches for “how to make money online” at a CPC of $4.00 and that is the only keyword that you rank for. Assuming you are getting 40% of that traffic ranking number one in Google. Using traditional SEO value the website is worth $64,000 per month in SEO worth traffic value.
Website valuation method
Let’s say that the similar website generated $100,000 per year in profit from advertising and affiliate profits.
If you applied a multiple of say 2.5 times to that website the assessment would come back as $250,000.
One would argue that the website is worth $64,000 per month because of the traffic value. The details are that from a website buyers perspective the profit that site can make is what determines value. So they value the website at $250,000.
Tips When allowing for Selling Your Website
By definition, you should really be viewing your website as a business because that is what it is, an profits generating asset that generates income and profits.
So if you are thinking of selling your website then let’s canvas some website selling factors.
1. Make Your Traffic Defensible
Buyers want to reduce their risk when investing. Their main goal is to get a return on asset. The more risk an asset class the lower they are going to pay. Hence why government bonds are seen as the safest investment (lowest return). Generally buyers look for diverse income and traffic. That is why your traffic must be valid. This is summed up well by Matt McGee. As Matt points out having defensible traffic means having a range of sources including search, PPC, social media, direct traffic. This is a big challenge for search based sites that rely heavily on search engine traffic. Especially with the recent Google updates sites that had great value a few years ago have been completely wiped off the map and have no value today.
2. Establish a Selling Price
Do you really know what your website is worth? I’m sure you have some idea but there is usually a big difference between what you ‘want’ to get for your website and what you will ‘actually’ get for your website.
Your advertising price is usually based on the following:
Your individual website and it’s unique assets
What parallel websites have sold for before
What the market is currently bearing for web businesses
3. Produce A Selling Document
Commonly referred to as an information memorandum or “the book”. This document is prepared to help sell your website. It includes such things as:
An summary of the website
The fiscal history
Traffic history
Synopsis on how it generates income
Summary of operations (what is required to run it)
Profit and Loss statements
Client Interview (general FAQ’s buyers will have)
4. Locating Qualified Buyers
The number one confront webmasters have when trying to sell their website is locating qualified buyers.
There are a few options that you can consider:
- Sell it yourself
- confidential network
- Business classified sites (e.g. businessforsale.com)
- Forums
- Flippa.com
- Internet investment companies (like internetbrands.com)
- Use a broker
- Their list of buyers
5. Don’t Drop The Ball
Don’t underestimate the importance of this fact. Stop looking after your website for a month and you may lose 5-20% of your selling price. Let’s use this example:
6. Buyers Want the Lowest Price: Don’t Let Them Get It
Most business and financial buyers have bought many websites in their profession, while most webmasters have never sold a website.
Get yourself up on the terms used by a buyer. And be ready to keep strong on your asking price. There are a lot more buyers than sellers in the market in general; particularly with the market awareness from flippa.com the market is being educated on the prospect of investing in websites. Educate yourself on the process of valuation and look for multiple offers.
7. How to Keep Your Sale Confidential
If you try to sell your website by yourself you are maybe going to have to advertise it for sale. There is no stopping the fact that customers, employees, suppliers and competitors might find out. If you go around emailing people that your website is for sale, unless you are really sneaky, there is a small possibility that you will be able to keep your identity hidden.
To protect confidentiality, if that is important to you, the normal process is to develop a generic, non-revealing advertisement to send out asking for potentially interested parties to contact you for more in order. As the seller you have the right to screen all those enquiries, so if there is someone that you don’t want rummaging into your business financials and info you can refuse them receiving any further information from the broker.
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