Websites are valuable assets, but surprisingly many site owners aren’t even sure how much their websites are worth when it comes time to sell.
But how do you know how much your website is worth?
In this article, we’ll explain what affects a website’s value and how you can get started using free website valuation calculators with a case study using the information from a typical content site.
Calculating Your Website’s Worth
There are two main formulas for calculating a site’s value, a cost-based formula and a multiple of the income formula.
Cost Approach vs Income Multiple
The cost approach tallies the costs required to create and maintain a content website,
Costs for a typical niche content site can include the following:
- Cost of individual articles (usually priced per word)
- Cost to edit content and format each article.
- Backlink building including outreach time.
- Monthly hosting cost.
- Cost of tools and addins required to run the site; examples include WordPress plugins and social media management tools.
- Hours required to maintain and grow the website and manage any team members.
- Cost of paid traffic (ad cost)
An income multiple (IM) approach uses a trailing monthly income average (eg previous 6 months) multiplied by a month multiple. See equation below:
Valuation ($) = Multiple x Monthly Average Profit ($)
Of the two, the income multiple approach is the standard amongst website brokers and marketplaces.
What Impacts a Website’s Worth?
Monthly Net Income ($) = Monthly Revenue ($) – Monthly Expenses ($)
A strong net income indicates a healthy site, especially one which is trending upwards month on month.
Traffic Source Breakdown
A site with several consistent traffic sources will warrant a higher income multiple and is less likely to have its revenue affected by a Google algorithm change.
Common traffic sources include:
- search traffic,
- social media traffic,
- paid traffic, and
- email list traffic.
If a site owner can track revenue back to individual traffic sources, it will put a prospective buyer more at ease. Data from an app such as Google Analytics is your friend here.
A high value website will have multiple revenue streams, spreading the risk of one or more being affected by a Google algorithm change for example.
Site History & Age
A quality website is only as good as its pedigree. Be able to show all that you’ve done to your site during its existence (both successes and failures).
Keep a log of all changes that you make to your site. It’s a valuable asset to provide to a buyer.
Site age is also an important factor. Google values a site which has provided useful content over a longer period.
There is a reason why you see “Since YYYY” on brick-and-mortar signs and site headers. People are more likely to trust a site that has been in business for a while.
No buyer wants a complicated and lengthy process when having a site transferred to their control after purchase.
If you can show that your site and all accompanying assets can be easily transferred, with timelines, it will put a buyer at ease.
Sites running on well-known platforms such as WordPress and PHP are very easy to transfer between internet providers.
Many sites use shady SEO techniques including private blog networks (PBNs) and sketchy backlink-building processes to boost traffic metrics.
A site with a healthy backlink profile, increasing consistent traffic, and a substantial number of relevant keywords ranking in Google can boost the site sale multiple.
No buyer wants a site with limited potential for further growth.
Buyers are looking for sites with multiple cost-effective and easily implemented opportunities to grow a website’s traffic and revenue after purchase.
How To Calculate A Website’s Profit and Loss (P&L)
To determine whether your site is making a profit of running at a loss is a simple matter of subtracting all costs from revenue. A spreadsheet is a useful tool to use here.
Revenues should be divided into two groups:
- Revenue from passive sources such as ads, affiliate networks or lead generation. Passive sources, once set-up, require a minimum of your time to generate. They are “hands off”. Add them as-is to your profit and loss spreadsheet.
- Revenue that is more time intensive such as guest posts or sponsored ads. Discount these by 50% to account for time spent on price negotiations, content formatting etc.
Determining Operational Costs
Some common website costs that can be added to your P&L spreadsheet calculation include:
- Domain renewal fees
- Monthly site hosting fees
- Monthly Email Autoresponder fees
- Social media tool fees
- Outsourced content needed for maintenance (content upgrades or rewrites)
- Keyword and SEO research tool fees
- Commercial WordPress plugins costs
- Stock photography membership fees
- Administrative costs such as virtual assistants
Remember to amortize your monthly costs into yearly amounts by multiplying by 12 to keep things consistent.
6 Ways To Increase Your Website’s Value
There are many easy ways to increase the value of your website. Here are a few we suggest:
1. Build Out a Brand
A strong brand, especially one that can be trademarked and grow a fan base on is a desirable moat to make a site stand out in from all too common cookie-cutter niche content sites.
A short, memorable brand name like Screened.com is much more valuable and trustworthy than BestTVsToByIn2022.com.
Always see if the [brand name].com domain is available before building out a brand.
2. Diversify Traffic Sources
Examine ways to expand your traffic sources. If you run, affiliate offers check with your affiliate manager to see what traffic sources or content are working the best for their client.
3. Diversify Income Streams
Are you missing any revenue streams that can increase your bottom line? Like traffic sources, multiple income streams will protect against any unforeseen reductions in income.
4. Negotiate Higher Rates On Affiliate Offers
Affiliate marketing is a popular, mostly passive, revenue stream. Don’t be afraid to renegotiate your existing affiliate rates especially if you can display past solid performance.
Most affiliate managers are paid on a commission basis. Make it a point to get to know your affiliate manager and touch base consistently. Always remember that posted affiliate rates are just the starting point. Strong affiliates can and do request higher payouts.
Also, remember to check across affiliate networks regularly. Different networks offer different rates, even on the same affiliate offer.
5. Create SOPs
A detailed set of Standard Operating Procedures can decrease the resources (especially your time) required to run a website. True passive sites should be able to operate without you being present.
SOPs are extremely handy assets to have when transferring websites. They show that you have a well-run business.
Don’t have any SOPs? A quick Google search can find many free templates that you can easily adapt for your business.
6. Take Care Of Small Technical Issues
Does your website function properly? Look at your server logs for any error statuses (eg 404 page not found) that indicate broken external or internal links or missing pages.
Is the site slow? Any increase in speed will help your conversion rates and can increase your SEO rankings in Google.
Not sure if your site is slow? Use a free tool like Google Lighthouse to measure its responsiveness. It will also recommend changes you can do to make your site speedier.
Make sure that your backups are current and test restoring the data to another site if possible. A backup is only good if you can restore your site from it. Good backups also help with the site transfer after you sell.
What Causes Lower Site Multiples? 3 Issues
There are several site attributes that can be red flags to prospective buyers and can lower a site’s selling multiple.
1. Shady Domain History
A domain with a clean history of high-quality, spam-free content will be a much higher value asset than one that has dropped and changed niches several times.
If you’re not sure of your domain’s history use Archive.org’s free Wayback Machine to check its previous content. Even if you bought your domain “new”, it may have been previously registered and expired.
2. Too Reliant On Individual Traffic Sources
Gone are the days of easy, consistent traffic. All it takes is one Google algorithm change to cause a huge drop in your site’s traffic. This is especially important now that Google does multiple updates during the course of a year.
Having a traffic source like an email list that your control is a valuable site asset.
3. Downward Traffic & Income Trajectory
Not all sites have the mythical unicorn startup “hockey stick” traffic and income trajectory.
A site with a consistent, upward trajectory in income and traffic will increase a site’s selling multiple.
If your site has had any past decreases in traffic or earnings be prepared to give details as to why they happened and what you did to correct the issue.
Best Website Value Calculators
Now that you know about all of the aspects that can affect a website’s value all you need to do is combine them to determine the final value. Sound challenging?
Fortunately, there are resources available that can make the process easier, even for free.
We went through free website valuation calculators using the public information from a typical content site, currently listed on on a popular marketplace for $125,210.
We will show the questions asked by the calculator, the values entered (shown in bold), the resulting website valuation, and the pros and cons of each calculator.
The Website Flip’s Calculator
- Age of the website? Older than 1 year
- Average profit per month? 2777
- Monetization sources: Display Ads
- Major traffic source: Organic Search
- Not required to enter your email to see the valuation results
- No ability to change the values once you enter your info and see the valuation
The Website Flip’s Final Valuation: $97,125.00 to $106,837.50
- What’s your domain name or URL? theminimalistvegan.com
- What year did you start the business? 2015
- What is your main business model? Content/Advertising
- What type of Content Site do you own? Blog/Articles
- What is your main monetization method? Advertising Networks
- What is the industry you operate in? Food and Drink
- What was your total revenue for the last 12 months? (e.g. $550,000) 34116
- How did your most recent month of revenue compare to other months? Did it decline, increase, or was it stable? Stable
- What were your total expenses for last 12 months? (e.g. $500,000) 782
- How many monthly users (unique visitors) did your website get last month? 66775
- How do you generate most of your website traffic? Organic/SEO
- What percentage (%) of your traffic is organic? More than 75%
- Is this your business you’re getting a valuation for today…? No
- Please enter your email address to complete your valuation.
- Your asset qualifies for “Flippa Off-Market”. Are you open to receiving off-market (PRIVATE) expressions of interest from Flippa buyers based on the information you have provided above? (This is a great way to test the market.) No.
- Comprehensive questions. Use of Flippa past sale data to determine value
- Chat format was not user-friendly. If you pause too long between answers, it will stop, and you will have to start over
- Requirement to enter your email to see the valuation
Flippa Valuation: $81,560 & $99,680
Empire Flippers Calculator
- How many hours per week do you work on the business? 10
- When did you start your company? 01/01/2015
- What is your average monthly gross revenue? 2843
- What is your average monthly net profit? 2777
- How many email subscribers do you have? 7445
- How many unique revenue channels do you have? 4
- How many social media followers do you have? 253
- Short Survey (progress bar was helpful)
- Included external assets and revenue channels.
- Ability to return to previous questions and correct or adjust your answers.
- Requirement to enter your email to see the valuation
Empire Flippers Valuation: $125,798
Like most things in life you get what you pay for. While free website valuation calculators are useful for ballpark figures, as seen above you will get very different valuations.
We suggest using a calculator specific to websites and online businesses that requires the essential metrics to be entered.
For a more comprehensive website valuation, it is best to spend the money on a detailed analysis. To download a free 21-page sample analysis from WebAquisition.com, check out our content site due diligence services.