Determining The Monetary Value of A Website

By: Daniel Imbellino
Updated: Sept 23, 2014

We’ve all heard the question before, “What’s my website worth?” pile of cash While there are a lot of factors involved, such as the popularity and traffic statistics for a site, the amount of annual revenue a site produces, etc, there are numerous other factors involved which you should be aware of as well. The old but sometimes still used method states that a site is worth 10 times the previous years’ revenue, plus any physical assets. While a sites revenue records may help to determine that it has some value, there are many other factors we need to take into account as well. Honestly, I would be looking closer at traffic data, especially where that traffic is coming from if I was even remotely thinking about purchasing an existing website.

If you were looking to purchase an existing site and grow it, there’s a few things you need to look out for, otherwise you could get taken for a ride! For starters, many domain and website auctions will claim they are selling you a site that has thousands of Facebook and Twitter followers, has 10,000+ visitors a day, and ranks well in Alexa, etc. Too bad they didn’t bother to mention that all those followers were fake, and so is the traffic as well! You can go online and buy fake followers for pennies on the dollar, and the same goes for bot automated traffic that amounts to having no value at all. On flippa.com, I noticed some people are claiming their sites are 5 years old, when in fact Flippa tells viewers that the site they are looking at was only registered in the past 60 days! Also, if a site is 60 days old and claims to have 7,000 Facebook followers, I would be pretty cautious to believe such nonsense.

Why Traffic Matters:

The real value of a website comes from the viewers of its content themselves! If you need to know what your site is worth, you first need to figure out whether or not people find any interest in it. You can use Google Analytics or Stat Counter in order to determine where your visitors are coming from, how long they are spending on the site, what devices they are using to connect, etc. You can also get data from Alexa.com that shows a global and country rank for a given website. Alexa also shows traffic data, such as bounce rate (how many people are entering your site and leaving upon arrival), average page views per visit, percentages of visitors from a given country, the average time spent on the site per user, and the percentage of visitors that came from organic search results. A site with a low bounce rate, a high average of page views per visit, that has a consistent track record of good traffic from both social media and organic search, are likely to carry good monetary value. Start by trying to figure out how many daily visitors a site receives, where those visitors are coming from, and whether or not they are sticking around.

It used to be thought that the older a domain is, the more it’s worth. Not exactly! Even the search engines themselves don’t care how old a domain is when determining its value to users, Google has stated this themselves many times in the past. Simply put, domain age means nothing in terms of monetary value. A site that is 5 months old could easily be way more popular, have better content, and be more trusted by users and search engines alike, then say a domain that is 10 years old. Age doesn’t matter!

You may have noticed the internet is plagued with website calculators today that state they can tell you the real value of your sites. Unfortunately all the data they use to analyze a website for its value is way too generalized to be meaningful at all. One good metric that can return whether a site has honest to good value is by taking a look at the quality of back links pointing to a site. Alexa tends to catalogue a majority of backlinks it comes across, giving anyone the ability to look up a domain and view its backlinks as determined by Alexas crawlers.

If a site has tons of back links that are coming from real websites that have real content, then its more than likely the domain in question is of a higher authority. Alexa tends to show the actual back links they find and display them to users. From here, you could simply copy and paste a number of back links directly into your browsers main search bar and head over to the site where a particular link was formed itself. If the link came from an article in which the article that exhibits a relevant idea or content on the other domain, and both the linked content and the content linking to it are relevant in nature, it’s likely those links are of a higher quality, and obviously hold good value. On the other hand, if a number of back links appear to be spam coming from forums, comments sections on websites, or from affiliate marketing sites that have no real content, then those links are not only worthless, they actually could hurt that sites performance over the long term. You can also check back links in Google itself by typing “link:name-domain.com” without the quotes. Google doesn’t provide every back link to every website, and Alexa.com is more likely to return an honest look at just how many back links there really are. You can also take a look at what links Google themselves found for your own domain by checking your links in Google webmaster tools.

Does your site, or the site you are looking at buying show any revenue from advertising, affiliate marketing, private ad contracts, or draw revenue from selling a product or service, etc? A site that displays good monthly revenue from advertising can prove itself worthy, as long as that revenue can be verified in some manner. The same goes for a product or service as well. The “10 times” rule might not be acceptable for a well performing site when determining its overall worth in dollars. A site with a consistent track record of good traffic and excellent returns on revenue could easily be worth much more than its revenue from the previous year. Honestly, a well performing site can almost name its price when it hits the auction block.

Another thing to consider when determining the value of a domain falls in line with what type of “Top Level Domain” (TLD) it incorporates into its URL. The reason this matters is because the average person will type the name of a website, brand, service, etc, into search engines assuming they are looking for a “.com”. For this reason alone, “.com’s” are obviously worth more money than any other TLD. There is .net, .biz, .org, etc. While these TLD's can definitely rank, because users are more likely to type in a .com and not a .net, .org, etc, you should consider them to be of less value. People will never think to type them in, and many assume .biz domains are nothing more than spam, which a lot of them are!

Content itself also plays a role in determining a sites value. Is the content popular, is it unique, and does it hold any real value in terms of useful information to site visitors? A website with hundreds of tutorials on programming and web design is probably going to have more value than a website about the flower bed in your backyard! The more educational and informative a site is, the more it’s worth, plain and simple.

Social Integration Plays a Role:

Another often overlooked metric when it comes to determining a sites monetary value is what level of social integration it has. In fact, with the continual explosive growth of social media, sites that don't exhibit a good social following are effectively missing out on larger audiences they could have had, which means lost traffic, lower revenues, and a lower valued website as a result. On the other hand, sites that do have strong social followings will likey be worth a lot more, especially if the sites in question have a forum, Facebook Group, or Google Plus community, among many other social options available today.

A good social audience means a site has a dedicated audience, making it more valuable to buyers, which can also help to inflate the long term value of a site. A dedicated audience means consistent traffic and more revenue!

While we could use the “10 times” rule to determine a sites value, I would be looking more closely at the factors I mentioned above, much less just determining a sites worth based simply upon its revenue. Good traffic statistics and good content do not lie, and neither does having a real dedicated social audience to drive that traffic! Remember to keep a look out for shady practices if you are the prospective buyer, and determine whether or not that traffic is real, the followers are real, if the content is any good, etc. Be sure to factor in your sites, or the site you intend to buys impact from social media. If it’s your own site you are evaluating, make sure you are making proper use of social networking apps and buttons on your site. If people are linking, +1’ning, or sharing your content on a large scale, then you have real data to show your site is worthy of its content. Sites that perform well in organic search tend to have a large social media presence, and they are popular because they are informative in some way that people like. People tend to share content they like!

If your content is worthy and you have share buttons on your site, you can get a good idea of what the public’s general opinion is of your site and its content. I use data from social media myself to help determine the value of my own content. If I write an article and it gets 100 shares overnight, then I know I did my job. Likewise, if I write an article and it doesn’t get shared but once or twice, then I need to go back and determine why the article performed so poorly. Was it the subject I wrote about, the way I worded some things, and was the content informative in some manner that’s useful to others? Use social media data as much as you can, as it can help you determine what content you produce interests your readers, and what does not, so you can make informed decisions as to what type of content you should produce in the future. Understanding what people value on the internet can give us clues as to whether or not our current strategies, and future ideas will work, in turn helping to raise the overall monetary value of our websites.

Check the quality of back links! A site that has thousands of spammy back links is totally worthless these days. Don’t factor in pagerank either when evaluating your sites worth. Pagerank is now only one factor out of several hundred that Google takes into consideration when evaluating a website these days. In fact, my best performing site, which I built for a client several years ago, has no pagerank at all, and scores page 1 on Google for more than 30 keywords, despite the whole site consists of only 3 pages, has never been updated once in the last 5 years, and is outdated at best. Nonetheless, don’t focus on that metric, it’s pointless. A site with a pagerank of 6 could have no traffic at all. Pagerank is simply Google’s evaluation of the worth and trust in that site, and this doesn’t determine that sites relevance to search queries in any manner.

Simply put, the monetary value of a website is really determined by how much someone is willing to pay for it! Easy to navigate, well functioning sites that have quality content, and a good user fan base, are likely to be worth the most.

More Recent Stories
Back To Home