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How Much is a Website Worth: Ultimate Guide to Pegging a Site’s Value

 How much is a website worth? What parameters determine a website’s selling price? Find all the right answers in this post to help you peg your website’s worth without stress. 

A site on the internet could be worth a few thousand dollars or even command higher figures. Not all websites remain under one individual or company’s ownership forever. Some owners of websites usually cash in on their site when a reasonable offer comes along. But it’s difficult to pinpoint the worth of a website without vital information. 

Pegging the real worth of your website ensures you get fair returns and the buyer gets a fair deal. That’s why this article provides a detailed walkthrough of ways to value your website, and much more. 

How Much is an Internet Site Worth?

However, websites that can sell for more money are usually ‘the business’ and not a marketing channel for an offline business. 

Determining how much a website is worth depends on some factors. Information on these factors will help buyers and sellers of websites arrive at a fair price. 

What Determines a Website’s Price Tag?

More than half a dozen parameters determine how much a website is worth. But on average, websites usually sell below $90,000. But it’s not uncommon to see some websites, like Inc.com for example, sell for millions of dollars. 

The price of a website is affected by how these parameters, or factors, favor or reduce its value. Even if a website is eventually worth what buyers offer to pay, these factors ultimately influence its final price. 

Several tools can help sellers of websites determine how much their property is worth. But it all boils down to the will of buyers to pay more and of sellers to settle for less.  

Here’s a look at the main factors that can influence a website’s price:

Net profit and margin 

Buyers are always interested in how much a website brings in on average over a period of time. The net profit of a website isn’t the only consideration buyers look at before offering to buy a site. Net margins have to be looked at to know how profitable a website is. The net margin of a website can be calculated by dividing the site’s net profit by its revenue. 

Most buyers consider net margin alone, as this information helps to determine how profitable a site is. A website may turn over significant revenue, but the figures may be slightly lower than its total expenses. 

But when a website turns over a significant net margin much higher than its expenditure, it’s a profitable interest. Buyers are more hesitant to invest if there is no potential to generate much ROI from a site.

However, it’s worth noting that there are different thresholds when it comes to measuring net margins for websites on sale. For example, e-commerce websites usually have a net profit of about 20 – 40%. But sites in other lucrative sectors may not be deemed profitable with net margins below 70%.  

Monetization potential

Websites rely on several forms of monetization, and a huge chunk of sites use AdSense for revenue generation. Sites that generate most of their revenue through AdSense may be more expensive than other websites. Sellers of sites that rely on AdSense can use several benchmark tools online to peg their expected earnings. 

For example, analytical software like the AdSense Benchmark tool can help owners discover a website’s potential value. Such tools can help website owners determine how much their site makes in a month. Getting such information eases pegging your website’s value to a certain rate. 

Non-competition agreement

Sounds funny, but it’s actually true. 

Future competition is something many buyers of websites lose sleepover. Some buyers of websites may be wary about a seller’s prowess in a particular niche. Experienced sellers may wish to sell off their existing website and scale another from scratch to rival that of buyers. 

In such a situation, buyers may get legal representation to draft a non-competition agreement. Such agreements usually comprise of the following:

  • Seller(s) will not launch a new business in direct competition with the sold website
  • The seller will not be a part of any website that has conflicting interests with sold website
  • An agreement to negotiate terms for sellers to enter any competition with buyers of the website

Such an agreement usually lasts for a defined period. When the period for such an agreement to remain in force elapses, sellers can transact in any interest they deem fit. 

However, if such an agreement is to be agreed on, the website will usually command a higher price tag.

Ease of transfer

Transferring websites from old to new owners could be challenging, especially if several interests operate through the site. Websites that are easier to transfer usually command a higher price tag than difficult sites. Any site that’s much harder to transfer will lose most of its intrinsic value with time. 

Buyers and sellers need to consider the following to arrive at a price for a website:

  • If clients are sold to the business or its owner
  • How systems are easy to transfer after a sale, especially if a new management team is slated to take over
  • Ease of transferring existing vendor contracts from the old owner(s) to buyer(s)
  • What sort of content management system the site runs on 
  • If any new developments will be non-disruptive to the website’s existing architecture
  • Whether old owners have a permanent interest in the website or lose all access to its operations

Close consideration of these elements may make a site easy to transfer, or not worth any investment. For instance, an existing website where customers are attached to its owner instead of products may be challenging to sell. But sites that can change hands with ease are more appealing to interested buyers. 

The niche

Buyers of websites have to consider the future before making a final offer. For what’s the need to buy a website in a market that’s likely to attract fewer customers in the future? 

Buyers must consider how much scalability potential exists in a website to generate revenue. And considering the niche isn’t limited to buyers alone. Sellers can take advantage of the market potential of their website to request a higher price. If facts support a seller’s argument, the website can command a much higher market value.

Organic traffic value

A website’s value can be set based on its organic traffic potential. Several tools are also available online to help owners and buyers determine how much organic hits websites receive per month. 

Organic traffic to sites is calculated by the number of hits per month. Every hit has a particular cost and the total value of hits help to determine a website’s value.

Can You Calculate How Much a Site is Worth By Hand?

You can easily calculate how much your site is worth by hand if you have some essential information. Find out your website’s monthly revenue first. In general, a website’s value is pegged within 24 – 36 times its monthly revenue. The calculation is regarded as an earnings multiplier and is popular for determining a site’s on-paper value. 

Let’s say a website generates about $5,000 every month. Using the earnings calculator, such a site’s expected sale price should be around $120,000 to $180,000. As we’ve said above, other factors can increase or drive this figure down.  Other expenses that go into keeping the website active are also considered when pegging its price. 

Ways to Increase a Website’s Value

Monetizing your site may be difficult without correct information. But with the tips below, setting up your site to command a higher price could be easier:

  • Secure more traffic sources

Amassing more channels for attracting traffic to your site boosts its value. Ensure you move onto ad campaigns, PPC marketing, and other forms of attracting visitors to your site. When your site’s organic and paid traffic hits increase, you can charge a higher rate without hassle.

And don’t forget to include more monetization channels while you’re at it. 

  • Own multiple domain variations of your site

Boosting your site’s value becomes less challenging when you own most, if not all its domain variations. 

Let’s say you own a .com domain of your site. If others own the .co or .us domains, it may affect your site’s value. Garnering all available domains of your website ensures your site can command a higher value. 

Useful Tips for Website Sellers

  • Determine the bound for your site’s sales price

Requesting a huge price for your website can be easy. However, buyers may not be too enthusiastic about offering you such an amount. 

As a seller, you must know how much you can accept for a website at its lowest scale. Negotiations can begin with the price you want, but you will leave the sale contented with a threshold. 

For example, let’s say your site is valued at $100,000. You can be willing to accept that amount but begin your negotiations at $250,000. If the negotiation goes your way, you can walk away with a much higher sum than your lowest rate. 

  • Make your network work for you

Selling your website to non-competitors could be lucrative. But there’s always an off-chance that a competitor may be interested in your site enough to pay higher. Reaching out to vital contacts in your market helps in closing a private deal if available. And if your bargaining power is spot-on, your site can command a higher price among competitors. 

  • Know your site

Knowing your website well is the first and most essential tool to request a higher market price from buyers. Make sure all essential information that would drive the price of your website up is compiled for easier reference. 

Use analytical tools to compile such information. If a potential buyer requests information about your site, you should be able to send periodic reports or earnings. Buyers do not need to know more than what an analytics or earnings report shows, making a sale less challenging.  

Essential Tips for Website Buyers

A sound investment should be your focus as the buyer of a website. Use these tips to make more of your stake:

  • Take a deep dive

It becomes less risky to buy a bad website with access to historical information.  With a detailed log of any website, you can determine if any historical adjustments to its algorithm have been made. Also, it becomes easy to know if the site has suffered any penalties over time with extensive information. 

However, you may be limited to more information than you would like. But with the help of an experienced auditor, it’s easy to know the essentials about a website. 

  • Investigate SEO tactics

There are two types of SEO tactics – black-hat and white-hat. While white-hat SEO practices are allowed, black-hat SEO is illegal. Buying a website that uses black-hat SEO for link building or attracting traffic is a waste of money. So, it makes total sense to hire an SEO specialist to run a full site audit. 

If any bad SEO practices are unearthed after the audit, bring such information to the site owner’s notice. Ensure all wrong practices are resolved and confirmed by an experienced specialist before making an offer. 

Takeaways

When you know how much a website is truly worth, it becomes easier to buy or sell. However, buyers and sellers must engage in deep analysis before offering to sell or buy a site. Sellers need to make the most of the tips suggested above if they are to get a great deal for their website. Buyers can also rely on suggestions in this post to buy a site worth their investment. 

When you understand how to value a site, initiating discussions, negotiations, and closing deals will be easy. Full knowledge of a website’s financial and marketing performance ultimately makes the difference. Buyers and sellers should note essential points about the website before pegging a suitable price. That way, both parties end up happy after the sale. 

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Jordan Stephenson

web designer

I love web design! It allows me to express my creative ideas through the thing you are passionate about. 

Jordan Stephenson

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