What Is Involved in Website Valuation?

Jeremy Laukkonen

A number of different factors should be considered in the process of website valuation, such as the content of the site, revenues, and the domain. Websites can be sold on the strength of the domain alone or excellent search engine positioning, though real revenues are often looked at in website valuation. Different experts will provide varying opinions, though the valuation can be anything from six months to three years worth of revenues. If a site has not yet been monetized, the content, search engine positioning, and domain are often considered instead. Expert website valuators can often determine how much a site could probably make by looking at these sorts of factors.

When valuating a website, its content and traffic are two major indicators.
When valuating a website, its content and traffic are two major indicators.

Content, traffic, backlinks, and many other factors can each contribute to a website valuation. A site that has excellent, original content will tend to rank better in search engines and generate more traffic. Great content can also result in more backlinks as other sites link to the material. Even if a site has not yet been monetized, having this type of material in place can result in a valuable property. Good search rankings are often desirable as well, but paying more on this basis can be risky since minor changes in algorithms can wipe out the benefits.

Domains can also be valuable on their own, especially if they are short, memorable, and aged. A short domain can result in more direct traffic to a site, since people are more likely to type it into their browser by chance. Aged domains can also be valuable, especially if they have been around for a very long time. Search engines sometimes put a premium on domains that have been around for a while, and there is always the chance that there are old links out there pointing to it.

The most concrete sort of website valuation can take place if the site has actually been monetized. There are a number of different ways to monetize a website, including advertising, product sales, donations, and subscriptions. Each of these methods can be considered separately when trying to come up with an accurate website valuation. Some investors want to pay about six times the monthly income for a site, though other experts suggest valuing sites based on two or three times a figure known as twelve months trailing (TTL). Both of these methods tend to value websites lower than physical businesses, which is due to the fact that investing in websites can be a substantial risk.

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