Buy websites or sell your website and quality domains

How to value a website

You value a website just like anything else:

• Based on future cashflows. i.e. the present value of future cashflows
• The opportunity, a niche space or a headstart into an area you believe will become highly profitable. What is the value of the opportunity to you? Read our buyers tips.
• The content, exclusive, hard or costly to develop yourself or legally protected. How much to buy or develop the content yourself?
• The domain, maybe including highly searched on keywords. Not only might this have the ability to deliver free traffic, but also may increase and deliver capital profits in the future.
• Personal agenda, no agenda, because you want it, any other excuse you can think up. Beaware, emotional purchase decisions are generally costly decisions.

Whichever way you look at it, you are are trying to either value the work done to date and/ or cashflows, or the establish the value of future cashflows.

Tips on valuing a website (Methodology)

1. Establish the annual turnover of the website and dio your due diligence to ensure this is as accurate as possible. Ideally ask for tax assessments if possible or at least financials prepared from a reputable accountant. At the very base level ask for screenshots from Adsense or any other affiliate or other programs used, or even bank statements.
2. Build a simple profit & loss (P&L) tanking into account hosting costs, marketing costs, any other expenses you believe the current site incurs. if you can get a P&L from the previous owner this will help. Don't forget to take into account the costs of keeping content and any other site requirements up to date.
3. Look at the following: 3-5 times revenue, 10-12 times profits, or cost of developers and content writers to get the site to its current status. Consider all these numbers against each other.
4. Work out the discount of premium against the asking price from the owner. If you are going to pay a premium, this should be based on the brand or some other opportunity which may be realised in the future
5. Build a cashflow out 12 months to see what you believe will be possible and apply the valuation rules in 3 above
6. Decide on what you think the site is worth, and what you are prepared to pay
7. Make an offer, negotiate

Keep in mind

Try to understand what the owners objectives or motivations are. Why are they selling? What else do they own? Build this into your negotiations. Read more on how to buy a website here.

Good luck