What's Your Web Site Worth?

What's Your Site Worth?

Ultimately, in identifying the value for your own site, you'll need to research the site sales market -- in particular, your market segment. You could start your assessment using the free tools we outlined above, using proprietary statistics packages like valueontheweb.com, which is owned by Rob May, who we interviewed for this article, and researching sales of similar sites at places like the SitePoint Marketplace, and through the technology media.

As you research, make notes of the factors that seem to be influencing sales in your sites' segment of the market, as well as the high- and low-end sales prices achieved. Alongside those records, include information pertaining to specific sales and factors that impacted on those prices. Perhaps a site similar to yours achieved a very high price because of the existing revenue streams and the potential for future monetization that was provided by detailed member profile data. Maybe a site that sold for a seemingly low price lacked the history and proven traffic stability of your operation.

Next, it's time to scrutinise your own site, being as objective as possible. First up, complete a SWOT analysis of the site's strengths, weaknesses, opportunities, and threats. Review the list of value factors that can affect a site's sale price, which we discussed earlier, and try to predict how each factor that's relevant to your sale might affect the buyer, and thereby, the sales price -- this will be easier in some cases than others. Pay particular attention to the advice of our experts, who indicated that the most important factors in determining a site's value were:

• Domains and Traffic -- Consider the age of your domain and the sustainability and reliability of your sources of traffic. Is your site one of the oldest in its segment? How do your traffic levels vary, and why?
• Collate documentation of traffic levels and proof of domain registration.
• Stability and Profits -- Can you provide long-term records of your site's profitability and a breakdown of costs, revenues, and so on?
• Collate financial documentation, receipts of payments, lists of creditors and moneys paid and owed.
• Potential -- Determining potential can be difficult, but if you can see scenarios in which your site could be developed to greater effect, it could be worth your while to list these ideas in your site sales listing (if you're selling it through a marketplace). When you're determining potential, consider also the costs involved in reworking the site to achieve that goal, as these will be considered by any prospective buyer.
• Make a list of the directions in which the site could be taken, and outline how difficult or easy these transformations would be.
• Workload -- as well as considering the work a buyer would need to do to rework the site to achieve its potential, assess the level of work that's needed to maintain the site at its current standard. Factor in your time, as well as that of any other people who work on the site.
• Itemise the tasks involved in running the site, and against each, place an estimate of the total time involved. Costing the time might also be worthwhile, as a potential buyer can then tell, at a glance, how much they might be able to save on operational costs if their setup allows them to use existing resources for certain jobs.
• Synergy -- consider the business types alongside which your site might sit well. This information might help you to target potential buyers through an online ad or marketplace listing.
• Technology -- review the technology that underlies your site, as well as that involved in any property that will be transferred with the sale (eg. scripts, software products, and so on). Assess the costs of technology, its reliability and robustness, and its scalability as the site grows.
• Collate records of the costs of the site's hosting, licensing costs for technology, and so on. Though these costs will likely be included in your financials, outline them here, too, to make it easy for buyers to access this information. It might also be wise to ask the developer (who may be you!) to provide an assessment of the scalability of the system. This will give the potential buyer an idea of the longevity of the site and its assets, and allow them to make financial forecasts for the business.
• Comparative Cost -- your research will have revealed upper and lower sales prices for sites in your market. Now's the time to go back top the notes you made about those sales, and compare your site with those. Does your site tick all the boxes? Does it lack certain aspects that appear to be desired by buyers? Where are the gaps?

This assessment should give you a clear picture of the way a potential buyer will see your site, as well as what its special features -- and pitfalls -- are. You should have some idea of a reasonable price that you can expect to receive for your site as is. You should also have a collection of valuable documentation that supports your valuation, but for one aspect: As Rob May reveals, "Humans respond well to social proof, so by showing similar websites that have sold for a certain price, a seller can usually get a similar price for their own site."

But, are you happy with that price?

If not, the next step is to look closely at the areas in which your site lacks, by comparison to others in the same market segment. Can you address any of these factors, and in doing so, remove a potential hurdle to the site's sale. If, when you considered the site's potential, you listed a few ideas for improving the site's revenues, could you implement any of those ideas?

Ultimately, Chris advises all site sellers to ask themselves "what's the opportunity cost of not having the money for the sale in your pocket? If you're going to sell a site for $50,000 what could you do with that money to earn you yet more money, what opportunity would you put that money into? If it isn't more than what the site already makes you, then you're asking for too little money. You need to increase your price."

Once you're happy with the price, and you're ready to sell, the only thing that remains is to find a buyer. Choosing a sales forum -- or approaching a potential buyer -- involves a raft of considerations that we don't have space to go into here, but good advice can be found in this Webmasterworld post, and on Yaro's blog, in a post entitled How to Sell a Web Site.

One point to consider, though, is the duration for which you hold your auction. Buyers are frequently advised to act quickly when they find a site they want to buy, or risk missing out on the sale. But interestingly, we've found through the SitePoint Marketplace that auctions that have a longer duration achieve, on average, a better sale price than their shorter counterparts.

The question of auction duration might be worth considering as you list your site for sale.

The Future of Web Site Sales

This article has aimed to provide a solid starting point from which you can begin the research involved in estimating the value of your web site. Though they can't tell you what your site is worth, the experts who shared their thoughts through this article offer significant industry knowledge, and first-hand experience with web site trading.

When we asked them what the future for site selling looked like, they were unanimously positive. Dan summed it up best with the words, "The market for web sites is only going to increase. All you need to create a killer service now is a vision and a few good coders. The pool of high quality sites available to buy and sell is only increasing."