According to some publications Venture capitalists look at the following metrics when valuing an Internet property:

Cost of Acquisition: At the most prized content sites, at least 35 percent of new users are enrolled by existing users. In other words, they are added “virally.” The best example of this is MySpace.

Site Stickiness: A site becomes more valuable if frequent repeat visitors make up a high percentage of its traffic. At Facebook, for example, nearly 65 percent of users visit the network daily. User-generated content - such as photos, reviews, and links - tends to increase the stickiness of the site and will increase it’s value.

Add-on Services: Sites that offer fee-based premium accounts have more opportunity for future revenues and will command higher valuations. Even a 1% take rate on premium services is considered healthy.

Although there is not much written about the valuation of websites, in the last few years some have attempted to establish some methods for valuing an already established website. These methods range from the simplistic to the overly complicated.

Even I wrote a lengthy (still in progress) article about web site valuation but while the methods set forth there are extensive, they are currently a little outdated and they don’t help properly and quickly valuing a website today.

Here are some tips on how to come up with a general value for a website you might want to sell.

You will need the following information: (1) unique monthly visitors (2) number of monthly page views (x) number of members (3) dollar amount of monthly income from all sources (4) total expenses to run site.

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When we originally launched WebsiteBroker.com back in late 1997 the Internet was a different place. It was before the now infamous dot com crash. No one had even heard about blogs back then. Google was not even on the radar. Even back then, the valuation and price tags of websites with very little revenue or even prospects for revenue was astronomical. Eventually these high valuations were part of the reason that led to the crash.

As the commercial Internet evolved and matured things eventually turned around and valuations started being based on more concrete metrics and revenue started playing a bigger role in the actual calculations.

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