Factors to take into account when valuing a website

By | November 28, 2007

There is no established formula for the valuation of a web site. However, there are several factors to consider when valuing a website. These items are discussed more fully in our website valuation article, but we wanted to provide you with a brief summary:

A. Profits and Cash Flow (This is really revenue minus costs)

  • 1. Source of Revenues
    • a. Monthly products or services sales from site.
      b. Monthly membership dues
      c. Subscription
      d. Commissions from other sources
      e. Revenue from partnership deals
      g. Advertising

      • i. Sell through rate
      • ii. Does the site have an ad delivery system in place

  • 2. Operating Costs
    • a. Monthly server/server costs
      b. Monthly hosting
      c. Monthly fees
      d. Monthly bandwidth excess charges
      e. Monthly staff
      f. Monthly outside labor
  • 3. Growth Multiple

B. Assets

  • 1. Technology
    • a. Hardware included
      b. Software included
      c. Rights included with the site (hosting, access)
  • 2. Content
    • a. Total number of pages at site
      b. Number of original pages
      c. Total number of graphics at site
      d. Number of original graphics
      e. Number of links to other relevant sites
      f. Is content optimized?
      g. Value of domain name
      h. Trademarks
      i. How long around
      j. Domain Age
      k. Good will
  • 3. Databases
    • a. Database of name and e-mails of previous visitors (i.e. guest book)
      b. Database of past customer (if site sells products / services)
      c. Does site keep record/ track of past promotions and marketing

C. Traffic

  • 1. Number of “hits” per day
    • i. What is a hit?
      ii. Rankings on third party services
      iii. What is the traffic worth?
      iv. Number of page views
      v. Traffic from search engines
  • 2.Traffic sources.
    • vi. Traffic from caches?
      vii. Invisible traffic
      viii. Traffic through links from other sites
      ix. Traffic to site from other sources
  • 3. Ratio of visitors to page views
  • 4. Number of Links to the site from other sites
  • 5. The value of links
  • 6. Percentage of traffic from search engines versus traffic from other links to site
  • 7. Placement for relevant key words on search engines and historical performance data
  • 8. Traffic growth per month in last year
  • 9. Access statistics available for what period of time?
  • 10. Automated messages
  • 11. Are there newsletters or forums associated with the site?
  • 12.Number of RSS feed subscribers

D. Niche