Website Valuations: Finding the right tool to value your website

By | April 24, 2009

If you are making your career in the business of buying and re-selling web sites, then you know just how lucrative this career can be. You could buy a plain web site, add some new features, new pages, some flashy graphics, and then resell it for much more than what you originally paid for it. People do this every day and are making great money from it. But how do they know what to price these web sites at when they put them back on the market? It is very simple, they must use a valuation. Valuation tools use a special process to asses a web site and all of its components, and provide you with the approximate worth of that web site. That way, not only will you know what to ask for, but potential buyers will be able to tell the value of what they are getting for their money.

So if you have recently purchased a site for cheap, you have made it into a better, faster, cooler site; one that guarantees it will bring in much more money than it ever could before, and now you are looking to sell it. So what are you going to sell it for? You might want to estimate yourself, because you were the one who put all the work into it, and you think it’s worth a lot of money now. However, you need to find yourself a good valuation tool. Unfortunately, buying and selling web sites, and working with valuation tools can be a tricky process. This is because no estimated price is ever set in stone, and there are many variables that come into the process, such as how the sale itself is presented, the type of buyers you are dealing with, the current market sentiment, and even more. More unfortunately, there is no universal set of rules or criteria, as well as no accepted and comprehensive standards for valuing your site. The only thing that these valuation tools can give us is an educated guess.

Because of the lack of concrete standards, an educated guess is absolutely vital to a web site seller or potential buyer. Nobody wants to pay more for a web site than they should, and no seller wants to take a hit when they make the sale. Everybody wants to get the most money they can, and pay out the least money that they have to. In this business, there is a lot of time and money spent during every step of this process, from the listing fees at the auction sites you use, to the time spent collecting the data of interested buyers. Without knowing what you expect to make on the sale, you would have no idea if all of this time and money spent would even be worth it.

When looking for the right valuation tool, it can be an extremely daunting task. There are many myths and misconceptions about valuation tools and that is partly because of the amount of these tools that you can find if you search the internet. Everything from free sites to the most expensive and everything in between. Some of these services provide you with an actual person to evaluate your site; others provide you with an automated system that produces an estimate on the spot. It is extremely important to check with more than one valuation tool. If you are consistently getting figures that are way out of the ball park, then move on to something else. Many of these sites can be upwards of $10,000 off! But how can that be? It is actually because many of these automated sites work a lot like those astrology charts or tarot readings that you put your birth date and birth time into, and they spit out a chart that is supposed to tell your future. It’s almost a random process, never spitting the same chart out twice. While these sites and the valuation sites like them provide you with estimations that are nowhere near the truth, they are still all too happy to take your hard earned money for their efforts.

Perhaps the very best valuation tool is one that you have built yourself, from consulting with all types of other valuation services, such as the automated services, web site brokers, and even from potential buyers. If they all seem to be giving you a number within the same range, it is much easier to find the asking price that will be the best for you.