The answer is it depends on what the site is used for, its popularity, and the popularity of the domain name. There are several ways a website can generate income and they should all be considered in determining its value. Some sites earn revenue in many ways. Others only earn revenues through referrals and through visitor inquiries.
A business that offers products or services online generates revenues directly from its site. A storefront is the most common way a website generates revenues. Site visitors choose the products they want, put them into a shopping cart, and pay for them when the shipping charges and taxes are added.
Another way a website generates revenue is through advertisement. Visitors click on links through Google or Adsense, which the owner of the website has agreed to or has signed up for. Every time a visitor clicks on an ad, revenue is generated for the website owner. Affiliate links work in a similar manner and generate revenues for the site with each click on the links.
A final way a website generates revenue is through paid subscriptions. Major news agencies offer online subscriptions. Sites related to specific professions may also offer subscriptions to entire journals or databases for professional journals. Interested visitors will pay for subscriptions to have full access to the databases.
When all revenue sources have been calculated, its time to determine the inherent value of the characteristics of the site. An older site with more backlinks shows authority and is likely to be valued higher than a newer site.
If you’re wanting to know how to calculate the value of a website, consider how the different characteristics are broken down.
Suppose the revenues generated from an online storefront are roughly $5,000 a month. The annual revenue is then $16,000.
You will need to then consider the value of your backlinks. If there are 100 links estimated at $40 each, the total is $4,000.
Next, you need to determine the value of links in terms of age. If you have 70% old links, 30% new links, and the age of the domain name is 5 years, you will calculate $4,000 x 5 x .70. The total is $14,000.
When deciding whether you should sell your website, it’s important to remember where the value is. The site itself is a valuable asset. However, it is only valuable as a tool for generating a profit. The real values lie in how much money the site is generating now and how much potential it has to generate money in the future.
Some other considerations in valuing a website include having diverse revenue streams, showing obvious growth, having automated systems in place, traffic from diverse sources, offering unique value to site visitors or serving a niche, and the marketing approach used to bring value to visitors. An earnings multiple of 1 to 3 can be applied to the annual earnings, to determine the future potential for revenues. Some buyers may also use data from similar websites for a comparison, to determine whether purchasing the site is a good idea.
When determining whether to sell a website or not and what it may be worth, the future potential may be considered when there is plenty of room for growth. This may be an additional factor for a new site that is generating plenty of revenue, where the organization is experiencing growth in the number of visits or product sales, as the word gets out about the site. Some buyers, however, may consider the site’s potential when it isn’t generating much revenue if the buyers see great potential by making a few changes.
There are a number of resources online to help prepare to sell and ultimately sell a website. BizBroker24 is a free valuation service offered online for anyone on the fence. They help business owners link up with potential buyers to get the ball rolling and start to field offers.
BizBroker24 founded by Steven Endrizzi, MBA has been in business since 2009. With over $100 million in internet business sales, they have been trusted by individuals and companies all around the globe. With sellers, they walk all individuals through the process to ensure an easy, smooth transaction.
For more information visit http://www.bizbroker24.com
This article was originally published by IssueWire. Read the original article here.