How to value your website

Some of you may be wondering how much a website can be worth and what the return on investment is etc. And this is a good question and something I have done a lot of research on. Generally it works the same as a regular business based of revenue, profit, loss, good will, customer base, database etc. There is a lot that goes into it, but it is a simple formula which I will explain below.

I will categorize the two main areas used when valuing (or selling) a website. These are “revenue” and “social equity”.

The revenue is the actual dollar figure which the website makes after the overheads are taken care of. So it’s the amount of money the website actually makes. This is an easy way of valuing the website. Let’s say the website makes $100 per month regularly. In one year the site generates $1200. If one were to value the website on these figures then you simply multiply this by 2.5 (current arbitrary valuation figure). This would make the website worth $3000.

Social Equity is the value of your website subscribers if you were to sell your list and or market and sell to the list. For example, to pay a company to collect subscribers and or email addresses of qualified and active members it costs generally $1. This means minimally that an active subscriber list of 5000 members is worth $5000. It works on the principal of 100 customers will generate an average of $100 per year (this is also an arbitrary amount. It can vary depending on your products, services, and value of what you are selling). The 100/100 rule is fairly standard across the board.

So if one were to value the website based on both of these examples (5000 members, and $100 per month revenue) it would be worth $8000. If we were to change the variables to say 100,000 members and $1000 per month the website will be worth $130,000.