How Valuable Is Your Website and Why Do You Need To Know?
Being able to determine a website’s value is extremely useful, particularly if you are weighing up the earning potential of a planned purchase, or exploring the viability of an industry you are considering breaking into.
However, when it comes to the value of your own website, it might feel like, beyond simple curiosity, there is no real reason to know.
After all, if you have no plans to sell, then your site’s theoretical value might seem meaningless. However, the value of your website can tell you far more than simply how much you might expect to make from its sale….
Measure Growth and Competitiveness
Once you know how much your website is worth, you can then set achievable goals for growth and expansion. In addition, by tracking your site’s value over time, you can quickly determine whether your business is trending upwards, or stagnating.
Furthermore, this information enables you to make more accurate comparisons with competitor websites. This will help you to determine whether your site is doing as well as it could. It will also highlight whether you need to refine your approach to gain a better hold on your chosen market.
What Gives a Website Value?
Remember: the value of your website is not determined by the amount of money and time you have put into it. It is based upon the scale and consistency of the returns it generates. After all, if someone were to purchase your website, they would plan to see a profit from their investment.
This requires the site either to have great potential for development, or to have consistent, established revenue with a positive growth trend. While a website may initially seem profitable due to a recent spike in trade and traffic, it is vital to look at the website’s history to determine whether this is a sign of genuine growth, or just an isolated event.
As such, a few factors to weigh up when figuring out your site’s value include the following:
- Age of the website.
- Size and number of revenue streams.
- Branding and market leadership.
- Positive growth trends.
- The diversity of traffic sources.
- Running costs and automation.
Whether you are seeking to purchase an eCommerce store (some for sale on here), or you are considering selling a website you have already turned around, it is wise to look at the value and recent sale prices of similar sites within your industry.
Website marketplaces such as Flippa are great places to get an idea of the rates being paid for sites similar to yours. Furthermore, you can explore the finer details such as a website’s age, rankings, and traffic, enabling you to weigh up which setups seem to be securing the greatest success.
As you can track the history of a website, you can also explore not only its current sale price, but what it has sold for previously, and how its condition has changed in that time. This is another great way to identify the key influences on a site’s value within your chosen niche.
Evaluate Social and Monetary Value
Keep in mind, the revenue generated by your website is not the only factor to consider when determining its value. For example, a large part of your website’s objective is to increase the visibility of your brand, and encourage users to engage with your business beyond the site itself.
If you have a well-crafted website, with an active community and a range of useful, relevant content, you will have created something which is likely to be perceived as valuable, even if the website itself is not monetized.
So while it is, of course, important to factor in the financial returns resulting from running your website, you should also consider how your site affects the opinions and willingness of your customers to buy. This can be especially useful on websites which do not rely on ad revenue. So engagement is essential to encourage users to keep exploring, and ultimately make a purchase.
On a non-monetized site, an engaged following also acts as a potential future revenue source. This will raise the site’s value in the eyes of a potential buyer. And the value is further increased if you have a website that carries authority within its industry. This could be either through its age and visibility, or as a result of having a body of useful, relevant content.
The Final Valuation Is a Judgment Call
There are a wide range of business tools that can help you gauge the approximate value of your business. However, in the current market, do not trust in these figures alone to determine your website’s worth.
After all, the genuine value of anything can only be what someone is willing to pay for it. So while these calculators use comparative studies, and detailed algorithms to project the value of your site based on its history, they can only ever provide an estimate. Furthermore, if you look at several of these calculators, you are likely to receive a wide range of values, which can initially be discouraging.
With a combination of these tools, and your own research and intuition, you will be able to develop a clearer idea of your website’s worth and how you might improve it.
Image Credit: geralt via Pixabay
Your website’s value is just one more piece of data that you should track in order to complete your picture of how well your business is performing. Identifying a reduction in growth, or even a drop in value can quickly highlight problems in your marketing funnel. This will enable you to react quickly and efficiently to amend the issue, and get your website back on track.
Furthermore, once you know the value of your site, you will be able to handle offers with more confidence and clarity. While you may have no intentions of making a sale, it can still be worthwhile hearing offers, and learning your site’s perceived value to other parties.
After all, there may be an offer that is high enough to convince you to make the sale. Equally, such an offer might prompt you to look for hidden potential within you site that you have not yet uncovered.
Ultimately, the greater your knowledge and understanding, the more effectively and profitably you can run your website. So set aside some time to find out your website’s worth. Then determine how you can increase that value even further.
Over To You
Do you have any thoughts on the above? Anything you think needs adding? If so, please leave your comment, below.
You may also like: 5 Methods to Find Your Competitive Content Advantage
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