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How to Value and Sell a Website Effectively

General Business News

October 2017

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How to Value and Sell a Website Effectively

How to Value and Sell a Website Effectively, Website valuationWhether a business owner wants to sell a website or he has been approached by an individual expressing interest in purchasing it, understanding what it's worth is essential to a fair sale for everyone involved.

Initial Factors 

To determine what a website is worth to a potential buyer, it needs to undergo a performance review. Evaluation factors can include looking at the number of sales the website has generated over the past year compared to previous years or other competitors. Additional considerations include how much the website is used to gain new customers relative to other sales channels, such as in-person and cold sales calls or in-bound customer calls.  

Valuing a Website Based On Its Attributes

A different way to look at a website is by its attributes. One of these attributes is what Top Level Domain the website address ends with. Most web users are familiar with the .com ending on a website, but many websites and associated email addresses end with .net, .org, .biz or .info. This often depends on the type of the organization that owns and uses the domain and the website they’ve built. If a website ends with a .com, it can have less confusion than a website with a .net or .biz domain.

Other considerations include how customers remember the name. For example, a long website that needs to be spelled out in person or over the phone, makes it less likely for customers to recall it and later visit it. Another attribute is to ensure the domain name is not subject to copyright protection.

Valuing a Web Site Based on Its Search Engine Relevancy

One way to value a website is through its ability to garner visibility and traffic through a backlink. A backlink is when a URL on a third-party website points visitors to the owner’s website. One consideration when building backlinks is whether or not the backlink is from a well-respected and relevant source, compared to a website known for producing spam or one that might be blacklisted. Backlinks on well-respected websites increase SEO value, while backlinks on lesser-trusted websites may detract from SEO rankings.     

For example, if a backlink for a law firm is on a local bar association’s website, the backlink will generally gain greater favor for the law firm. If, however, a backlink is on a legal website known for spam, the backlink will not have the same effect. Websites with better reputations that provide backlinks to the website for sale can potentially increase the site’s value.  

Another important area to focus on is a website's traffic statistics. Measuring how much traffic is generated from search engines is important because it shows how well traffic is garnered from an existing search engine optimization strategy. Depending on the SEO efficiency, value can be determined based on if the existing strategy can be built upon or if the website needs a different SEO approach.

Valuing a website is highly subjective, and these are not all the factors that buyers and sellers take in account, but understanding what the marketplace looks for is a good place to start. 

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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