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by litepink on June 22, 2015

Thinking of Selling Your Website

Website owners have a different reason for creating their sites. You may have created your website with the goal of making it as your sole or additional revenue source. Or you may have altruistic motives whereby you don really aim to make big money (or any
money, for that matter) out of it, but simply want to get your message across your target audience. Whatever your objective, you put time, energy, even considerable expense in nurturing the website and seeing its audience or customers grow.

However, for some reasons, there may come a time when you
would want to sell your website. Maybe, it has already served its purpose and you want
to move to a different direction. Or possibly, it is only marginally successful and you think spending more time and energy to it is a waste. You may also possibly consider the website as a short lived opportunity that you want to dispose quickly.

Whatever the situation, selling your website will be one of the most important business decisions you will ever make. After making it grow possibly for years, you only got one chance to sell your site. Once you sign on the dotted line and closed the sale, that it! No turning back for you, whether you think you sold the website for a price too low or whether you shouldn have sold it

at all.

It is therefore important to carefully consider some steps before selling your website. And one of the main questions you will ask is: how do I set a price tag on the web site? What is the website value?

One important point, though: there are no clear cut ways and established formula to determine a web site value. In fact, making an accurate valuation is a judgment call, where not all parties may agree.

Below are ways commonly used to assess and determine
your website value, which you can use in combination with other factors that may be relevant to your web site:

Multiple of the profit it turns in.

Many practitioners in the field put a website value using a straight formula: 10 times of its net profit. The rationale is that 10x is the lower level bottom foundation of return on investment. For a website that earns a profit of $100,000 a year, then its value can be placed at $1 million!

However, this formula is too simplistic (why multiple of 10, and not multiple of 15 or 20?). Then using the 10x valuation method, the first website value despite its coveted domain name is only $500, while the site with the longer hyphenated domain name could fetch up to $5,000. Given this case, the
10x valuation formula does not really make any sense.

Cost involved in replicating the website.

Similar to brick and mortar businesses, another method of valuation is determining the price of the website based on its inventory and assets. For a website, the inventory assets would include the quality and quantity of its content and images, as well as scripts or applications that may have been purchased or developed specifically for the web site.

It could also include the size of its customer list or database; as well as number of subscribers. Patents normally increases the underlying value of a business. However, patents are intangible intellectual properties, and can be subject to varying assignments of value and worth.

Branding and industry stature.

A website with a well established brand name and industry recognition is likely to attract a higher price than a totally unknown web site. For example, a site targeted to CEOs and high level executives is more valuable than a site whose main audiences are folks who love squirrels.

Other considerations include: the effectiveness of the web site to its users (are they finding what they need?); as well as the loyalty of its customers as determined by the number of its return users.

Domain name.

There are site buyers who have no interest in the current content of the site and focuses solely in the site domain name. If Google, for example drops the site, then the website loses 100% of its traffic. However, a site that relies on search engines for 40% of its traffic, 20% from links, 30% from paid advertising and 10% from publicity has a greater insurance when one source stops bringing in traffic to it.

A site that consistently ranks at the top of the search engines (not just a one time fluke) also can be
used as a negotiating factor when setting the price, as well as the number of its quality backlinks.Articles Connexes:

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