As we all know, selling websites can be a lucrative business. Believe it or not, some websites have sold for millions of dollars. However, it’s important to keep in mind that while this isn’t common, it is possible. Whether you’re trying to build a website to sell in the future or already have an existing website you are willing to sell, it’s good to know how to determine a reasonable price.
Factors to Consider When Pricing a Website
Many people are looking for websites they can purchase because they are already established. By established I mean that the website already has a decent amount of traffic (or a community of followers) and maybe even has an older domain. Remember, domains age like wine and the older a domain is, the more it is worth (typically). Therefore, when a website is established, it’s much easier to grow or manipulate it in ways to increase revenue. Since there’s a market for websites, all you need to do is price yours in order to sell it. A great way to see how much your site is worth is to compare your site to similar ones already for sale. For example, Flippa.com is a great online marketplace for websites to be bought and sold. Check out sites that are similar to yours based on the various traffic metrics available, and your subjective evaluation of the site to get a decent idea.
Think About the Time You Put Into It
If your website is generating income, you’ve probably put a decent amount of work into it. But it’s important to remember you were compensated for that work. That’s why when you sell your site, you should factor in the time it took to build. It’s probably impossible to remember how many hours you spent, unless you documented your time. However, with a little effort you could come up with a general approximation and that’s good enough. If you’re having trouble, you may want to ask yourself, “How much time would I expect someone else to use to replicate my site?”
Consider the Traffic
A website needs to have a decent amount of traffic to be profitable. If your site only gets a few visitors, it’s probably best to wait until you can increase the traffic numbers. The only exception to this general rule is if your visitors are heavily engaged and you command high authority over them or your site’s niche. In contrast, if you’re getting thousands of visitors a day, it’s time to put it up for sale. Generally speaking, the more traffic you have, the higher you can sell your site for. However, be sure to keep in mind that engagement is important as well. If you have 50,000 visitors per month but 99% of them are new visitors that only stay on your site for 5 seconds than that’s not terribly valuable is it? It’s generally better to have a decent amount of visitors that stay on your site longer, actively participate, and share your content. Always be sure to consider the subjective value in conjunction with objective data (raw traffic numbers).
Factor In the Revenue It Generates
When you sell your website, the buyer will receive the revenue you’re making on it now. You have to make it worthwhile to your buyer. The only way to do that is to increase the revenue of the site to a decent amount of money. This really only applies to sites that display advertisements, do affiliate marketing, or sell products/services. Remember, selling a website is a lot like selling a brick and mortar business. Expect to prove to potential buyers what revenue or profit your website generates. A smart buyer won’t buy your site based on traffic estimates alone.
Pricing Your Website – Do the Math
There’s a lot of talk online on how much you should multiply the average revenue of a site to come up with a website price. Some people will say to multiple the site’s average revenue by 2.5 and then minus the costs of running the site. They then add back in the time it took them to build it and the traffic it receives. Other people say that multiplying the average revenue by 10 makes more sense. As you can see, that’s a huge discrepancy. Based on those two metrics you can sell the same site that makes $1,000 a month for either $2,500 or $10,000.
What you really need to think about when pricing your site is how much other people are willing to pay for it. This is just basic Economics, and just like my old economics professor said, “Something is worth exactly as much as someone else is willing to pay for it.” This is why you absolutely have to think about your buyers and your industry. Some industries are hot sellers, while others take a while to sell because buyers don’t see sites in that industry as good investments. The amount of money buyers in certain industries have also differs. The technology industry is profitable and website buyers know this because they’ve made money from them already. Overall, do your research to determine how much you should multiply your revenue by, so you can set a price that buyers will be able to afford and makes sense for your industry.
Using Website Appraisal Tools
If you’re still stuck on how much to sell your website, you may want to consider using online website appraisal tools. Most of them are free, but they aren’t as accurate as you would like them to be. You may want to take the values and average them. That can give you an idea of a price for your site.
There is an appraisal service you can use. The service gives you a more accurate price for your site. DomainAppraisal.org has three plans to choose from:
- Enterprise Appraisal – $149.99
- Premium Appraisal – $59.99
- Basic Appraisal – $19.99
Just like anything you sell, you’ll have to do market research. You’ll have to think about your labor and expenses. Use the appraisal tools as a guide, and then set a price that makes you comfortable.
How do you price your website? Is it a difficult process, or do you have a system you use? What are the best resources you’ve found for pricing or selling your sites?