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How are websites valued?

Most buyers consider the net profit made by the website annually plus some percentage higher than this amount. Suppose, for example, a website’s annual net profit amounts to $100,000.00 a buyer may multiply this amount with 1.5 and give an offer of $150,000.00 as the buying price for the entire website. Other than this, there are several other issues that the buyer considers; such as any risks that the websitemaybe facing. In case a website shows high risk patterns, the buyer may provide a lower multiple which generally lowers the final buying price. In order to ascertain the risks faced by a website, a number of factors are considered such as:

  • Increasing growth
  • Stable earnings
  • Automated systems
  • Diversified traffic streams
  • Diversified income streams
  • Unique selling mechanisms

Methods of Valuation

There a myriad of ways in which websites can be valued. For some websites, the assets the websites owns such as a rich contacts database or customer list may be appealing to potential buyers who may have innovative ways of using this asset, and therefore may value the website based on these assets.

At other times, buyers may consider the revenues the website makes and identifying a multiple based on strengths and weaknesses of the website. In such a case, the buyer scans the revenues the website had been making for a stipulated period of time and multiplies this value with a predetermined multiplier figure in order to arrive to the final value of the website.

For more information and free evaluation visit the website broker website of BizBroker24.




September 10, 2013