Website Value Valuation

The Value of a Website

A website is today seen as online real estate. Organizations, institutions and individuals are the most visible website owners. Each website available via the internet has value either to its owner, or to its visitors.

The administrator of a website is called a webmaster. Some website owners are their own webmasters. Some website owners hire or contract webmasters to manage their websites.

The value of a website has two faces to it. First is the website’s importance in carrying various functions. These functions of a website are determined from time to time by the owner of each individual website. Second, a website had monetary value. Such monetary value hinges on the analysis of the individual buying or selling the website.

Functionality of a Website

Let us first look at website value based on functionalities first, before we venture into monetary value.

Websites are seen as online real estate due to their ability to assist owners to carry out various tasks. In this respect, a lot of websites are used to communicate. Others are used as interactive platforms such as gaming websites, sales websites and government websites. All websites conform to one or both functions i.e communication or platform. Some use a mix of both functions. Most websites that are used as platforms capture data to build databases too.

The above are the functions of a website that make them valuable to their owners. Next, let us look at a website’s value from a monetary perspective. This is useful when you are buying or selling an already established / running website.
Below, we will look at a number of factors used in calculating or approximating the value of a website. Most common, people use website traffic to analyse its value. While website traffic is an important factor, it is not the only factor that should be considered. Traffic to a website has clout, but can be outweighed by other factors.

Sentimental Value

Sentiment is not physical. You cannot touch it, smell it, or see it. Sentiment is felt. Website owners feel a sentimental attachment to their websites. This is especially true for websites that are owned by individuals. When you are evaluating the value of a website, consider the amount of time and effort that the owner has put into it. The more resource and time they have put into the website, the more sentimentally attached they will be to it.

Age of the Website

This brings us to our second factor, which is age. Older websites have more value than newer websites. If you want your website to increase in value, stick with it for a number of years. Real estate grows in value with time. Websites are not any different, they too appreciate in value over time. Most likely, this is because a website attracts more loyal visitors and users over time. The age of a website can outweigh some other factors when evaluating the monetary value of a website.

Traffic Per Unit time Period

Traffic is about the number of people visiting a website per a giver unit of time. Units of time range from hours, days, weeks, months and years. Traffic analysis tools incorporated within websites give webmasters this information. A website A with 1000 daily visitors has more value that a website B with 5000 weekly visitors.

Another measure of value that is found within traffic is the number of page views. If you have visitors to your website who do not click through your website, then you have valueless traffic. You may have 1000 visitors per day, with each visitor viewing 1 page in your website. Another website may have 500 visitors in a day, but each visitor views 3 pages of the website. This translates to a total of 1500 pages viewed. The website with more pageviews per visitor thus has higher value.

Often, pageviews per visitor is a more useful measure of a website’s value. It is advisable to consider pageviews per visitor even when a website has a lot of visitors.

Achievement of Website Goals

Every now and then, webmasters set goals within their website. The goals may be simple or complex. Targets in sales within a website(s) and traffic are the common goals people set. If a website is often able to achieve its goals as set by the webmaster, then it is a valuable website.

Uniqueness of Content

Every website is unique in its own way. Unique content within a website increases its value. Duplicate content or content copied from other websites lowers the value of a website. Content uniqueness goes hand in hand with content originality.
Some websites are called niche websites. They focus on a very narrow area within a whole industry. E.g in travel, one may have a website dedicated to only tourism. They do not include content about travel for business. Such a website that focuses on a unique aspect of a niche within an industry will have very unique content. The content is even more unique if the webmaster writes only about their first-hand experiences. It is however disadvantaged when being sold due to its rigidity.

Therefore, a website with generality to it remains flexible and might work to your advantage when you are selling it. When it is placed under a new webmaster, it is adaptable to suit the needs of the new owner. It is also able to comfortably take in new content without losing its loyal visitors.

If you hope to ever sell your website, try to have some generality to it. Even if it is a niche website, have some amount of general content in it. You can limit such general content to say 15% of the total content. That way, general content will not eclipse your niche content.

Potential per individual analysis

Every buyer or seller has their unique perspective of a website. The website owner who is selling sees something the website has potential to do. Unfortunately, most of the time, webmasters and website owners are not doing or implementing the developments within their websites. They cite various reasons ranging from inadequate capital to labour intensiveness. Others just lack the time to implement the changes or new things they have identified.
On the other hand, the buyer may identify the same or something else in the website. They believe that they will do it to get more out of the same website.

All these point to potential. In the analysis of both the buyer and seller of a website, potential to get more out of the website plays a major role in determining the website’s monetary value. Of course, a website with more potential has higher value. Both the buyer and seller must factor in potential when agreeing on the final price of a website. Potential can sometimes outweigh the current traffic that a website is receiving.

Social Media Accounts

The last factor we look at is Social Media. Social Media is a useful attendant addition to any website. Consider the social media accounts connected to a website. They help with getting traffic to websites. If a website has social media accounts lined to it, you are strongly urged to sell them or buy them together with the website in one package. High value social media accounts add value to the website.

A word of caution about social media; do not be deceived by large social media followings. It is important that the social media accounts have demonstrable ability to channel traffic to content on the website under analysis.

In conclusion, every website has its unique value. Whether you are a website buyer or seller, analyse the value of a website carefully before resting on a final monetary value. We have identified and explained the major factors you should use when analyzing a website for its monetary value. Use them to arrive at a fair estimate of the value of any website.

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