You’ve built an online business, putting in endless amounts of time and effort, and now you’re considering selling. You undoubtedly are asking yourself, “How much is my website worth?” In order to get maximum value for your website, there are several variables you need to take into consideration.
The big question: How much is my website worth?
There isn’t a single valuation formula that will work for every website, as there are several variables that differ depending on how the website is monetized. There are eCommerce websites?that sell their own physical products, those that earn affiliate commissions through programs such as Amazon Associates, and then websites that generate revenue through advertisements.
In order to determine how much your website is worth, there are some basic questions you will need to take into consideration:
- What is your total annual revenue?
- What is the net profit after all operating expenses?
- What online channels do your customers come from, and do these appear to be sustainable in the foreseeable future?
- How much competition is in your niche, and where are you positioned currently?
- What operational components of the website are systemized?
- What role do you fulfill, and will the website continue to operate if you step away and are replaced by a new owner?
Once you’ve carefully evaluated the answers to those questions, read on to see how your answers could impact the value of your website.
Factors that have a positive impact on your website’s value
In reality, the amount of money that someone is going to be willing to pay for your website will revolve around two things: the ROI (return on investment) and the risk associated with your business model.
Lower risk and high ROI will help command a higher price, while lower ROI and higher risk will drastically reduce the value of your website. Here are some factors that will ultimately lead to a higher valuation:
- Multiple proven traffic sources that are both responsible for a significant percentage of annual revenue and have long-term staying power.
- A long history of traffic stats from Google Analytics?and revenue data from merchant accounts and CMS platforms.
- Long-term relationships with manufactures and suppliers, with multiple viable back-up sources.
- A business name that is trademarked and consistent from the domain name to all social media handles.
- A high percentage of repeat website visitors and customers.
- Potential for scalable growth.
- Processes and systems than can be easily documented and taught.
To help you understand everything you will need to take into consideration, check out this guide on the factors that influence website value.
When is the ideal time to sell your website?
While there will never be an absolute perfect time to sell your website, any time you can show rapid exponential growth, you will be able to command a much higher price. There are also several different circumstances that can trigger a sale.
For example, an illness or the desire to retire might force a faster sale, which will result in a lower net. If someone is eager to acquire your website, you might find yourself in a situation that you simply can’t pass up because the offer is so attractive, financially.
Let’s pretend you own an eCommerce website that utilizes a drop-shipping model and is completely hands-off. The revenue over the past five-years was:
- $230,000: Year one
- $247,000: Year two
- $785,000: Year three
- $560,000: Year four
- $565,000: Year five
You would have been able to sell your website for a much higher price at the end of year three than you would have if you waited until year four or five. The revenue peaked and then dropped, although it appears to have leveled off.
Trying to sell your website after the peak or while revenue is declining will greatly reduce the size of any offers you receive.
You have to think strategically once you decide that selling is the right move.
How to find a buyer for your website
The actual process of selling a website is straightforward, regardless of whether you sell it on your own or use the services of a professional website broker. The deal flow is as follows:
- The decision to sell is made.
- You put together all details in regard to revenue, expenses and net profit.
- You get an appraisal and website valuation completed.
- You identify potential buyers.
- Negotiate a purchase price.
- Funds and assets are transferred using a service like Escrow.com.
You have two options when it comes time to sell: you can attempt to sell your website on your own, or you hire a broker to pre-qualify potential buyers and handle the entire process. There are pros and cons associated with both options.
- With plenty of marketplace options like Flippa,?Empire Flippers?and Shopify Exchange, this is a great option for those looking to sell a website with a yearly revenue under six figures.
- You will pay less fees than you would by hiring a broker to handle the transaction.
- You have to handle the process from start to finish.
- You will be responsible for pre-qualifying potential buyers and performing due diligence.
- No access to a broker’s Rolodex of solid buyers.
- Years of experience working for you in order to net you the highest exit.
- Access to a network of qualified buyers.
- Brokers handle the entire process, including the transfer of funds and assets.
- You will pay a higher success fee than you would if you listed your website on a marketplace.
- Brokers will typically only take on websites with high revenue numbers and those within niches that are extremely popular.
- Most will require you to sign an exclusive listing agreement.
Selling your website can be challenging process. From determining how much your website is worth to finding a buyer, there will be many challenges and obstacles along the way. Hopefully, the information above will help you make the right decision and yield the highest dollar amount for your website in the event of a sale.