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Determine Website Valuation

Posted on 2010-01-05
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Hello,

If i want to buy a website then which factors should i consider?
I know there are various factors like google pagerank, alexa rank, backlinks etc. But i dont know the weightage of them. So please tell me how to use the above mentioned data to calculate website quotation..

Thanks,
Badal
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Question by:badalpatel
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by:apexpert
ID: 26179217
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by:badalpatel
ID: 26179235
Hello,

I dont want any hosting plan.
I want to determine any site valuation..Suppose, there xyz.com and if i want to buy it how can i calculate the valuation of it? Pagerank, backlinks........???
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Springy555 earned 1000 total points
ID: 26180236
There are a few factors you can take into account...

The most common way of valuing a website is by taking the profits it makes and multiplying it by 9-12months.  Although this can vary quite a bit, depending on whether the website is abolutely rock solid (in which case you might multiply it by 36-60months) or if it has obvious earnings potential.

For a website that doesn't generate income, it kinda comes down to supply and demand.  In which case the domain itself is the most valuable.  Any 1/2/3/4 letter domain name can go for $$$$'s.  Way more if its a dictionary word.

In terms of pagerank, backlinks... the sole purpose is to generate traffic to the website.  Pagerank can change at any time and is easily fraudulated.  And a lot of backlinks could just be directory links.  So the valuation should be based on how much traffic this generates, and how much of that traffic can be converted in money.  Then multiply by so many months as above.

At the end of the day, most people paying good money for a website will expect a return on their investment.  A website costing $100,000 making $100 a month is probably not a good investment.
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by:dhsindy Sparrow
dhsindy Sparrow earned 1000 total points
ID: 26185721
In the final analysis, the value is what the buyer is williing to pay.
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