How to estimate the value of a website or a web business?

Many software offers an automatic estimate of your website, based in particular on the free data available such as Alexa, a tool that classifies sites worldwide according to their audience.

Except that Alexa… it's over:

Other tools tried to use the PageRank… no longer displayed by Google for a few years.

In my mind, there are 2 categories of sites, for which the valuation method will be different.

1/ Raw domain names, purchased for their intrinsic value.

The most expensive domain name, Lasvegas.com, sold for $90 million. It now serves as a travel booking site for the city.

Was it a good deal? I'm not sure given the estimated traffic curve from SEMrush:

estimated traffic semrush lasvegas.com

Note that other "sites" sold for more. But they were attached to the joint sale of a company and derived their value from their turnover.

Today, given the number of extensions available, I advise you not to buy a domain at full price for its name alone. Any domain that is a little "marketed", with a few links/referring domains, will be able to rank in front of a " exact match domain (EMD).

2/ Online businesses, startups and pure players.

By online business, I mean a profitable site, properly monetized, with a turnover and a gross operating surplus (EBITDA).

And if not?

The US market being quite mature, I often refer to Empire Flippers. I had discovered their site after 2 articles on MOZ and Ahrefs (yes, it works guest posts to discover your business, create links and develop your turnover).

Quick answer: your average monthly profit over 1 year * between 20 and 50.

Reasonably, like most physical businesses, around 3 times EBITDA.

If your creperie earns you €60, you will generally resell it for around €000.

Of course, you're going to tailor that number to security and how easy it is to hold the case.

If it has been running “on its own” for 50 years, it will be worth more than one that just opened 3 years ago or less and requires the full involvement of the manager.

It's the same for online businesses: for equal profit, the drop shipping site opened a year ago will be worth less than a gardening site from the 2000s with a diversified business model.

3/ Risk criteria of an online business.

Here are some examples of sites for sale on Empire Flippers:

examples of internet business sites for sale

I take this site as an example as I noticed their entry into the INC 5000 rankings and therefore some success / some subject matter expertise:

criteria entry in inc 5000 ranking

I told you about 3 years for a classic site/fund; here we are on 39 and 41 times the monthly profit for example.

You can easily find cheaper sites, especially on Flippa, but with a related danger that forces you to make them profitable in 6 months – 1 year.

What factors influence the risk of an online business and its valuation?

a/ Sources of traffic.

To be able to monetize, you must first receive traffic.

If you've ever looked at Google Analytics or an equivalent, you should be familiar with the different types of web marketing channels.

traffic-channels-google-analytics

On this graph, appear:

  1. Le natural referencing (SEO) : most appreciated by investors because it is not dependent on a direct investment, even if it is the one that requires the most time / financial effort to set up. A good SEO is also the brand development, which can represent a good part of the searches of Internet users who visit the site.
  2. Le referral : these are links clicked from other sites (guest articles, spontaneous quotes, etc.); it's an amazing channel because it not only boosts your SEO but also drives direct conversions. A link from a popular site is a recommendation for both Google and Internet users.
  3. Direct traffic : these are Internet users who type the name of your site directly into the browser bar; it is a good indicator of the popularity of the site / your brand.
  4. Le paid referencing / sponsored links : these are paid campaigns in Google, Bing (Ads, Shopping, etc.) or on social networks such as Facebook, Instagram, etc.
  5. Le corresponds to the advertising banners present on a site. It's a calamitous way to try to do business; you will lose an average of €7 to gain €1 in turnover.
  6. The Social networks : unless you pay for campaigns, social networks used "naturally" are not an effective way to make a website profitable.
  7. It should be added: mailing, an excellent channel if you have collected these emails on a regular basis and not by sucking them up automatically from other sites and then spamming their owner.

Wolfgang Digital, in his study on E-commerce KPIs, lists the average turnover to be expected according to the channels:

average ca ecommerce kpi study

b/ Sources of income – diversification of monetization methods.

The more a site's revenue depends on one type of monetization, the more uncertain its future.

Empire Flippers allows you to filter according to the type of monetization:

types of monetization of a site

Are listed:

  1. Membership.
  2. Amazon Associates.
  3. Amazon FBA.
  4. Amazon FBM.
  5. Amazon KDP.
  6. Amazon Merch.
  7. Application.
  8. digital product.
  9. Display advertising.
  10. DropShipping.
  11. Ecommerce.
  12. Infoproduct.
  13. Lead generation.
  14. Other.
  15. Saas.
  16. Service.
  17. Subscription/subscription to a box.
  18. Subscription/subscription.

Perhaps you will find a strategy there to test?

c/ Work and qualities needed on a daily basis.

Can anyone take over the business or does it require some expertise in the field?

Is it sufficiently automated/supervised by an existing team for a quasi-neophyte buyer to take the reins?

What workload should be expected? Is it a full-time job or can you continue to do another job on the side?

d/ Criteria related to my SEO experience.

2 criteria that I like to look at to evaluate a competitor or a site to buy:

  1. The contents.
  2. The links.

For content, look at the number of pages indexed in Google by typing “site:nomdusite.fr”; it's a first quality barrier crossed, even if the method is not infallible.

By experiment :

  1. The more pages a site has indexed in Google, the more traffic it receives… and therefore its turnover announced via SEO is more credible.
  2. A correct content page (product sheet/blog article) costs around 33€ to produce (figure to be adapted according to your own experience).

For links, the more referring domains a site has, that is to say different sites that link to it, the more popular it will be in Google.

Kevin Richard published a study on the possibility of predicting the ranking of a page in Google by looking only at the referring domains dofollow :

This study is in line with all those seriously documented on SEO:

Buying a site with a large number of indexed pages and a large number of referring domains is always safer.

You will then have to study your Analytics + Search Console data if they are available to validate your analysis.

Failing that, the SEMrush curve will give you a first glimpse. Here, a good example of "made for adsense" (MFA), smashed by the Google Penguin algorithm:

site penalized by Google Penguin

4/ Take into account the potential of the site?

For having already acquired sites, companies and real estate:

  1. I'm always suspicious when people talk to me about potential.
  2. It's not up to you to pay for it. It is up to the current manager to make the investments / efforts to sell at a higher price afterwards.

In the majority of cases, the seller sells because he believes that the business has reached a peak or is likely to decline again in the near future.

I earned my first income on the web in 2012 by developing and monetizing the traffic of my sites (AdSense ...).


Since 2013 and my first professional services, I have had the opportunity to participate in the development of more than 450 sites in more than +20 countries.

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