The first part of this series was a very general overview of Virtual Real Estate investing, and it’s predecessor, (regular Real Estate investing), and then we went over the different ways to acquire websites in part 2.
If you missed the previous articles, you can read them here
What Gives a Website Its Value?
In this third part, we’ll go over the different factors that determine what a website is worth, so you can tell if a website you find for sale is a good deal or not, just by examining a few key factors.
So, we see all different websites all the time popping up on sites like Flippa and other places, and it seems very hard to determine, at first, how much each site is actually worth, and how popular it will be with the bidders. Well, there are a few different factors that really increase the value of a site, but, what are they? Well, first of all, you have traffic. Traffic is usually one of the first thing that people look at when determining the value of a site. One easy way to determine the traffic’s value, is to use a website called SEMRush.com. SEMRush will give you a dollar amount that indicates how much free traffic a site is getting per month, so, for example, if a site is getting roughly 1,000 visitors each month from Google, and if you were to target those same keywords using Google AdWords, you’d be paying $1 a click, then it’s safe to say that that site has about $1,000 a month in free traffic, so that’s what a $1,000 SEMRush score will indicate..
Aside from just the SEMRush score, you can also look at the number of visitors a site is getting, and where those visitors are coming from. For example, if they’re coming from “search”, then that’s good, because it means they’re coming on account of the site having some good search engine rankings. If they’re coming from referral, however, this could be anything from Facebook ads to display advertising on any number of websites, but in any case, it’s often paid traffic, and if you don’t know how much the person is paying for that traffic, then you have to be careful.
The other big thing of course, is how much is the website making at this very moment, and where is that money coming from? This is usually reflected as a monthly, such as $500 per month, for example. But the dollar amount of course, isn’t all that matters. You need to know, for example, is it coming from Google Adsense, from a product that the person owns, or from affiliate sales? This makes a big difference, because a site making $500 a month just from Adsense, is worth a LOT more than a site making $500 a month from affiliate sales (since the Adsense site requires almost no management, and can be made even more profitable, for anyone looking to take the time to test out some offers on it).
Many websites have other assets that come along with the website as sort of a package deal. This can influence how much the site is worth dramatically, for example, does the site offer a ClickBank product, such as a video series, or an eBook that some people might consider to be valuable? If so, you’re not just acquiring a website, you’re also acquiring a product as well, so you can expect to pay a lot more. Products aside, another important factor to look at, is whether or not the site comes with a list, and, of course, how big that list is, and how loyal are they? Also, does it already come with an auto-responder series to help you monetize that list as well as any future opt-ins? That’s something you’ll really want to know as well, because a list that has been nurtured, where some good relationship marketing has been done, can be EXTREMELY valuable, and is often under-valued significantly, so make sure to keep that in mind when you’re going to purchase a new site.
Last but certainly not least, is the domain name. As a general rule of thumb, shorter domains, are considered more valuable than really long ones, however, what’s more important is the Top Level Domain (TLD). The most valuable TLD is, of course, a .com, but also .net and .org carry some value as well. Anything other than those (.me, .info, .biz) are generally worth very little money. Also, what is the PR (Page Rank) of the domain name? The higher the PR, the better its SEO, and the easier it is to get it onto Page 1 of Google for the keywords you’re looking to monetize. The last key aspect of the domain, is its age. How old is this domain? The older the domain name, the better, and the more valuable it’ll be seen to be.
There are a few other factors that determine value as well, but just knowing these, will give you a very good idea going forward, of how much each website you come across is going to be worth to you if you try to sell it, or increase its revenue..