I make no secret of the fact that I work as a freelancer and that I have also branched out into website development. FreelanceWithUs is one of those websites, but it’s far from the only one and I’ve actually lost track of how many they are.
My writers think I have an addiction to website creating. My partner thinks I am insane, as does the guy that mentored me. But there is some sanity to all of this madness because while these sites may not make a huge amount of money on their own, collectively they are able earn a respectable wage and even when they are not earning they still exist as an asset.
Every now and then I can offload one of them to earn a little side income (which inevitably goes back into more sites, because my habit is like an alien that grows two heads when you chop off one) and the others will continue to exist as part of my portfolio. But how do I know how much they are worth if they are new, if they have yet to earn any money or if they have only just started earning? After all, if you don’t know how much your site is worth it’s hard to place a price tag on it, let alone come to the decision of whether you should be selling to sell it or not.
Start-up Sites Are Worth More To You
It’s hard to place a value on a site that is brand new and it’s even harder to sell one. A site that is showing a lot of promise should be able to meet expectations within a year, maybe even within 6 months. So, if you create a new site that suddenly does really well and then you sell it based on the fact that it will likely do better, then prospective buyers are going to question your motive.
They will question why you didn’t just keep it for a few months and then make more money from the sale and they’ll think you’re up to something. And rightly so. Because if you think a site will grow to be worth $50,000 in 6 months, then why sell it for $5,000 or $10,000 now on the basis that it could be worth 5x or 10x more? It doesn’t make sense, no matter how you frame it.
You might be able to convince a private buyer to take a site that has potential because they may know you and trust you. I have sold privately to people who know my methods, trust them, and know they will ensure the success of the website. This has allowed me to get the price I want without waiting several months. However, there is just no way of doing this on an open marketplace like Flippa.
Wait Until It Earns
One of the first rules I learned in this business was that a site that doesn’t earn is a site that isn’t worth anything. You can’t sell a site just because it is getting a lot of traffic, because the quality of the traffic is what makes the difference.
As an example, I have a directory that gets over 3,000 hits a day and makes about $1 a day in Adsense, yet I have a financial site that gets 500 hits a day and makes $20 in Adsense. If those sites were not monetized then you could be forgiven for thinking that the former was worth much more, but that’s not the case.
Ignore the Automated Website Calculators
There are business valuation services for websites whereby you put your URL into a program and it spits out a perceived worth. But this is based on factors that have little actual impact on the value of your site.
They focus on hits and Alexa ranking, as well as the size of your URL. None of this really matters and I’ve seen far too many discrepancies in these automated programs to ever put any faith in them.
The best way to find the value of a site is to wait until it is earning and then calculate those earnings. No one cares how much potential you think it has or how much work has gone into it. They do care that it has good metrics, is getting quality hits and has good SEO, but the earnings will reflect that most of the time.
You should take your average monthly earnings from the past 3 months and then multiple by 35. Once you have done that you need to subtract the amount of money that you spend every month on advertising in order to get those hits. This is why a site that is getting organic hits from Google is going to be worth much more than one that is paying for them, because the former has a minimal budget and relies on quality content and SEO, while the latter relies on marketing and social media profiles.
The figure you arrive at is a rough estimation of the total worth of your site. But it is also one that is towards the higher limit of what you can expect to get as websites lose their rankings all of the time and there is no guarantee that an investor who buys the site today will earn their money back in 35 months. On average, you will see sites selling for a figure that equates to about 20 to 25 months of earnings—even less if they have proved to be unstable in the past or they are very young sites.