But first, a legal disclaimer:
⚖️ I am a writer, not a website broker, financial expert, or legal expert. This article is meant to give you a rough idea of the process you’re looking at, not to replace professional legal or financial advice.
With that out of the way, let’s talk about website values!
What impacts a website’s value? ?
There are many different factors that influence a website’s value, but before we dive into those, it’s important to note that we’re talking about market value. This doesn’t necessarily mean it’s the amount you’ll make when you sell your site; that number is determined by what your buyer is willing to pay. Sometimes it might be more than market value, other times it will be less.
Still, knowing the market value of your site gives you a number to aim for. So let’s take a look at what you’ll use to calculate it.
Traffic split
You might assume that the total number of visitors to your site each month/year is what determines the value, but not all traffic is of equal value.
There are two types of website traffic: organic traffic and paid traffic.
Organic traffic
Organic traffic is the term used for visitors who find your site through search engines, like Google, Yahoo, and Bing. This is the most valuable type of traffic because it requires little ongoing investment, creating a wider profit margin.
You can figure out how much organic traffic you’re getting by looking at your analytics. You can also see how the amount of organic reach you’re getting compares to similar sites by using an SEO tool, like Organic Research by Semrush. This can help you understand where your site fits into the market.
Paid traffic
Paid traffic is any traffic brought to your site through paid advertisements. This type of traffic requires more funding to maintain, reducing the profit margin, making paid traffic less valuable.
Luckily, if you’ve been properly tracking your ads with UTM parameters, it’s easy to figure out the percentage of traffic you’re getting from paid ads.
The ideal split
There is no universal standard for an “ideal” split of organic vs paid traffic, and most investors will expect to spend some amount of money on advertisements to maintain a site’s popularity. However, you want to have more organic traffic than paid traffic, ideally a lot more. Personally, I think it’s good to aim for at least 70% organic traffic.
Net profit
Total revenue can be misleading if a company spends a lot of money on basic business upkeep. This makes it important to calculate the net profit, which is the amount of money your business earns after expenses. You can figure this out in two steps:
- Subtract your operating costs from your total income – this reveals your gross profit
- Subtract the amount of taxes paid from your gross
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This article was written by Dianna Gunn and originally published on CodeinWP.