Tuesday, February 14, 2006

How to determine the value of your website

Your website is you web property or real estate.

Buyers are surprised to learn that quite often the asking price is based upon nothing more sound than the seller’s whim.

However, here’s a way that would help to assess the value of a website –

***The cost of creating the website and related expenses, quality and quantity of its content and images, scripts purchased and used***

When you commission a webmaster to create your website, you will shell out at least P5,000 (US$96) for 3-5 webpages. There may be cheaper prices around.

For one webpage, it can range from P1,000-P2,500 (US$20-50).

I was asked recently by a British company to do their inner pages in the amount of P250 (US$5) per page. This I will use in the computation below.

If you have 100 pages in your website, total cost amounts to P25,000 (US$480). Therefore, you can sell your 100-page website for at least P25,000.

Let’s talk about the premium that is paid over and above the costs of creating your website.

This will account for the uniqueness of your website’s content, it’s popularity, or the number and quality of existing visitors.

Other considerations for the premium:

Branding and industry stature
Target audience
Domain name
Income Diversification
Traffic Diversification
Search engine rank
Site potential
Etc.

The Coke brand alone is already US$36 billion that should be paid over and above.

Therefore, we will still have to add the premium to our P25,000 calculation above.

Of course, the buyer think in terms of what the website is worth to him or her. Usually, it is based upon anticipated earnings.

A sophisticated buyer will ignore the above costing and not pay more than the business is worth to him or her.
At the end of the day, your web site is only worth as much as what somebody else is willing to pay for it.
Google bought into Alibaba.com for US$1.6 billion.
But before you buy or sell a website, it’s best to refer the valuation to a third party professional.

If you create your own website, think that you will sell it in the future, not just a presentation for your product or service.

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