How to calculate your website value

Before you sell or buy a website, you need to know how much is the value. This is very important so that you did not buy too high or sell too low. There are a several ways to calculate your website value. The best way is Profit based.

Web sites are bought and sold based on the expectation of future profitability. To find this you must first determine the revenue and cost. Profits are defined as earnings minus expenses. Expense might be from advertising, domain, and hosting. Do not forget to include the cost of your time to run the website. Find out how much is an hour of your time. Calculate how many hours do you have to work for your website, and multiple this with your hourly cost. If a website profit is $10 per month, then value is 10 * $10 = $100. So the website value is 10 months profit.

Things to consider when buying website.

• What will happen with the website backlink? Will you have to pay for the backlink? Does backlink come from the current owner? What will happen to the backlink from his website if he sells the website to you?
• Where does the traffic come from? Traffic from search engine is more valuable than from ads.
• What is the trend of the website traffic. Young website usually have high growth. Increasing or declining traffic will affect the website revenue. if  every 1000 visitor generates $10, and next month the website visitor drop 10% then your revenue will drop 10% too. For example if current month profit is $10 and the website trafic has zero growth then you just multiple it with 10 = $10 * 10 = $100. But how much does its value, if the traffic increases 10% each month and from 1000 visitor it generates $10?

The value is now $159.37 compared to $100. You have to remember that $159.37 is based on future value not current value. To calculate the present value see this.