Find out how much your site is worth and how to further enhance that value! – WAU
The value of a digital asset, such as a website, is not as clear as that of physical goods. But there is a way to do this calculation. Let’s talk about this formula and see why it’s important to pay attention to it, even if you don’t intend to sell the site.
Creating a website today is so easy that it can be done for free in a matter of minutes, in a personalized way, in several well-known publishers.
But creating a valuable website, which makes a profit and can even be sold to an entrepreneur interested in investing in digital marketing, is much more difficult.
In fact, for many it is even difficult to calculate the value of the site itself and to know what to do to increase that number. Do you know how much your website is worth?
If the answer was no, you are in the right place, as we have created a guide that will help you to see this subject in a realistic and objective way. In addition to learning how to evaluate the value of a website, you will see what to do to make it more valuable and recognized in the market. Good reading!
Why does it matter if you know how much your website is worth?
If your website is connected to your company, and not an independent digital business, you might think it makes no difference to know how much it is worth.
If you think so, reconsider. The value of a website is not only important when the idea of the owner is to sell it later.
Even if it is directly linked to a physical enterprise, it is important to know in what ways your website generates value for the business. As well?
Many companies have websites, but they do not use them effectively to generate business, nor do they insist on measuring how much they are really useful for generating revenue.
It is as if it were just an obligation to have your own website, without any real commitment to make it a profit channel.
Knowing how much your site is worth and thinking of active ways to increase that value is the best way to avoid this trap and take advantage of all that the digital environment has to offer for your company.
How does the enhancement of a website work?
Physical assets already have a long history of valuations and transactions, which makes it much easier to assess their value. But how do you calculate the value of a website?
It may not seem like it, but the practice of buying and selling digital assets is huge – and it only tends to increase. Therefore, experts have already created effective methods of assessing the value of a website.
One of the most widespread methods is multiples concept. In this model, you need to average your last 12 months of net income. Then just multiply that value by a multiple, which goes from 20 to 50. The account looks like this:
last 12 months average net profit x 20–50.
And what determines what the multiple of your site will be? This number will depend on a number of economic factors, related to the market, and also to the performance of the site to generate profit even after being sold.
We can even separate 4 main factors that determine the calculation of the multiple that will be used to define the final value:
- risk: the greater the risk taken by the buyer, the lower the value of the multiple;
- potential: a site with high growth potential is worth far more than one that doesn’t have much to expand its operations to;
- ease of transfer: the new owner must have the same condition to run the business as the previous one, without major changes;
- proof ability: everything you say about the site needs to be supported by data to legitimize the proposed value.
For example, a website that relies too much on the owner’s intuition or personality to function has less value than one that already has a firm strategy, a proven method of generating leads and sales constantly.
After all, the second site offers less risk, probably shows greater potential, is easier to transfer without loss and can prove results and projections with data.
How to evaluate the value of your website?
In addition to the four points already highlighted above, which are very important to determine the value of a website for a possible buyer, it is necessary to evaluate other issues in this equation.
Some aspects directly linked to the functioning and performance of the website itself are vital in determining its value.
See below what are some of the most relevant factors that you need to keep an eye on to discover and prove the value of your website.
Revenue generated through the website
What is the role of the website in generating income for your business? The answer to that question will weigh heavily on the value assessment. After all, this is the ultimate goal of having a website.
Failure to follow this metric shows a lack of commitment to making this channel work as it should. Besides that, a website that gives no financial results has practically no market value.
In such a situation, the most that can happen is for a competitor to be interested in your domain and make an offer for it.
On the other hand, a website that generates high returns has everything to be valued with a generous multiple.
Traffic is also very important as it is where the money comes from. Sites that attract a lot of people sell a lot.
And even if the site doesn’t make that much money, a high flow of monthly visits means good growth potential. Just a few adjustments would probably be enough to increase your conversion rate.
In that respect, there are many possible sources of traffic, and all of them are welcome. But here’s an important tip: organic traffic it is always better than paid.
Thus, a website that has a high number of visits because it does a complete SEO job will have more value than an identical website whose traffic comes primarily from ads.
How is the brand that the website features seen by the market? A small business on the rise in the market usually attracts the attention of large companies, who become potential buyers.
In turn, a brand that has been weakening over the years should decrease the value of the site at the time of sale.
Sites that invest in branding and work to generate value and become sources of authority in the segment in which they operate will achieve greater appreciation because of the positive image in the market.
A successful website does not live by traffic alone. Engagement is another criterion that helps show how complete the job is and meets a public need.
If the engagement is low, it means that the content of the site is likely to be seen as superficial or of low quality. This type of fragility increases the risk of the business not sustaining itself in the long run and, therefore, decreases its value.
Time spent on the site, comments, shares, mentions on social networks, positive reviews of Net Promoter Score and email list engagement are a few ways to measure that engagement.
Good market practices
The digital market evolves very quickly, but some good practices have been around for a long time and need to be part of the business that wants a high valuation.
Sites that are not properly optimized for mobile, contain many SEO flaws, do not have a documented lead generation strategy or a designed and tested sales funnel fall far behind in the evaluation.
These good practices give credibility and strength to the business. Failure to comply with them indicates a lack of management capacity.
What are the ways to increase the value of the site?
Finding out how much your website is worth is only the first part of the story. The goal after that is to find ways to increase that value, that is, make it more effective and profitable.
In the list of strategies below, you will find great tips on what to do to value this asset and profit much more from it. It pays to invest in the following options.
Content Marketing is among the main digital marketing strategies that exist in the world.
It is based on generating value for a well-defined audience. With him, you can cultivate a large, engaged audience that will ultimately have the confidence to buy what you sell.
Many of the important criteria for increasing the value of a website are achieved with this strategy.
Diversify traffic sources
You should already know the danger of putting “all your eggs in one basket”. If your traffic always comes from the same source, what will happen if that source dries up?
As much as you follow a method to achieve the desired flow of visits, no one has control over external channels. This makes it risky to base a website’s success on just one source of visitor attraction.
Diversify and get visitors in many different ways. In addition to taking less risk, it will be possible to test which one has the greatest growth potential.
Diversify sources of income
The same principle of traffic holds true for revenue generation. Creating by-products or betting on different sales channels is a great way to increase profit without depending on a single strategy.
The more sources of revenue the site has, the greater its growth potential will also be: is killing two birds with one stone.
Extend your email list
The email list is very relevant to a website’s success for two main reasons: it keeps engagement and is great for conversions.
So, if you need to strengthen the relationship with your audience, work hard on email marketing. It will help you turn leads into customers and customers into fans.
The result of this is, of course, an increase in the value of your website.
Just above I said that the only thing that a website without sales could be of value is its domain, which could interest a competitor.
This was not for nothing. Domain variations of a website, within its segment, increase the opportunities to make it a reference in the area in which the business operates.
The tactic here is simple: acquire domain variations and key words that have strategic value for the business. This makes a lot of difference in the value of the site.
Testimonials and customer reviews happy with the results of your work, positive reviews in the specialized media and other social evidence that your business is reliable and profitable also help too.
This serves both to increase your prestige and cultivate a positive brand image as well as to increase sales and engagement.
Backlinks are one of Google’s 200 ranking factors, and they carry a lot of weight in organic website traffic.
That is why, the work of link building worth it. It takes work and takes time to get others to recommend your site. But once you do that, the value of that asset will increase a lot.
Don’t settle for creating a website that adapts to mobile devices in a basic way. Follow Google’s guideline and remake your site to become mobile-first.
In addition to creating a better user experience and helping search engine rankings, it will show commitment to the best practices in the digital market.
No doing things on intuition. Create methods and document them. Test to see what works and refine them constantly.
This will make your business a scalable and predictable results machine, unlike many sites that don’t know how to make money in the next month.
Now you know everything you need to do to find out how much your website is worth and, even more, how to increase that value.
Whether your idea is to sell the site, or keep it to promote your physical company, seek the help of specialists capable of helping you to boost this very important business channel.
And, if you are looking for ways to increase traffic to your site – without paying extra for it – download our free ebook on the subject!