It’s quite common for the seller to overvalue the object he’s selling, and the same thing applies for the website. However, in case of vehicles or real estate, there’s quite clear evaluation guidelines and big enough market with similar items on sale to make a correct evaluation. However, with websites, there are a lot more divergences between then, which makes comparing the sites with each other a lot more difficult.
Before we go into details, it’s important to separate the website into two categories:
- Website
- Online business
When you are buying a whole online business, you won’t evaluate it solely based on the website. You evaluate it as a whole business and use the same equation you would use to evaluate any business.
Here we’re gonna focus on buying just a website without any business coming with it. Websites that fall into this category are usually websites that offer a free service or content websites like blogs, news platforms or forums. Keep in mind that a news platform can also be a whole business, for example, if you would buy a website of a news media company, for example. But smaller news websites are usually only websites, even if they make money with ads. An easy baseline to separate a website from an online business is to see what is included in the sale. If you only get the content of the website, domain and social media accounts, then you are clearly buying only a website. However, if the company has employees who join you, then we are talking about online business. Not to mention if there’s also computer hardware and some office space included.
When buying a website, you need to look at these aspects:
- Traffic
- Content/Niche
- Domain name
Traffic
The most important aspect of a website. When evaluating the website pay attention mostly to organic traffic. The social media traffic is also legit, but only in the case if it comes from social media profiles belonging to the site. You will know this by looking if those accounts have a lot of followers and high engagement rate and then comparing the results to the traffic they generate.
Other traffic sources, such as direct or referral traffic, are most likely paid or fake and will disappear once the sale is made. Unless of course, you see that they come from a specific site which links to you and know they are not going to remove those links any time soon.
When looking on organic traffic, make sure to check from what country it is coming. For an international site, it’s a lot better if traffic comes from USA and UK rather than India or China. For a local website, most traffic should come from the country the website focuses on.
The only scenario when organic traffic does not have to be looked at is when you are buying the site just for the domain name and are not paying for the traffic that comes with it.
Content
Content is important for two reasons. The least reason is that you will not have to delete everything and rewrite the site. The main reason is that the site generates organic traffic based on keywords the current content has. So if you change the content to something completely different, the organic traffic will drop significantly.
Domain name
When buying a whole website buyer usually does not pay for a premium domain name, even if the site happens to have it. It’s mostly because you don’t get to pick the domain name yourself, but the website comes with the domain name it already has.
The aspect you should pay attention, though are Domain and Page Authority. The higher the number, the more the domain and the website is worth and the better it will rank on search engines, which also means more traffic now and in the future.
Regarding the domain name itself, it pretty much depends on your own personal preferences. Unless the domain name is completely from different niche than the website you are planning to build, it’s all up to the fact if you like or do not like the domain name. If the site is cheap, you can yield and take the domain name that is not best possible, and if the domain name is great, you can pay extra to get it. But remember that you can never change the domain name, everything else about the site you change, but not the domain name. So whatever decision you make make sure you are will be happy to live with it.
What I don’t recommend taking into account
The aspect that I don’t recommend to pay attention to is ad revenue. Such advice may come as a surprise, so let me explain it to you. Ad revenue is dependent on traffic and niche. When we evaluate the traffic and know the niche of the website, we can estimate the average ad revenue based on this, and it will be similar for all website of this niche.
Why I tell not to pay attention to ad revenue, even though it pretty stable is because in case the owner of the website is active in selling ad spaces or paid articles he may earn a lot more money than he would make with only using 3rd party ads, such as Google AdSense for example. But the moment he sells the site to you, the revenue will drop to the average value, because he will be no longer selling for you.
Design and web platform the site is on is another aspect you can completely ignore. This is because it’s effortless to change to something completely different, and it will not have any negative impact on anything else. Sure it will cost you something, but unless you are buying a low budget site, the cost will not make much difference.
So how to determine the price of the website?
I personally like to use https://www.websiteoutlook.com, which is straightforward and easy for beginners. While it takes account of all traffic, and not just an organic one, I still find it to be accurate enough in terms of evaluating the price. Just remember to check that at least half of the traffic the site receives is organic and that the numbers are up to date. But that’s not all. If the site has unique content which is exactly the one you would need, you may agree to pay more. The above site only calculates the value of the traffic the site receives, and not the other aspects.
Conclusion
Remember, in selling and buying it all comes down to negotiation. If you manage to convince the seller that his website is worth less than he assumed you will get it cheaper. Or if vice versa the seller manager to convince you that the website is worth a lot more, you will pay for it more. Negotiation skills play a great role here, but facts must back up all claims, so feel free to use this article as an argument when buying or selling a website.
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