Today on Digg.com, one of the top stories is a domain valuation tool run by DNScoop which valued YouTube at $969 Million and Digg.com at $106 Million.
Seems they are pretty close with YouTube, and Digg could be valued a bit more. I clicked over to their site and it’s down (the Digg Effect) but they point to another domain appraisal tool, LeapFish.
LeapFish however, values Digg.com at around $13 million. There is quite a difference in valuation there, but the system they use seems down due to Google and Yahoo value attributes not working.
This domain and site valuation gets me thinking, what is the best way to assign value to a web site?
Here are some basics I’ve always used:
- Revenue : It’s a good rule of thumb to look at site’s current monthly revenue, and multiply that by 36; 3 years. If you’re buying the site, look at the revenue opportunities that are missing. Does it use Text Link Ads? Google AdSense? You can find good value in a site that is not monetizing to its fullest advantage.
- Community : Can the value of one user be assigned? If a forum has 5,000 registered users and each user is valued at a $10 acquisition price, that’s an easy added bonus of $50,000 to a site. Sure, the value of a registered user is questionble, but it is a major factor.
- Domain Age : The older the domain and site, the better. If the site has only had one owner, in the same fashion as a used car, you can track back the milage of the site and the history to one trusted source. If the site has had various owners who may have used questionable SEO tactics in the past, then consider that a negative score on site value.
- Inbound Links : Use Yahoo Site Explorer to track the amount of people linking to the site and from what types of sites. If there are thousands of relevant and authoritive sites pointing to the site, then that should add to its value. If there are link farms or lots of spam sites linking to the site which is being appraised, this could hurt its long term value and the labor of mailing sites and asking that links be taken down could give the site seller or buying a strong negotiation advantage.
Recently, I’ve been thinking of selling one of my older and more established sites, BlogSearchEngine.com.
Here are its stats:
- Established in 2003
- $1,400 a month in revenue (and yes, this could be increased substancially)
- About 100,000 users per month (again, could be increased big time)
- 346,000 inbound links
- Incredible domain name!
It’s valued at $800,000 by LeapFish and I’m eager to see what DNScoop values it at once DNScoop is up and running again.
Question is, exactly how accurate are these appraisal tools?
What other variables do you put into figuring out the value of an established site or domain?
