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?
I wouldnt sell it unless I wanted the money to reinvest into something bigger…
it’s a fantastic domain, and a lot can be done with it.
Appraisal-wise, 3 yrs revenue is a bit too long-term, don’t you think? 2 yrs max. Valuing the community is important but it’s also important (critical if its a blog) to remember that the blogger and his blogging style is an important component of that community. Blogger leaves, droves of commenters leave, you’ve got a ghost-town worth half of what you paid for…
Hey, Thanks for the mention. I made dnScoop, and yes it’s a bit loaded down at the moment. I’m only allowing a certain percent of traffic to use the tool right now, since last time one of my tools got dugg, the host was not happy, and I had to move the site. Anyway it should be back to normal by tomorrow.
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From dnScoop
The estimated value of http://BlogSearchEngine.com is: $577,300
Thanks B Jones. Looking forward to seeing the tool back up and running.
What criteria do you base your estimated values upon?
BSE! Awesome domain name for sure.
I hope I can have it back to normal by tomorrow.
The value is based on several factors. Some for judging the value of the name alone, and others for estimating the value of the developed site.
Number of external linksLinks have become a valuable over the last few years. People pay up to several hundred dollars per link per month.
Popularity of the domain name
(or how often the domain name as a phrase ‘domain.com’ occurs on the web)
Popularity of the domain name word
I also attempted to judge the quality of the words used in the domain (how popular is ‘domain’ without the .com) This isn’t as effective in domains with fewer than 5 characters, so I used a different method for those.
Alexa Rank
Alexa rank can contribute to the value of a domain, but in the algorithm, only ranks of around 900 or higher can really contribute to the value, with ranks of 100 or less contributing significantly.
Age of the domain
Usually the older a domain is, the more it’s worth.
Site Category
Site category is taken into consideration (just a little)
Though the page shows the pagerank value of the site, I didn’t factor that value in. I felt that the link numbers from Yahoo were a better indicator of the link popularity.
I also wouldn’t sell it now. It can be worth much more in a couple of years.
FinanceRating.com – Worth $17,000 Sweet!
Loren:
I tested two sites. It is just fun to see the worth.
But no real value.
[1] It is based on alexa rank. Most of u know it is easy to manipulate the rank. And, most webmasters (beginners) do have it installed on their desktops.
[2] Based on inbound links. Not based on the quality of links.
However,The tool will add more value, if the tool can take into consideration on what you suggested (number users visiting, registered users etc..).
I recently helped a customer sell their website + domain name and i found some helpful tools at Buysellwebsite.com
(12 x (Net Income Average)) + 12 x (Unique Visitor Average x Unique Visitor value)) x 1plus the content value = High Value for Website
(9 x (Net Income Average)) + 9 x (Unique Visitor Average x Unique Visitor value)) x 1plus the content value = Low Value for Website
It is also very important to estimate the value of the keyword(s) and the number of keyword(s) that compose a domain name.
I tried the tool with a domain that I sold a couple of months ago on Sedo and the value given by dnScoop was 20 times less. I think it is a better tool to value websites than pure domain name (with no traffic).
Also, you can have a domain that has no value to you but has huge value to someone else. The negociation is also important, a domain name is unique and therefore the price limit is the limit of what the buyer is willing to pay.
I am surprised why the valuation has not included one important factor of the user database that the site has.
Consider the Google acquisition of YouTube. At some point in the future, we can expect Google allow YouTube users to login with their Gmail id. One thing, the amount of user registered there, Google can expect a huge new list of users. That apart, Google now has an extra dimension to read its user behavior; by the kind of videos they watch!
So, isnt the user database a critical aspect of any valuation?
If you can find someone to buy that domain for $800,000 i would sell it in a flash. I accept that revenue is not the only way to value a domain, but at only $1,400 that means the valuation is equivalent to 47 years the annual turnover. This is clearly madness. I would focus on building the revenue then you might have a much better chance of selling it at $800k.
I’ve found another site valuation tool and it seems to me that it’s more accurate than dnscoop. For example the value of myspcae.com is $782,886,527 and I believe it’s quite close to real value. The BlogSearchEngine.com was appraised at $406,972. Not bad :)
BSE! Awesome domain name for sure.
Thanks Jones. I coding now Blog search script.
Thanks for the great info, I did find another great domain name appraisal website named WeValuer.com Its new but looks like it has some info on what your looking for.
http://www.sitesbid.com I have sold many websites here and it is free to post a website. You can buy or sell websites at http://www.sitesbid.com
Those tools are not accurate ofcource but at least the give you a clue about the value of a site
Great article! I tried a few websites I use a lot and found the difference in value funny. Some websites I expected to return results in the 10′s of millions and the came in low, whereas other websites I expected to be low came in rather high. Awesome tool though!
You can also try http://www.estimix.com – a free tool that provides a nice summary of the website performance.The estimation provided by estimix is the result of a complex analysis based on factors like: the age of the website, the demographic structure of the traffic, the countries where the website is popular and sources of the traffic.