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Recently, there has been a proliferation of automated “website value” estimators. These sites claim to be able to compute the cash value of your website given only its URL. I like this idea of course (who doesn’t like to punch in their URL and see the results?). The problem of course, is that it doesn’t work very well. I started with the popular “Website Value Calculator” (located here) and tried entering a few different sites.

Putting the Website Value Calculator to the test

The first site I started with was Yahoo! Why? Because Yahoo! is generally ranked #1 in terms of site traffic. I figured a good place to start was with the most popular site on the Internet. Here’s what I got:

Now how much would you pay for a site with an Alexa traffic ranking of 1? (Ok, I know Alexa is broken) But if I had $1.4 billion burning a hole in my pocket, I’d certainly shell it out for Yahoo.

A quick check on Yahoo! Finance tells me that the company has a market capitalization of$30.58 billion. So our first test of the calculator clearly shows the calculator to be way off from ‘actual’ value. As everyone knows: The price of anything is the market-price. “Worth” is only a measure of what someone is willing to pay for something. In this case, the market values Yahoo at almost 22 times what the “Website Value Calculator” says.

A test that’s closer to home:

Ok, let’s try another test: One of the sites I own, ifate.com doesn’t have very many pages, but it still gets a fantastic amount of pageviews, and its a nice little earner.  We’ll ask the Website Value Calculator what it thinks:

Laugh! Sorry guys — iFate can clear that in a month with a combination of AdSense and affiliate marketing deals.

It looks to me like these calculators are using a combination of Google Pagerank, Alexa rankings (which we know are a cartoon), and backlinks to calculate “value”. The problem of course is that value is made up of an enormous number of additional components. We all know a site that contains reviews of high-end cameras is going to be worth more than a site that sells boiled peanuts. And even if you’re looking at two high-end camera sites with equal pageviews, one could be monetized more effectively than the other.

The bottom line is: It may be possible for a highly sophisticated calculator to someday accurately compute website value — but we’re not there yet.

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