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How Much is Your Website Worth?

webcalc_icon.gifRecently, 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:

webvaluecalc1.gif

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.

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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:

webvaluecalc3.gif

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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One Response to “How Much is Your Website Worth?”

  1. Methinks these ‘calculators’ would be more popular if they just inflated all the prices upwards. It says my blog is only worth $720 :(