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How to Value Your Website Before Selling

SEO,Sydney Nova Scotia Web Design,Web Design,web design nova scotia Comments Off on How to Value Your Website Before Selling

Are you considering selling your Nova Scotia website and want to know how much it’s worth before selling?

Has anyone made an offer yet? Have you just lost the passion for the website itself? Has the market declined? Have you lost business?

Maybe you built it up and it’s worth 10 times now than it was when you built it or purchased a few years ago.

Here are some tips that will tell you what your site is worth.

Most Nova Scotia Website buyers want to know one thing. How much is it making? You might have a few sales each month but they still want hard proof and analytics data (traffic). What you want for it and what someone else thinks it’s worth are completely separate matters.

You’ve put a lot of work into the website and want a decent return on your investment. Makes sense, right? You’ve added to the original design, you added a shopping cart, you’ve run several Halifax SEO campaigns and the site looks amazing! Time to cash in, right?

Below is a list of items that will lower the risk of a website and put more of a value on it:

  • Increasing growth
  • Stable earnings
  • Automated systems
  • Diversified traffic streams
  • Diversified income streams
  • Unique Selling Position

 

Evaluation Methods:

There are a few different types of valuation methods that buyers will use to value your Cape Breton website.

1. Revenue Multiple – You have most probably heard the statistic that most businesses sell for 2-3 times earnings. Basically a buyer will take the current net profit of the website for the past twelve months and then multiply it with an earnings multiplier to get a final valuation figure.

2. Comparable SalesNova Scotia Website Buyers will use this method if there is sales data available for similar websites. They will then adopt a similar valuation and make an offer based off that.

3. Asset Value – sometimes buyers will ignore the revenue of a website and instead look at the assets of the site (the customer list, or email database) and make a calculation on that instead. They do this because they may be able to leverage those assets better than the existing owner with a new product or making alterations to the system etc.

 

So What’s My Website Worth?

First you need to figure out just what your net profit is. You calculate this by taking your total sales/earnings and then subtract all your expenses from that figure, which will give you your net profit. Do this for the last twelve months earnings, known as trailing twelve months earnings (TTM).

Then you need to apply a multiplier to your TTM earnings.

Generally newer sites will sell for 1-1.5X earnings. More established sites 1.5-2.5X earnings. And high risk sites 0.5-1X earnings. Websites can sell for out of those ranges however they are normally an exception to the rule.

This data is based off over $500,000 worth of transactions over the past few years.