Website Valuation: Key Factors & Multiple Ranges

[00:00:00]putting a value on a website is not an easy task so how exactly do we determine a website's true value is it a 35 times 40 times or even a 50 times multiple in this video i'm going to try and simplify the process of valuing a website to make sure that you don't pay too much if you're buying and make sure that you get true value if you're selling so let's dig in hey they're affiliate schoolers so let's talk about value the true value of something is only really ever worth what someone is willing to pay take this lovely wp eagle t-shirt for example that i recently won on a wp eagle live stream if you didn't know who wp eagle is then you probably wouldn't think it has a lot of value but if you do follow alex and you should links down in the description then you probably would think this t-shirt has quite a lot of value so the question is how does this work with websites well a few things are going to impact on a website's value and most of them are going to come down to costs and revenue but i'm going to look at six factors today that include some of those things that will help us to establish the true cost of a website and make sure you stick around until the end of the video because i'm going to be giving you a few tips on things to look out for to help you avoid buying something that you might regret so the first and probably the biggest factor when it comes to valuing a website is the profit that it makes on a monthly basis and to determine the profit we simply take the monthly revenues and subtract the monthly costs now those revenues can come from a few different places typically you're going to have affiliate revenues advertising revenues but then you might also have some other things to look out for such as guest posts that have been published and any other form of revenue that has come into the website and again typically there are going to be certain costs that you would expect to see so look for things like hosting costs any content creation costs and link building costs too if a seller is declaring that these costs do not exist then ask the question why because most websites are going to have some form of ongoing marketing or link building costs and of course those content creation costs the second determining factor that we want to look out for is the current trend for the website and we're looking at the trends for traffic and the trend for revenue is that revenue increasing month or month or is it decreasing and the same question with regards to traffic now if a website is showing an increasing trend in terms of those two things then you can probably expect to pay a higher premium for that and by the same token if the trend is declining then you would expect the website to have a slightly lower value than if the trend was going up next up we want to assess the content on the website so this is where we're going to look at the existing content and see if we can attribute any value to that now this is something that you're going to want to look at more so with websites that are not making a huge amount of money each month or perhaps are making no money because we all know there is a cost associated with creating content and of course you're also going to want to audit the content and see if it's actually of good quality if it's not then it's probably going to have very little value to you but if it is good quality content you might want to look at that and think about how much that would cost you to create that content yourself either in terms of paying a writer or in terms of your time fourth on the list we want to look at the backlink profile and again attribute a potential value to the backlinks that already exist now quite often i just for the sake of simplicity i will look at each decent do-follow backlink and when i say decent i mean links with traffic that are relevant to the niche and that have probably a dr of let's say 25 or more i would attribute a value per link of around about a hundred dollars so if a website's got 20 good quality do follow backlinks then i might attribute a value of around 2 000 to those backlinks on the flip side of this if it's a website that is earning you know a good a good amount of monthly revenue then i probably won't look at those backlinks on an individual basis and attribute a value to them because they're already kind of adding the value by gener helping to generate that traffic by increasing rankings and and so on so i would probably only really look at value of backlinks if it's again a site that is not making a huge amount of money next up is a really important one and one that quite often people overlook and it is the time that is needed to be spent on that website on a weekly basis now typically for most websites it's going to be at least a couple of hours a week just to maintain go in and and keep an eye on the content and publish new content and so on but some websites will require more time to keep on top of things particularly if they're more news or time-based content related then you're going to need to be a lot more hands-on the other question here is does the seller have processes in place already that are costed in so for example is there a writer or a writing team is there an editor or a few editors who again are already costed in who you can take on board with those processes in place to make sure that this website doesn't become a full-time job and the last thing that really we want to look at when it comes to valuing a website is the potential now i actually hate it when i see listings on places such as flipper where people will say there is lots of potential to grow this site to five or six figures a month because i think well why has that person not done that and then sold the site once they've done that so really you do need to go in and do your own research and really take the time to assess the potential for yourself now there can be potential in lots of different areas it could just be the the niche has not been fully explored so there are lots more keyword opportunities and content opportunities to explore there could be potential there there could also be potential in the the way in which the site is monetized so for example if there's lots of informational based content pieces and there are no display ads running currently and those pages get a lot of traffic then that could be an opportunity to monetize those with display ads and by the same token if there's a lot of affiliate content but it's not set up to convert particularly well perhaps buttons aren't well placed or images aren't linked and things like that then that's another opportunity to increase the earning potential right from the beginning without even increasing traffic or anything like that so there's lots of ways in which you can identify potential but of course you don't need to disclose that to the seller they might try and push the fact that there's potential on you but really keep that to yourself and you know attribute that value somewhere when you're looking at whether to to make that purchase or not now like i've said a website is only worth what someone is prepared to pay for it so typically we will see websites in the range of 35 times multiple all the way up to around a 50 times multiple on what they make on a monthly basis now if you want to get a feel for websites and the value of them then take a look at online marketplaces such as empire flippers motion invest flipper and you'll start to see that websites that are older that have more earnings history that are low maintenance and have good solid transferable systems in place will attract those higher multiples and sites that are younger and that don't have that revenue history will attract a lower multiple now before i go ahead and give you my tips on things to avoid when looking to buy a website if you've found value in this video we've talked about value a lot today but if you have found it in this video then i would really appreciate it if you could bop that like button now we're going to jump onto the computer so that i can show you those things to avoid and we're going to kick things off with backlinks so i found this website on flipper it was claiming to make around about 180 per month so what we're going to do is we're going to pop it into ahrefs and take a look at the backlink profile we're also going to look at some of the organic search data around it so we'll start off with the backlinks and the first thing we're looking at really is that it does have some decent backlinks and when we say decent we're looking for links that have got good traffic that have got a nice dr again probably 25 or more and that are relevant to the niche so this website is to do with cars and vehicles so we're looking at car and vehicle related and maybe tech related backlinks we can see here we've got some of those which is good to see so next up we're going to look at the anchor text profile and really what we're looking at here is that we've got some branded anchor text so these are branded or naked urls and we can see we've got it here again and then everything else is spread fairly evenly amongst a variety of different anchor texts that are of course relevant to the website if we had anchor text here that was exact match for you know maybe 10 12 15 20 of the referring domains then that would be a concern the next thing we're going to want to do is to pop the website into wayback machine and just take a look at its history so we can see there's a little bit of a gap here so i'd be interested in looking at just this period in 2021 so let's just take a look at this and see how the site was looking and just make sure that it was still being used in much the same way so we can see the website looks a little bit different but on the whole we can just we can see that it's a a landing page for all of the the various posts and it you know it does look like an affiliate website if we were seeing that website being used in a slightly different way so maybe almost like a link farm or a pbn or something like that then of course that would be a concern other things to look out for might include foreign language or spammy links the next thing we might want to try and identify using ahrefs is the trend for the site and really we can do this through the organic search section here and if we look at the organic search we can see the site kind of dates back to around mid 2020 so it's a couple of years old and traffic gradually increased over time but then we can see here right at the beginning of december 2021 that's where the traffic peaked and then it pretty much fell off a cliff down to where it is now around 300 hits per month now this is very interesting timing because we can see here this tallies up perfectly with the product review update that was released in early december i think it was actually december the 4th by memory and it's almost definite that this site has been hit by that update and that leads me into my final point in that what you should also ask to get access to is google search console and google analytics because tools like ahrefs are great for estimating but it doesn't give you that absolute specific and accurate data that you will get from google analytics and google search console if a seller is not prepared to give you read-only access to the analytics and to search console then i wouldn't bother progressing with that sale that i would see that as a red flag and it's going to help you to identify any issues around penalties or algorithm updates and the impact of them on the site it looks very much like that site was hit by the product review update and you'll be able to see that in google analytics because you'll see that traffic just drop and you'll also be able to see it in google search console because you'll see those impressions drop and you'll see what the the clicks are and you'll get a lot more data there in addition to that if there have been any other kind of penalties like a manual penalty then that will also be present in google search console and again if you can't rule that out then you don't really want to be partying with your money now the last thing that i generally try and avoid is exact match or partial match domains and that's purely because i find that they're quite limiting in terms of the potential and looking at other keywords and talking of keywords if you want to maximize the potential for your website and really nail down that keyword research then you want to watch this video next because i'm going to go through all of my keyword research techniques that are pretty simple to follow and that will help you to maximize those earnings on your affiliate site guys thank you very much for watching and good luck with your projects