Once you’ve determined why your website may be worth money, you need to start thinking about its possible price point. A novice might say, my business is making profits, so it is worth money. But, that isn’t how you calculate the value. For example, Facebook’s current value is a massive $527 billion. The highest the company has made in a single year thus far was $70 billion in 2018. And that was $15 billion more than it made the previous year.
Which begs the question, why is its value so much higher than its earnings? A company’s worth does not reflect its profits, but rather it’s earning potential. And at the end of the day, that’s what it all comes down to. Your buyer wants to know that your website will make greater profits in the future than it does today.
So, what do buyers look for in a website? Possible assets that can help them generate revenue. That can involve multiple factors, and your site doesn’t need to meet all of the criteria, just enough to give them something to work with. After all, their goal isn’t to overhaul your entire business but to increase its productivity using the systems you’ve set up.
1) Profit sources
Your profit sources are the first thing potential buyers look at. Here they’re checking three boxes. Are your website’s income streams steady, stable, and diverse? Meeting all three benchmarks is essential if you want to get a good price for your website.
When you put your site on the market, the assumption is that your revenue is steady. And by that, we mean it’s in an evergreen niche that generates interest year-round. If two brands have the same yearly income, but one makes the entire sum in six months while the other makes smaller profits over 12 months, buyers will prefer the spread out profits.
However, both sites will sell. It’s just a matter of how high a price you’ll get. They’ll also want proof that your profits are consistent, and smart buyers will often ask for the profit reports from the past year or more instead of just a few recent months.
Second, buyers want to know that your revenue stream is stable. If you make your money selling a specific product or service that is trend-based, there’s risk involved. Alternatively, if your income is dependent on other market factors and goes through sharp peaks and downturns, it is unstable. The allure of a high profit will not attract a smart buyer if your website does not have a stable income source.
Generally, buyers want a site with steady cash flow coming from multiple avenues. Diversity in income streams is the third thing they look for. A site that depends on a single income source is risky because if anything affects that revenue stream, it will devalue overnight. Having only one source of revenue presents the risk of an investment souring quickly in unforeseen circumstances.
2) Growth trends
Upward growth trends are a key indicator of a site’s growth potential and refer to both sales and traffic. Ideally, your records will show a steady increase in both over the past year. However, buyers are looking at more than just the numbers. Often simple metrics can be deceiving. After all, a site owner can say, “I make this much revenue a month, and my site receives these many thousand views,” but that doesn’t tell you much.
An experienced buyer will use your website’s growth trends to gain insight into your business and marketing tactics. As a seller, it is your job to break down your website’s metrics before you hand them over. That way, you’ll be able to answer any questions a buyer has.
For example, if your site received a sudden increase in traffic, buyers will want to know how you did that. And they will use your answer to gauge your site’s investment potential. Whether you used expensive ads or a targeted marketing campaign will affect the value of your website. The first is a temporary, high-cost solution, while the second is a sustainable organic response.
Alternatively, if your site saw a downward turn or your sales went down, potential buyers will see that as a red flag. A savvy buyer will try and find out whether this was because of serious concerns like competition in the marketplace or a lack of interest in customers. If your site has been stagnating, do not try to hide that information from potential buyers. Be very clear about how you haven’t been actively putting in work or nurturing your brand for personal reasons.
Why an increase in traffic isn’t always a good thing
You’ll find a lot of resources on the internet saying increasing growth trends are good and decreasing trends are bad. And while that makes sense, it’s also a gross oversimplification of how online real estate works. When you’re trying to sell your website and make a profit, things aren’t that black and white.
A mistake many beginner sellers make is thinking that high traffic equals a high price for their site. Many will attempt last-ditch efforts to increase views without realizing that this is actually hurting their brand. If your site’s traffic is exceptionally high, but your sales metrics don’t match up, that’s a big red flag for buyers because it means you’re not converting leads into sales. While there are strategies on how to make your site sell for more money, this isn’t it.
When you’re running a website, you want to give your customers the best possible design experience. A huge part of what buyers look for in a website is good design, and this doesn’t just mean the page layout.
Before a buyer ever contacts you, they will check to see if your site runs smoothly on a mobile browser. Then they’ll consider how long it takes to load. If your page takes time to open and is frustrating to use, potential buyers will immediately reject it. Before you put your site on the market, spend some time optimizing, and testing it. You can even use apps to test the loading speed.
Next, buyers will look at your domain name. Having a short and catchy handle increases your site’s market value. After all, this is your main asset. The less complicated your URL, the easier it is for potential customers to reach your site.
Also, your website needs to have a clear message and call to action. Visitors should know exactly what’s on offer. Gimmicks like animation don’t impress customers, and they don’t impress buyers. However, they will appreciate an intuitive layout. When a buyer visits your site, they want to be able to get from point A to point B without confusion.
Finally, buyers want to know what platforms you’re using. Is your site on a web builder like Wix or an open source CMS like WordPress? Do you buy plugins? How much does that cost? Are there flexible design options within the platform? Who is your hosting browser, and which package are you using? When was the last time you performed site maintenance? Did you hire a professional to set up your site? All of these are questions they will ask if you get past the initial stage.
4) Marketing success
Buyers prefer websites that have established marketing systems. This is any channel that draws useful traffic to your site. The two main assets you can have in this category are social media marketing platforms and email marketing tools.
Social media presence
Your social media accounts are a solid base for establishing and growing your brand. Having quality followers on your Facebook, Instagram, or Twitter accounts makes them a coveted asset in the world of website trading. High quality is when these viewers are 1) members of your target audience and 2) spending money purchasing your products.
A buyer will want to know how you’re advertising your site on these platforms and who you’re targeting. With spaces like Facebook, you can choose the people viewing your ads using any elimination process. You can specify factors like area, age, gender, income, employment, etc. In fact, your target can be as specific as ‘vegan mothers living in Baltimore.’
You can also isolate people with interests in your niche or even behaviors. This allows you to target ads at people who have visited your page. A buyer will want to know how you made these decisions and what outcomes you got. So, you should collect data for engagement and lead generation, as well as strategic changes you’ve made and their impacts on your site’s growth trends.
If your social media pages are an active source for pulling in leads and converting them into sales, you can add these platforms to your selling package and price your website higher than you otherwise would because any buyer will want them as part of the deal. When you’re selling your website, you need to highlight your company’s distinctive selling points to make it as attractive to the buyer as possible.
Email marketing list
Another major asset in a site’s marketing strategy is an active email list. Website owners spend years building their mailing lists. And if your list is contributing significantly to your lead generation, it can be a golden egg. Any buyer will want this coveted item, so you need to present it in an attractive package.
Overall, the more assets you add to your site, the higher you can price it. But you need to collect and prepare concrete evidence that proves the follow of traffic and generation of revenue. Having these items on hand gives you an upper hand going into a negotiation. That’s why you must spend time preparing not just your site, but your profile before you put your website on the market.
5) Audience and branding
When it comes to branding, your company’s image revolves around your target audience. How you brand your site depends on who you’re selling to. Buyers will not just want to know who your target demographic is but also how much engagement you’re getting from them. Also, are other groups of customers interested in your product? If there’s an untapped market, that’s a growth opportunity, and you can point it out to potential buyers.
Generally, a buyer will want to purchase a site that’s in a niche they know with an audience they understand. When you’re selling a website, you have to consider the buyer’s perspective. They have to look at not just your backlog of data, but also how the site will function under their ownership. So, make sure you spend time getting to know the buyer. Ask them what they’re looking for and discuss possibilities for the direction they could take the website in the future. Don’t be afraid to give advice on how you think they could improve the business. After all, no one knows your brand and audience better than you.
Before you put your site on the market, make sure you collect data on web traffic. That includes the marketing tools drawing it in, the type of audience, where they’re coming from, and how much they’re spending. Having high web traffic means very little to buyers on its own. For example, if your site sells luxury cars and you have high viewership, but most of your audience is college students, that traffic has no value. In fact, it’ll serve as a red flag for a buyer because clearly, something went very wrong with your marketing strategy.
Overall, an interested buyer will want as much information about your website as you can give them. And they’ll be interested in any tools or strategies that you’ve used to make it successful. Whether that includes targeted marketing campaigns, high-quality SEO optimized content, outsourcing work or other avenues of lead generation. A buyer wants a site with growth potential. If your website has a clear message and reaches the audience it’s meant to, then you can sell it for a profit.