value of websites-how are they determined?

[thinkingbig]

I just wanted to know how the value of a website is determined especially when some websites do not earn money from selling anything. I am not talking about big social networkign sites or anything.

For example, look at www.villagecinemas.com.au it is worth $400000. The site does not sell anything. Surely, advertising cannot make you earn that much.

Anyone know??

[ndreamer]

It's hard to value a website, i have seen websites turn over $0 yet sell for 40k+ because of traffic, some category's of websites however get huge amounts of traffic and are worth next to nothing as there traffic is to hard to convert in to money.

[Michael_R]

there is a site I found called - Flippa that just sells sites.

So if you were asking the question to find out how much you could sell a site for then go and have a look there. Or you could test the market just like an ebay auction!

It is amazing how some site can go for $100 when others go for $5000 with not much difference.

Mike

[mike@engagemarketing]

This blog post from Flippa should help to answer your question:

http://flippa.com/blog/buying-websit...thout-revenue/

Basically it comes down to traffic and page rank.

[thinkingbig]

i know this will definitely sound stupid: if a website is worth $400000, but does not sell anything, does the creator of the website earn anything?

[Hugh Thyer]

It's an intangable cost. It's like the value of a brand. It has a vital role in the way Village Cinemas interact with their customers, helping them get information and promoting their service etc.

But putting a value on it is what it's worth to the business having it, and not how much direct money it brings in.

Most company's websites do not sell anything direct, but this doesn't mean they'd give them up.

[thinkingbig]

maybe it is a bad example. For sites that do not have physical shop and do not sell anything online, how do they get valued.

eg. yourmovies.com.au (don't know why i am choosing cinema sites). This site has the session times of all cinemas in australia. They do not sell anything themselves, but is worth $1.2 million according to viralhit.com

[Rhys]

Wow, great question. And one I think that applies more generally than just websites - so what is the value of any asset (intangible or otherwise)?

Where did the figure of $400k come from? I would be very surprised if Village would sell it for this amount, it's part of their brand. So how much would they sell it for? Is that the site's value? How much would anyone else pay for it (probably much less than Village would sell it for), so is that its value? Or somewhere in between?

There is a whole body of work on valuing assets, based on the discounted future cash flows from the asset . . . but identifying those cashflows is usually pretty tough and often for all practical purposes impossible.

I know my site is worth a lot more than I paid for it, based on that notion of future cashflows - extrapolating the additional revenue I have generated in just the past 2 months since relaunching the site, I think I will have covered the cost by the end of June. But as to what it's worth? Just think of all that future revenue foregone . . . a price I would sell it for would almost certainly be far more than anyone else would pay for it, so what then is its value?

Like I said at the top, great question!

Cheers, Rhys

[LukeMoulton]

Originally Posted by mike@engagemarketing

This blog post from Flippa should help to answer your question:

http://flippa.com/blog/buying-websit...thout-revenue/

Hi guys, I actually wrote that post (I'm from Flippa) so thought I could try to shed some light on this topic.

Valuing a website that does not generate revenue is very difficult. One way to get a loose indication is to find out how much it would cost to buy the traffic that a website receives - using Google AdWords for example.

The best way to value a website is to try to find similar sites that have sold in the marketplace (check out the "Just Sold" section on flippa.com).

Note that I'm referring to websites, not domain names. Valuing domain names can be much more subjective than valuing an established website.

[thinkingbig]

hey i read your article. glad your here to comment.

One question: does the creator of the site worth some good money that does not actually sell anything earn any money?