Websites were initially built to purely information and establish ones name and brand in the online market. With the tide of commercialism, websites have turned out to be revenue-generating machines.
But with innumerable websites prevailing in the online market, the entire website scenario has now turned into gaining more and more traffic on ones website. It not only increases your website worth manifold but enhances its credibility too.
How incoming traffic does really affects your website’s worth? Or say, is your business website actually generating some worth? Basically for analyzing and checking the valuation of your website, you can just follow a straight forward formula, that is
12 Month Average Net Profit x 20-50 Multiple
The above formula indicates that first, you must be aware of your average net profit. Next is the multiple, usually an average profitable business has a multiple between 20 and 50x. Here we have taken into account, a monthly multiplier and not annual. The annual multiple ranges between 2 and 4x. A multiple less than 20x can be extremely distressing and warning for you to take some tough decision. Though there are ways and means to alter and increase this ‘multiple’ for gaining profit.
Yet another method of determining your website worth is the Traffic Value Valuation method. This holds significant for sites that are yet lacking site monetization.
The two essential parameters you require here is the ‘top key phrase (s)’ that are a hit in driving extensive traffic to your site. Next is the Cost per Click value pertaining to the keywords. Consider the top two key phrases x and y driving the highest traffic. Make use of Google Adword’s keyword tool and feed both x and y keywords. This will give you the approx. cost per click value for each keyword. Say for x its $n1 and for y its $n2.
Now say incoming traffic for x is 400 visitors and for y is 800 visitors, so the traffic value can be computed as
Cost per Click x Monthly Unique Visitors (for that particular keyword)
Traffic Value = $n1 x 400 + $n2 x 800
The above equation will compute the monthly traffic value to your site. Next, use the computed Traffic Value and multiply it with 45% (approximate estimation).
That is Traffic Value x 0.45
Computing the above gives a closer estimate of the actual traffic if paid, as chances are there that not all would pay the highest cost per click.
Final words, the traffic coming to your site highly relies upon what is the source its coming from. Sites driving organic traffic indicates that the site is rightly optimized for the SERP. Sites driving traffic via direct source indicates that the site is well reputed and hold a remarkable place. In case your site is receiving lot of referral traffic then you need to examine spam domains.
Once you own a website and assets, find out its actual worth, if in loss try selling them or increase their worth by following appropriate measures.