We have been asked this question on more than one occasion recently. It is not an easy question to answer as there are so many different factors that come into play. I will try to break this question out into three different factors that I believe need to go into assigning a value to any website. Most of what I will discuss will relate to business websites that are essentially 100% online - based. If you are going to sell your entire business including your website and your business includes physical assets such as buildings, real estate, and /or equipment the following valuation method would obviously not apply.

So here we go, in this blog post I will try to assess the value of a search engine friendly website like the ones we develop for our clients. The first piece will be the software piece which essentially includes all the webpages and graphics that have been created for your site. This piece would also include all the back-end functionalities, scripting and databases. The easiest way and most conservative way to assign a value to this piece is to add up all of the development costs that you put into the creation of your site and then double it. Now if your site is more than 2 years old you will need to adjust this for inflation and/or determine a current replacement cost and double that. This additional 100% premium on top of the development costs is the fact that you have a "search engine friendly" website and includes the time and sweat you have invested into the development. Presumably this custom development under your guidance has made your site unique and successful. The extent of how unique the coding is will obviously increase this factor. Also if you have any patented or proprietary technology involved this would also greatly increase the overall valuation. These additional factors are much too complicated to be discussed here.

The next component is to assign a value to the aging factor of your site and any premiums that our search engine friendly design and SEO services have produced by creating higher rankings in the search engines and increased visibility on the internet overall. The age of a site will obviously increase its visibility on the internet and this provides a higher weight when the search engines try to rank a website. In addition, you can add a premium to the site for its domain name and its current search engine rankings and visibility. This is very difficult to assess. One way to do this is to value the traffic that is generated to your site from "natural" search engine results.

If you had a site that did not rank very well naturally in the search engines then you would have to pay someone to generate this traffic to your site and doing so almost any other way would cost you easily $2.00 a click or more. I will illustrate the value of our "search engine friendly" websites as follows, if your "natural" search engine rankings are generating traffic of about 3000 visits (clicks) per month this is generating about $6000 worth of visibility. What that means is that our efforts replaces $6000.00 worth of advertising costs that you would have to pay some other way. This is obviously a very real value for your site. Now to value this further becomes a little more difficult. In some cases I would say 12 months worth of traffic would be appropriate or about $72,000.00 just for this piece. Other cases maybe just 6 months worth would be appropriate. This is the really difficult piece of the equation but I think you get the idea.

Notice that I am talking about clicks or unique visitors and not "hits". Hits is a metric that scam artists and sellers of snake-oil use. We NEVER use "hits" for ANYTHING and if you are getting quotes from someone in terms of "hits" you need to stop the conversation and tell them that they need to start talking in terms of unique visitors or you are walking away. End of story. Okay enough on this.

Now on to the last piece of the puzzle. Lastly you would value your current annual revenue that the site is generating (and the client lists etc.) and value this piece as 2 or 3 times the annual sales. This is a price to sales ratio of 2 or 3 which is a standard metric in the business world. Now if your site is an ecommerce site that resells items and your profit margins are very very low then the price to sale ratio estimate will obviously not be as accurate and may need to be adjusted downward.

Hope this makes sense and this is the best guess-estimate that I can come up with at this time.
Kind regards,

SlickRockWeb Inc. a leading provider of affordable SEO services - "Bringing you business one click at a time."