How would a profitable website be valued in court?
The value of a website is determined by a few different factors. A website that receives no visitors or generates no revenue is most likely worthless. If you have a high-value domain name, however, it might be valuable.
Your website becomes an online company if you receive traffic and/or revenue.
Your website’s worth essentially boils down to three factors:
● The revenue you earn (and where that income comes from)
● Traffic to your page (and the quality of that traffic)
● Additional worth addition (e.g., backlink profile, social media audience, or email list)
The most popular (and lucrative) way of website valuation is based on a multiple of your company’s net profit. Net profit is the amount your company keeps after expenditures.
If you have multiple revenue sources, your website will likely sell for more money than a website that only has one (e.g., a mix of ads, affiliates, and physical or digital products).
Other factors include:
Your dependence on paid ads – The selling price may be affected if your income is based on a complicated paid advertising system that is difficult for a layperson to manage.
If you have standard operating procedures (SOPs) — A SOP is a document that outlines precisely how to carry out tasks within your company, such as how to write, edit, and publish an article or how to create links — it is important to know. They facilitate the transition to the new owner, potentially increasing the selling price.
How much traffic a website receives is the second – most popular method of evaluating a website. However, because traffic can have a variety of traits, this method of determining value is not the most precise. The quality of your traffic, rather than its sheer volume, can at the very least enable you to increase the monthly multiple on your sale.
