What is the Value of My Website?
As a marketer or a business owner, people are probably trying to sell you website upgrades and enhancement services all the time. It’s likely that you’re spending more and more on your site every year, and seeing the ROI from those costs can sometimes be difficult. At The Mac Groups. we think that you should fully understand the value of your site before you make big decisions like how much to spend on SEO, web redesigns, digital advertising and the like, so we’re going to show you some good ways to calculate the sales value of your site so that you can make more accurate and informed decisions about your web marketing.
The first step to calculating this value number is to assess what kind of website you have and how it brings you profits. The three types of sites we’ll focus on are: e-commerce, lead generation, and informational/content.
Having an e-commerce website is the easiest way to assign an accurate value, because the website is doing all the work itself which cuts out a lot of the outside factors we’ll consider later. For an e-commerce site, just add up the total gross sales you’ve made through the website, and you have an approximate value. If your site has other functionality in addition to e-commerce (e.g. it also generates leads for you), consider this as well by using the formulas from the rest of this post and then add that value to your e-commerce number.
If your website generates leads for you but doesn’t actually track sales, that’s where things can get a little messy. The easiest way to determine the worth of your site in this situation is to determine the value of a lead first. If you get 200 leads per year that result in gross sales of $50,000, then each lead is worth about $250 to you ($50,000 / 100). Now just find out how many leads you’ve generated through your site and multiply it by that value. If your site produced 100 of those leads, then it’s worth about $25,000 ($250 x 100).
Something to keep in mind with lead generation sites is that you need an actual person on the other end to spend time converting these leads into sales. If you wanted to take your assessment one step further, you might consider subtracting a portion of your sales staff’s salary from the value of your site as calculated by this formula, because the value it delivers cannot fully be realized without some extra work by your team.
If your site doesn’t actually make sales or provide leads that later convert into sales, you probably fall into this informational/content category. These websites usually make money through advertising or by selling some sort of sponsorship to third-party brands. In this case, impressions are a main driver of value to your site, and you can usually make more money by getting more impressions. This leaves you with a couple valuations to consider: the total value of your site, and the value of impressions on your site, usually measured in thousands.
With an informational site, the best way to measure value is to add up all your annual revenue from advertising sales. That will give you some idea of how valuable your site is over the course of a year, but the growth of impressions will show you whether your site’s value is trending up or down, so it’s also important to understand the value of your traffic. To find this number, take your total advertising revenue and divide it by the number of impressions on your site. So if you have $200,000 in ad revenue and 10,000,000 site impressions, then each impression is worth about $0.02, and 1,000 impressions are worth $20.
Putting It All Together
Understanding these valuation numbers can help you accurately determine how much is enough (or too much) of your budget to allocate to your site. When approaching a website redesign, it’s helpful to look at your website like a house that you’re renovating. It can sometimes make sense to spend more on the renovation than the house is worth, but you need to make sure you’re seeing an increase in the net worth of your asset. When you budget for services like SEO and PPC advertising, it’s helpful to have this number in mind as a general reference point. The more you spend on SEO, the more the value of your website should increase.
While the strategies for valuation that we’ve outlined here can help you approximate the worth of your website, it’s important not to forget things like number of links and brand value that add strength to the asset. This post was also written to value a website as a marketing asset, not a property to sell off to another owner. If that’s what you’re looking for, you’ll want to approach things a little differently.
If you found this helpful and want to take the next steps to building a better web presence, check out our web development services and let’s see if we can help you out.