How much is your site worth?

This is a question that has often crossed my mind. There are many online valuation tools that attempts to estimate what your site is worth based on its Google PageRank, traffic rankings, niche, age of domain, and so on and so forth.

These tools, while interesting and entertaining, are mostly useless and should not be used, even as only one of several factors, to appraise a site.

It goes without saying that a site is worth only as much as someone is willing to pay for it. But how do you know how much to ask for your site? What is the ballpark figure?

One method is to price it as you would a brick-and-mortar business. You could, for instance, price your site at 3 times your annual net profits. At 3x net profit, you could ask for $36,000 for a site that earns $1,000 a month (minus all advertising expenses).

But a website isn’t a brick-and-mortar. It does not have tangible assets that you can liquidate to recoup some of the loss should your online business fail. Therefore, the value of a website should be adjusted (i.e. downward) accordingly.

Another consideration is that the web business is generally much more fluid than a brick and mortar one. More than the current profit, one should also consider the ever-changing nature of the internet technology. A site that is useful to a lot of people today may become a thing of the past the next year. So, one must take into account the risk associated with this and the amount of work needed to keep up with the trends so that your site does not become obsolete. Therefore, the price should be adjusted downward further.