Your website may have started as a side hustle, but have you thought about the end game? But how much is your WordPress site actually worth?
Knowing when to exit is something every entrepreneur should be thinking about ahead of time. This is because selling allows you to avoid burnout, self-finance other projects and, in some cases, achieve financial freedom.
If you’re not at the selling stage just yet, getting regular valuations will give you a figure from an impartial source that you can use to track your progress. We’ll also break down the valuation process so you know how to increase your WordPress site’s value to earn even more profit.
The Most Sellable Types of WordPress Sites
Before we get into how valuations work, we should first clarify which websites are commonly bought and sold.
WordPress is a diverse content management system (CMS), but there are a few types of online businesses using this particularly desirable platform.
The best part of this business model is that a website can be created for a relatively low startup cost and potentially have sky-high profitability.
Let’s look at some of the most popular business models.
Content Sites
How Much is Your WordPress Site Actually Worth? How about content sites. Content sites typically make money through affiliate marketing and/or display advertising, such as AdSense. They publish a range of content that often includes product reviews and ‘best of style guides to drive Google search traffic.
This is the most common type of online business model, and these sites are bought and sold more than any other. This makes it relatively easy to find buyers and makes flipping websites a profitable career for many entrepreneurs.
Digital Products
If your WordPress site sells downloadable products, such as WordPress themes or plugins, you have a digital product business. Buyers like these sites because there is no need to store inventory, making them easy to run.
An info product is a detailed explanation of how to do something. This is most commonly done through video lessons.
Info Product
An info product is a detailed explanation of how to do something. This is most commonly done through video lessons.
Info product businesses might not be bought and sold as frequently as the other models, but they remain attractive assets if they can run them passively.
E-Commerce
This is another powerhouse online business; e-commerce interests buyers because they can purchase a store that already has a winning product.
Typically, e-commerce stores aren’t built using WordPress, which means it might take you longer to sell if you use WordPress. But this shouldn’t put you off selling, and it certainly shouldn’t put you off getting your store valued.
How to Value a Website
The formula for valuing a website comes down to two factors: net profit and the multiple.
Taking the past 12 months’ average net profit is the best way to determine the profitability and trajectory.
There are times when a shorter pricing period, such as six months, can be used, but this is reserved for websites that are in a sharp period of growth or decline. Using a shorter pricing period may result in higher net profit, but it lowers the multiple you’ll receive.
Speaking of the multiple, this is where most confusion stems from. The multiple is made up of all the factors that make your website attractive to a buyer. Essentially, this usually boils down to how stable and secure it is as an investment.
Thankfully, you don’t have to do this calculation yourself. You can use a free valuation tool that will give you an accurate estimate of what you could receive, should you decide to sell.
Many factors go into the multiple, but we’ll focus on some of the most important. Working on these factors can help you improve the valuation of your business.
Domain Age
The more established a website is, the more valuable it becomes.
Most brokers will only accept sites with a minimum of six months of profitability. This is because most buyers want to buy a site that has demonstrated that it can earn consistently.
To receive a more attractive multiple, it’s nearly always better to wait until you have at least a year of profitability. This is the point at which buyers will start to take note of your business and see it as a desirable acquisition.
After one year, the multiple will increase incrementally as the business ages.
Traffic
There are two main things that a buyer will look for when it comes to analyzing your website’s traffic: trajectory and diversity.
A site with stable or slightly increasing traffic will usually get a higher multiple than a site in a sharp growth period. Buyers are cautious of sharp growth as it’s difficult to tell where it will level out.
With stability, it’s easier to assess the asset’s current state, and it will therefore be valued higher.
Most websites use Google organic search as their main traffic source, which is the preferred method for buyers. However, diversifying this with other forms of traffic, such as traffic from social media, can only be a good thing.
One of the critical causes of failure for a website is Google algorithm updates. By having additional traffic sources, you can fortify your site and protect it against negative updates. This will result in a higher valuation.
Similarly, diversifying your traffic across multiple pages is another way to make your site a more attractive asset. If the top three pages of your site drive most of the total traffic, you should look for ways to even it out.
Earnings
The first part of the valuation formula is net profit, so it’s clear that how much money your site generates is a key factor.
However, the way your site earns income will also affect the multiple. Like traffic, steady or slightly growing earnings are preferred over sharp growth, as the asset is considered a more secure investment.
If possible, it’s also important to diversify your earnings so that they’re coming from multiple sources. For example, an affiliate site should try to earn from a minimum of three affiliate programs to diversify risk.
Typically, the desired range of successful affiliate programs or products is three to eight. This ensures that your business is not only more secure but also remains easy to manage.
Owner Involvement
How Much is Your WordPress Site Actually Worth? It also depends on the owner’s involvement. Start tracking how much time you spend working on your site per week. Most buyers don’t want to spend tens of thousands of dollars or more on a site that will require them to take on a full-time job.
To get a better multiple, you ideally want to be spending less than five hours a week on your site. When the time commitment rises above 10 hours, it hurts your chances of securing a quicker sale because fewer people will be interested.
Outsourcing content creation is the first thing you should be doing if you haven’t already. While doing so might lower your net profit, it makes your business a much more attractive asset.
A Sale to Unlock Your New Business Opportunities
Owning a profitable WordPress site can be one of the most hands-off ways to make money.
While this is a dream for many people, it isn’t without its challenges. With Google algorithm updates and motivated competitors, you need to stay on top of your game to keep your site profitable in the long run.
Stop guessing at the price of your website, and get a valuation to track your progress. You might be surprised by how much your site is worth.
It pays to think about the end game; realizing you have a way to cash out of your asset makes a WordPress site even more powerful.
But there’s no need to resort to a panic sale; preparing your site early on will allow you to get the best price possible and can help you make it more secure in the short term.
Discovering how to sell a website for the best possible exit might unlock opportunities you didn’t know you had.
Author name: Max Lapit
Max is part of the Marketing Team at Empire Flippers. Before joining the company, he was involved in creating content sites and copywriting. Outside of work, he can usually be found watching sport or traveling the world to watch it. He’s hoping to take in more new places after memorable trips to Budapest and Croatia.
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