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Have you ever asked yourself, how much is my blog worth? A WordPress blog’s value can be roughly estimated using various domain appraisal services and website value calculators. Unfortunately, these blog value estimators merely consider your site’s domain name, visitor traffic, PageRank, and other exterior measurements. They can’t accurately measure how much your website is worth without knowing how much revenue and profit your site makes in a typical month. If you really want to get an accurate indication of just how much your blog is worth, you need to look at some raw website sales data. After all, the true value of something is ultimately dictated by what the market is willing to pay for it.
WordPress website value data collection
Recently we completed a search on Flippa, a popular marketplace for buying and selling websites, to collect real WordPress blog sales data. The search was confined to sites sold under the WordPress tag or those that were built on WordPress. Additionally, I only included sites that reported their revenue and profits and we excluded those that appeared to be falsified. That is, if the website’s profit wasn’t less than that of the generated revenue or the seller’s evidence for such earnings was questioned by many potential bidders, the site was excluded from the data set.
As you can see from the WP blog data below, we used Microsoft Excel to create the figures, calculate the r-squared values, and the linear regression equation (Y intercept set at zero). We understand that there are perhaps better statistical tests and software that can be used to do this but for our purposes this will suffice.
| Website value data derived from Flippa |
From the data listed above we can clearly see that a website’s reported revenue and generated profits are the best indicator of its value compared to PageRank and the amount of visitor traffic it receives. We know this because the r-squared values were the greatest for those two parameters. Remember, an r-squared value of 1.0 indicates a perfect fit of the regression line to the data points. Thus, with r-squared values of 0.83 (final price vs. profits) and 0.80 (final price vs. revenue) we can feel assured that these are good indices for approximating a final selling price for your WordPress blog on Flippa.
Just for fun, I’ve included the calculations for the monthly earnings factor for each website sold based on their reported revenues (Price/Revenue) and profits (Price/Profit). At the top of the spreadsheet you’ll find the averages for all of the blogs included as well. These calculated averages give you an idea of what the sale price of a site is worth in reference to its monthly earnings. That is, how many months of revenue/profit the site is worth to the buyer. This provides some very useful information to the seller too because it lets them make a well informed decision as to whether or not to keep their website, and therefore the potential monthly income, or sell it for the number of months in website income the buyer’s price may be worth. In the data displayed above, the average monthly earnings factor for the reported revenue and profit for the included sites were 13.13 and 15.52, respectively. Thus, WordPress blog sellers are earning a little over an entire year’s earnings by selling their site. Of course this is just an average and the linear regression equation should probably be used instead. Regardless, between the linear regression equations constant and the referred averages you’re looking at earning about 10 to 16 months worth of profits if you choose sell your WP blog or WordPress based website on Flippa.
Obviously there are specific sites and domains that may be considered outliers of our data if they were to be included. For example, if you owned a single letter domain it would most likely sell at much higher amount than what might be predicted using our linear regression equation. This is because our basic statistical analysis doesn’t take this variable into consideration. The majority of the WordPress blogs included in our data set were associated with top level domains (TLDs) that possessed a somewhat normal amount of letters (>3).
How much is my blog worth?
If you’d like to use the data I collected to predict what your WordPress blog may be worth, simply plug your blog’s monthly revenue or profits into the linear regression equation. The value of X represents your WP blog’s monthly income (revenue or profits), depending on which equation you use, and Y is the predicted amount for the final winning bid price. Hence, if Y=9.9962X and your blog’s monthly profit is $100, then the estimated value of your WP site is $999.62. You could also use the linear regression equations for visitors and PageRank to predict your WordPress blog’s value but as the r-squared values indicate, they aren’t good indicators of an auction’s final bidding price on Flippa. However, I have included the average monthly earnings factors for revenue and profit so you can also use those to estimate what your blog is worth.
It’s a no-brainer that revenue and profits are the best price indicators for most website sales. However, without actually collecting the data, analyzing it, and then reporting it, this can not be verified for a specific website marketplace. Moreover, the data reported here gives us a clear indication of what the market is willing to pay for websites listed on Flippa and the most appropriate annual earnings factor that can be applied to obtain fact-based website valuations.
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There is no clear way to value every site on the web. It depends on income, design, content, potential, traffic and more.
Flippa is a funny place. I’ve seen really really poor 2 page affiliate websites that have luckily generated a few sales go for thousands whilst websites with over 100 pages of unique content and slightly less income get passed by. Most people on Flippa are looking for a quick return, which I understand. Though many are purchasing some very poor websites.
Too many sellers have unrealistic valuations of their websites too, which doesn’t help the market.
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Kevin Eklund reply on April 12th, 2010 6:24 am:
I concur with mostly everything you’ve said in your comment. Each website should indeed be considered separately depending on its strengths and weaknesses (i.e. domain name, traffic, etc.). Our prediction equations aren’t the only factors that should be considered when gauging how much a blog or website is potentially worth.
What I liked about the study was that we collected real data from WordPress blogs that were sold and then used that information to predict the potential value of a similar website. This is in stark contrast to the numerous website value calculators that merely check the domain age, PageRank, inbound links, and traffic stats to base such an estimate. Another useful outcome of our study was that were were able to identify the average monthly earnings factor (i.e. 10-16 months worth of profits) in the Flippa marketplace. In my opinion, most website valuations should be weighted according to how much income a site generates and the potential for future growth. Of course there are exceptions, especially when you have a really great domain. In that case, the estimate should weigh heavily in favor of the domain itself.
As I was gathering that data from Flippa I saw some very questionable claims by sellers and a few clear cases of fraud. I’m not sure how you can defend against that except by doing your homework as the buyer. That is, ask lots of questions and check the website’s revenue and traffic stats. Unfortunately, many potential website buyers want to believe the seller’s claims and they don’t do their homework.
It’s great to have you speak on this given your background using Flippa. Thanks for stopping by and sharing your insight Kevin!
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no need to thank me, I enjoyed the article
Yes, there are a lot of scammers on Flippa, more so than before. Though it’s usually easy to spot them with their inflated prices.
One of the biggest factors that a lot of people don’t consider is time. A sites value decreases with the amount of time you need to spend on it.
For example, I’d maybe pay 15 months of monthly income for a site that required 10-15 hours of work every week. But I’d pay more if the site made a lot of money without any work. As this indicates that you can leave the site and still make money and that you are likely to see a good return if you do invest some energy into updating it.
I still keep an eye out for bargains on Flippa. I was looking for a site to invest in but over the last few months I’ve realised that bargains are hard to come by. In that respect, Flippa is a better place to sell than it is to buy. However, everyones different. When I look at a site I always think about whether I could build it myself.
For example, there was a really bad hosting directory type site on sitepoint with bids exceeding $600. I have the script and template which the site uses as I reviewed it a year or so ago. I reckon I could have built a better site within 4 hours. Yet people are bidding on it.
Some of the stats you bring up are interesting though. Take the sale of a site which was making $2,000 profit for around $16,000. Pretty good deal considering. Again, what stats don’t show is whether the profit was just sheer luck and is liable to disappear or if the income as increased steadily over time.
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Kevin Eklund reply on April 12th, 2010 12:30 pm:
The time commitment is another great point of interest when buying or selling a site. It seems that most newcomers overlook this. Usually when I find a decent site worth purchasing, it’s the time commitment that keeps me from pulling the trigger. Plus, there’s something very attractive about creating brand new sites and building them up.
Yeah, that $16,000 site looked like a decent deal. On the other hand, there’s a site in there that sold for 7k and was only making like $111 per month. If I remember correctly the seller was pitching it as a very low maintenance site. That’s like 5 years worth of earnings! I took a closer look at it thinking I must have missed something but I’m still amazed that particular WordPress blog sold for that high of an amount. Moreover, the website had 500 articles and generated all its 5k in monthly uniques from organic search.
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Having 5,000 uniques from organic results is a good thing, though I wouldn’t be keen paying 60 months time the monthly income. Unless of course I thought I could increase it easily.
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Twitter/Share/BookmarkHey Kevin,
I absolutely love this! You’re the first person who has applied some form of science to the process rather than all the individuals who employ “lick my finger and stick it in the air PHP edition” scripts to create website valuation tools that never work.
I’m working on the same thing at the moment as our site has 1,000s of records of past sales with data on sales price, pr, backlinks, indexed pages, revenue, profit, uniques etc on Flippa, Digital Point and other marketplaces.
I’m trying to incorporate PR using non linear regression though as there’s distinct jump in buyers perceptions between a PR2 and a PR 3 for example.
Keep up the great blogging, and please let me know if you would like to work with me on furthering this.
Regards
Justin
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Kevin Eklund reply on April 19th, 2010 11:08 am:
Thanks Justin. The correlation between PR and sale price appears to be quite poor in the small sample I collected on Flippa. However, that doesn’t mean it’s true for all other marketplaces or specific segments of website marketplaces. I’d be very interested in working on this further. Send me an email and let me know what you have in mind.
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