Valuing websites is a service Intangible Business offers for a variety of purposes, such as valuing a website for tax management, valuing a website for due diligence, valuing a website for a dispute or for general business management. Valuing websites is similar to valuing businesses and other assets. The value of a website is determined using a combination of three website valuation methodologies.
- The income approach to valuing websites is the third website valuation methodology and is usually the primary methodology used in valuing websites. This website valuation approach calculates the net present value of future income attributed to the website using a discounted cash flow methodology.
- The market approach to valuing websites looks at transaction values of similar websites and the differences are adjusted for parity using benchmark valuation ratios such as value per registered user, per visitor, P/E multiples and revenue multiples. The value of websites with similarities is also considered to arrive at a comparable website value.
- The cost approach to valuing websites calculates the amount invested in creating the website, such as the cost of the domain name registration, hosting, site building, website content creation and marketing of the website and business. The cost approach to valuing websites also considers the amount required to recreate a similar website.
All three website valuation methodologies are all generally considered, with the most relevant one for the circumstances used as the leading indicator of value. Calculating how much a website is worth requires specialist skills and an appreciation of what generates website value, such as volume of website traffic, conversion rates, domain name rarity, website ranking and knowledge of the market in which the website operates.
Intangible Business specialises in valuing websites and other intangible assets both large and small. Intangible Business’s website valuations have been approved by audit firms and regulatory bodies including HMRC and the SEC.