How To Calculate My Website Value?

How do I calculate the value of my lead generating website?

• I run a small lead generating website that is performing so well that two of the companies receiving and paying for the sales (CPS) are considering buying it from me. But how do I value it? I assume the value to them is the sales they make monthly, but multiplied by what?

• Answer:

  The value of the company is whatever it is worth in sales. NOT what you are getting paid for each lead. For example if I have a business which is turning over $350k revenue per year, the general business value is an ROI of about 1-2x (of course there are many other ways to value but that is a conservative estimate. SO a tool which is firing leads over to them (a lot of lead sites sell leads say for $50 - $150 / lead, and there are various different ways to measure "qualified" lead vs. closed sale etc. So you may be tempted to think "I am sending 1000 leads to them per year, and I make $100 * 1000 = $100,000 which is your annual revenue. So you might think "ok 100-200k sounds about right to me. BUT its easy to forget the value of your leads to the company. If the company has a sale value of $1k or say it is an insurance policy of $1k / year x an average of 5 years, then the true value of your service to the business is $5k / lead (and it's an amazing deal for them that you only charge $100). SO to them, your company / tool is actually worth $5M in new business per year gain, and their business grows by that value each year from now on. There are huge elements of risk involved (traffic drops, etc) so the true value is somewhere between those 2 points, but it is very important to be aware of what the value is to the client. Simply put, if 2 businesses are trying to buy you - there is probably a reason for that. I have also seen MASSIVE changes to the value of the business, with the addition of a business plan, a cashflow forecast, training manual and those sort of grown up things that companies feel safer with. I have several lead gen tools which I am building and growing, so I am happy to chat about your sale if you wanted - I suspect I may be helpful, as I have done quite a few business purchases / merging in a previous business role.