Business 2.0 magazine recently reported that "for highly trafficed websites, bubble-era buyouts are back. The reported how websites like blogspot.com, myspace.com, askjeeves.com and about.com… and other recent sales… have priced eyeballs at $38 per monthly visitor.
This article got me to thinking… what is a hotel or inn website worth? How does one valuate a hotel’s website? If you got 10,000 visitors a month your website, it would be priced at $380,000 according to the valuations in Wired magazine. That sounds a bit high to me.
The equation we have recommended in the past is: Replacement Design + Replacement Traffic – Existing Ongoing Maintenance = Replacement Cost.
- So, lets say you get 10,000 visitors a month or 120,000 visitors per year. You spend $500 a month to maintain your website and its traffic, or $6,000 per year in "Existing Ongoing Maintenance".
- If you had to "replace" that, you might plan on spending $4,000 in "Replacement Design" (to design a replacement website)
- But, you also need to replace the marketing of that website if you are starting from scratch. You might, by example, spend another $2,000 monthly to market your website and drive 10,000 visitors per month — the "Replacement Traffic". That would put your cost at close to $24,000 per year just to replace the traffic.
$4,000 + $24,000 – $6,000 = $22,000 replacement value for a website getting 10,000 visitors a month.
So, if you are determining the value of your website on the back of a cocktail napkin, try taking the number of visitors per month and making them each worth about $2.2 a visitor. Of course, your math will be different.
What Works: The Return of Monetized Eyeballs; For highly trafficked websites, bubble-era buyouts are back" by Om Malik, Business 2.0, December 2005, Pp 55-57.