Calculating The Worth of Your Website

Last November, I wrote a blog entry on how to calculate what your pageviews or internet hits might be if you had a reasonably successful website. I get a lot of page views and Google queries on the entry. If you wish to read it, you can click HERE.

In that entry, I did some exponential regression analysis to come up with a mathematical formula to calculate future hits or page views. The formula looks like this:

I am afraid that you will have to read the entry to get an explanation of how to use the formula.

So now that you know how may pageviews you can get per day, I decided to take it further. I decided to extract a formula for website worth.

The key indicator of what your website is worth, is how much ad revenue that it can potentially generate. The key indicator of ad revenue is page views or internet traffic.

There are many websites that calculate the worth of your website, but none of them give you the formula. I did some regression analysis to come up with the formula that you can use with your own metrics.

Here it is:

W is the worth of your site. X is the average number of page views per day. The way that the formula works, w= 720 * (0.00300007x + 1.74285) , is that the part in the brackets ( 0.00300007x + 1.74285 ) is the daily predicted ad revenue based on average daily page views.

That figure is then multiplied by 730 days or two years. In other words, the most that you can count on ad revenue in the internet world is two years. This formula gives you an approximation of what your site is worth to a buyer.

So to do your own calculations, is to take your average daily pageviews and multiply by 0.00300007. Then add 1.74285. This is what you can expect to make a day if you had ads on your website. Then multiply the whole shebang by 730 and that is what you can expect if you sell your site.

Using this formula, Facebook is worth $630 million dollars. Microsoft doesn't think so. It invested $240 million in Facebook, and got 1.6%. Yep, less than 2%. That makes the owners of Facebook billionaires, but we already knew that. Good luck!

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