How to Evaluate an Internet Property
An Internet property can be very valuable; much like prime real estate, given it meets certain requirements. Domain names and websites are majorly considered internet properties, and according to their popularity or importance, may be valued in the millions.
Most people are not aware of the true value associated with an internet property. One cannot base the estimation on just popularity or projected revenue, as there are plenty of other factors to be considered.
Instructions
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1
Doing proper mathematics
To gauge how a website is performing, it is important to value it on the finances it is generating. However, your estimation must consider the final profit, which can vary considerably if the payroll includes more than two people.
For instance if the website is run solely by the owner, who takes care of all aspects such as accounting, customer service, receiving and placing orders etc, then the profit will be simply calculated by the general rule which deducts expenses from the revenue. However, the game changes when the owner of the website hires a worker to help with the logistics. The math here will take into account the hourly wages, the total hours worked in a week and the total number of weeks in a year. The product will be the new expenses which will be then deducted from total revenue. The profit margin will considerably lower down. -
2
Focus on expansion
The expansion process may sound relatively straight forward but it is not. Again, for a general rule you would like your website to show growth in customer base (users) as opposed to revenue. For the niche market, for instance selling the iPhone, you can measure the growth rate by Google Analytics which gives you a reasonable estimation on the number of hits. Remember you are not interested in increasing the traffic but finding new users. There is a difference between the two. -
3
Run Rate
It is an important estimation technique where one forecasts the growth prospects of a website in monetary terms in a certain time frame. For instance if the company has generated 2 million dollars in the first half of the year, then one can expect 4 million dollars by the end. -
4
Resources
Value the internet property by keeping in mind the human resources it requires. Many will have a large workforce which will be looking at various technical aspects, while others will be required to carry written work.
