III. Valuation of the Assets of a website

1. Assets

   The web sites assets have been broken down into several sections. There is the site’s hardware, software and access rights.

   1. Technology

      1. Hardware included

         Is there any hardware included when you buy the web site? Does the web site reside on its own server? Does the price include the server and the hardware necessary to connect the computer to the Internet.? What type of hardware is included in the sale / purchase price. Is it only a computer or is there more, such as modems, routers, servers) etc. Is there the hardware included to produce the web site (i.e. scanners, digital cameras etc.) You should also be mindful of the necessity and ability to service the hardware if necessary. What if there is no-one that can service the hardware in your area (if you decide to move the hardware?). You should also determine the speed of the web servers connection to the Internet. Familiarity with a little more than the basics of the Internet and Web is very helpful in this phase and it could be helpful to have “consultant” to take a look at the actual hardware, in the event you lack the necessary technical skills or knowledge.

      2. Software included

         What software is included with the web site. Is there development software (i.e. graphics tools, HTML programming tools). Does the site include CGI programs. Does the site include custom cgi programs. Does the site own all rights or licenses to the software that used to run and maintain the site? Does the software license expire at some point? Who knows the software and can fix it or troubleshoot it? Is the software easily maintainable? Is it easy to upgrade. What are the limitations of the software. Does the site have the exclusive rights to the software? Can it run on more than one server (physically and legally)? is there is a database associated with the software determine how solid it is and in what format it is.

      3. Rights included with the site (hosting, access)

         What kind of rights are included in the price. Does the price of the site include T1 access rights (and the equipment for such access). Does the site have a certain amount of pre-allocated bandwidth or storage space? Do the existing rights allow room to grow? Can the site be moved without negative impact on such rights?

      4. Patents and Licenses

         Does the business/site own and hold any Patents? Does the business/site license any content or technology for which it receives any royalties?

   2. Content

      1. Total number of pages at site

         Even without high search engine rankings, having a lot of pages can generate a lot of traffic in itself. This type of traffic generally comes from search engines that have indexed more than just your home page.

      2. Original Content

         You must also look at the ratio of actual real pages to “on the fly” or dynamically generated pages. You should distinguish between what is a simple collections of disorganized links and what is actual “real” content that has been created specifically for the site (perhaps described as editorial content). How often does the content change? Who provides the content? How is the content generated? Is the content “self generated” (i.e. it is made up of user submissions)? Is it well written? Is the information useful? Does it target its niche audience? Is the information current? Is the content compelling? Is the content developed by the owner alone, and if so, will the owner consider providing more content in the future on contract? Do visitors convert into customers? Remember, content is king. It is was make a site good and valuable. The more good quality content the site has the more it is worth. Content includes graphics, videos, podcasts, articles and downloadable software.

      3. Design of the site

         Consider the following: Is the design of the site attractive? Has thought been given to usability, or will modifications be required to the layout and navigational interface in order to make it easier for visitors to find their way around?

      4. Number of links to other relevant sites

         Look at how many links the site contains. The number of links to the outside is important (and to some degree so is the number of internal links). A large number of outside links means that the site is more solid, has been around long enough to collect the link. Such a directory and collection has a value in itself (for an extreme example of the value of such a directory check to see how much the Yahoo directory is worth these days), Directories usually also have a high page number view. Naturally, a large number of outside links also means that you will have to spend more time doing “upkeep” on the links and maintaining the links. Maintaining the links means checking for dead links, updating older links and adding new links and resources to keep the site fresh. It is important to also examine what mechanism if any exists to maintain and update the links. See if there is a database to maintain the links of if one could be implemented easily (especially for sites with extensive link collections). The issue of number of links is important at sites that rely on part of their traffic coming from people who use the web site as a starting point / gateway for a particular subject.

   3. Branding

      1. Value of domain name

         These days we have seen domain names alone selling anywhere from a few thousand to millions of dollars. See if the name of the domain has a value in itself even without the web site behind it. There are buyers who are not interested with your content or the minuscule revenue that your site is generating. They will buy your site solely for the domain name.

      2. Trademarks

         Does the site also include any valuable trademarks? Are these trademarks being sold together with the site?

      3. How long around

         How long has the web site been in existence? These days a site that is more than a couple of years old is still considered old / mature.

      4. Good will

         Like for the valuation of many businesses, you need to assign some value to the good will of the site, especially if it has a lot of repeat traffic.

   4. Databases

      1. Database of name and e-mails of previous visitors (i.e. guest book)

         Did people request to have updates sent to them. How many e-mail addresses. Perhaps assign the value just like purchasing a regular mailing list (from a broker). Is there demographic data available for the e-mail addresses to get better idea of what the audience is like? These mailing lists can be used to send ‘What’s new” announcements and can generate additional repeat traffic and site awareness.

      2. Database of past customer (if site sells products / services)

         This way old customers can be contacted and invited back. past customer are usually more likely to come back, especially if their last experience was a good one.

      3. Does site keep record/ track of past promotions and marketing

         This way you can see what has been tried, what has worked and what has not worked.