How can valuation of a company be measured based on page views?

I was wondering, if a site has lets say 1 million page views per month, how much does that make it worth?

Similarly, for signed up users, lets say, a thousand signed up users - how much does that make the company worth and how does one count the valuation for such a venture?

Thanks!!

You cannot set the value based on pageviews or members. I'd say you need also to consider at least

• the business model
• the stage of the company (just launched, early stage, mature...)
• the cost structure

As an example, let's say you have one million page views per month, and your only possible business model is advertising.

Considering 1% of average click through rate, and 0.40$ per click, that would make 4000$ in revenue per month. Such a website would have minimal hosting costs, let's say 50$ per month, so it'll make 3950$ profit per month. That obviously excludes costs of employees (that you should definitely account).

The value of such a website would be

value = yearly profit * (multiplicator) where (multiplicator) depends on many factors:

• if it is an established website with employees and stable revenues, the multiplicator can be 4-10. Of course you need to calculate the profits in much accurate way than I did (taking into account employee costs and office, as a start)
• if it is just a website you run on the side, the multiplicator is probably lower (1-2). You can check website evaluations of Flippa, a marketplace for websites
• if your website is new, you should consider that it's value will probably increase in the next 1-2 years due to the normal network effect (and maybe better Google indexing)

On the other side, if your website offers paid memberships, things usually get more interesting. Evaluations also can become more difficult, but a few things to consider are:

• conversion rate (% of free users that convert to paid users)
• cost of user acquisition (how much you have to pay in advertisement to convert 1 paid user)

If it becomes clear that in your website

cost user acquisition << profit per user then your website value will likely become much higher.

Worth to who, for what? There is no inherent value in a website with page views--

It has potential value. that potential value is that ability of those page views to convert into something.

The value of the site with lots of page views will be determined by the conversion rate and the eventual revenue generated from it.

for example -- if I have a site that has a 100,000 page views per year -- and 1% of those converted an purchased a car valued at $20,000 --it would be worth a lot more than a site that had a million page views per year -- and 10% of those converted and purchased a magazine subscription for 19.95.

Or another -- if my review was purely advertising based and I had a site that have 1,000,000 page views per month and .01% clicked through on the associated advertising resulting in income of .10 per click it will be worth significant less that yours if you can get the click through rate up to 1% --

Now -- someone may find value in your site without any other metric-- because they have a product they know can monetize that audience. So even though you haven't -- you have built and audience -- and then you are selling the audience. The more you know about that audience-- the more potential valuable it will have.

Bottom line: Value can not be determined from page clicks alone.