Editor’s Note: Today’s post comes from Paul Garcia at Digital Exits. With many years in the industry, Paul is now the community manager for Digital Exits, who helped create the infographic below. He likes to help people get results and also provides as much information as needed to help those around him.
We put a lot of focus on setting up an eCommerce business using WordPress, but rarely ask the question, “How much is my WordPress eCommerce site worth?” The value of your WordPress eCommerce site is an important fact to know in case you’d like to sell your business one day. Interestingly, the platform on which you build your site doesn’t have a huge influence on value. However, I’m willing to bet that there would be some negative impact if you’re using a platform that’s not consistently maintained (as most major platforms like Bigcommerce, Shopify, or WooCommerce are).
Also, the type of business affects this. Typical eCommerce sites may go for these multiples, but those selling digital products typically demand a lower multiple – different type of product, different multiple. Software companies, for example, typically demand multiples closer to 0.75x to 1.5x. Maybe it’s because products change quickly, but it’s a trend to consider depending on your business type.
Our friends over at Digital Exits created a helpful infographic about an easy way to evaluate your business. A lot of you may have wondered at some point about selling your eCommerce business or tried figuring out how much it is worth. Well, the good news is that it isn’t that hard; you just need to know what to look at and how to calculate the proper figures to find out what your business is worth.
While looking at this infographic, you may notice the term “multiple” being used a lot. The way this term should be interpreted is that it means the multiple of earnings that your business may be able to sell for. For instance, if you have an eCommerce site that has a revenue of about $100,000 or more, that business would be able to sell at a multiple of 2 or 3…which approximately puts your business’s value at about $200,000 to $300,000.
Digital Exits will also provide free valuations for any business owner who is willing to contact them about it. Although this infographic is really helpful in trying to figure out the value of your eCommerce business by yourself, it is always best to get a professional third party to evaluate it when looking to put it up for sale. The last thing you want to do is to get an incorrect amount and sell the business for less than it is actually worth.
Thanks so much to Paul and Digital Exits for sharing this research. While many business owners launch a site expecting to stay with the site as it continues to grow, there are sometimes circumstances that will necessitate a sale. It’s valuable to have an idea of how much your WordPress eCommerce site is worth before getting to this point.