Expenses

As with any business, it’s important to know just how much money is being brought in. Not just gross, though… you need to know net earnings! A website may be bringing in $500 a month, but if $600 needs to be spent monthly to make those earnings, then the website is losing $100 a month! While this is a simple concept that seems obvious, it’s very easy to forget.

Fortunately, a great thing about websites is that they’re usually fairly inexpensive to keep running! Because of this, a website’s expenses are usually pretty negligible and aren’t used in calculating the overall valuation of the website.

Finding out what a website’s expenses are will help you ensure that you’re not buying a website that’s hemorrhaging money, and it’ll also help you identify potential ways to cut expenses and help the website make more money! 

There are a couple of different expenses you’ll typically see with websites.

First of all, hosting is most likely the biggest expense. While some hosts can be relatively cheap, the good hosts can cost a pretty penny every year — especially if the website is bringing in a good amount of traffic!

This isn’t an area where cutting costs is a good thing, though. Budget hosts usually aren’t nearly as good as premium ones, so it’s best to not risk your investment by trying to save a little money.

The good news is that if you combine multiple websites under one host, you’ll tend to see cheaper costs per website. As you build your portfolio, this will help you out big time!

The second biggest expenses, maybe the biggest depending on the website, is plugins! While some websites are very bare-bones, others require different plugins and services in order to run effectively. Page builders, speed enhancers, security, affiliate integrations… all of these plugins can come with costs.

You should get a list of every plugin being used on a website and do some research into how much they’re all costing. I usually find a decent amount of plugins on websites that can be cut out and save money without much of a downside!

Finally, a decent expense that some websites have could be content. Most websites don’t consider content costs, because it’s not a consistent and necessary thing to keep paying for. If you stop producing content, old content still ranks and gets pageviews! That is, at least for most websites.

Some websites depend on a consistent stream of new content, such as news websites. In this case, these websites often come with staff writers. It’ll be up to you to find out how much these writers cost and set up systems to keep them on board, since websites like these will tank without fresh content consistently.