|The worth of your Adsense site.|
Hi usually the worth of a website is some factor times the current yearly revenue (simply put).
Can anyone tell me what's that figure? There was a thread earlier as well related to this topic.
I think it's usually revenue x 12 months. I personally won't sell any site for so little, maybe 3 years I might consider.
This has been argued endlessly on many forums.
Overall consensus was around 6 months of averaged income and no one could find a compelling reason to sell at that price.
There seems to be a big gap between what a site is worth to the owner and what someone might pay for it, perhaps because of the risk involved. The potential sale price is particularly low because of the perceived volatility and fragility of adsense income. Will it sustain the same level? Will it be around in 2/5/10 years?
The maximum value of 'worth' to the owner could be calculated by working out the value of an asset that would generate the same income, including growth - 5% per annum is an approximate figure good enough to illustrate the point. So, a site generating $1,000 per month would need an asset of approximately $240,000 to generate the equivalent income. However, that would be a relatively safe asset (more so than adsense) so the value comes down dramatically because of risk. $6,000 for the same site does, however, seem very low.
Perhaps it's a good time to buy.
If your site is selling something that is separate from AdSense then you can reasonably expect to get more for your site if you sell it. I sell items from my site that are custom made. I also sell items that are not custom made but that I can resell over and over again to different people. The items that I resell over and over again make the site very valuable. If I were to sell the site those items would go with the site.
Plus the site is a catalog of past work -- and that generates more paying projects.
You wont find any QUALITY sites with a 16 months or longer history for 6 months revs..what you will hear though are BUYERS trying to tell you 6 months is top dollar
I'd buy QUALITY sites all day long at 6 months revs..
I tried to sell one of my sites for $XX,XXX with a min bid of 12X monthly, but no one bid. Site is about 15 months old. Maybe I was just posting it on the wrong place, but I think it is hard to find buyers for that prices. Maybe below $10K it is easier.
So I'm just keeping it as passive income for now, no biggy.
By what sensible model would somebody buy a business based upon a multiplier of its annual revenue, as opposed to its earnings? Take three businesses, each earning $10,000 per month. One requires three full-time employees, the other has a full-time owner-manager, and the third requires two hours of work per week by its owner-manager - which is worth more? Or take three businesses which earn $10,000 per month, the first based upon 95 approximately equal sources of income, the second getting 65% of its income from a single client and the rest from about 30 smaller clients, and the last getting virtually all of its income from a single client - which is worth more?
For brick-and-mortar businesses, a typical business valued on the basis of its earnings before interest and taxes might fetch 1.5 to 2.5 times those earnings, plus the value of any assets included in the sale. The multiplier would depend upon a number of factors, including the industry. Some businesses might fetch significantly more, perhaps 5 or 6 times its earnings, some might fetch less.
A capitalized earnings approach to valuation (i.e., how much money would it take, if invested, to generate the same return) is going to take risk into consideration. A $10,000/month scraper is worth a lot less than, say, a $10,000/month site on travel which has multiple revenue streams, an established search engine presence, and years of income stability.
Things in this market are way too volitile. I would not pay, nor expect anything more than 3 X Monthly rev. Maybe 6mo.
While I agree with you hyperkik, internet businesses always used to sell for revenues as opposed to revenues. That was because none of them were making any money and why the whole thing imploded.
Now I think the issue is with websites is the typical webmaster is not maintaining an accurate p&l so the numbers in regards to profitability are just not normally available. So selling basis is going off something else. I imagine most of the transactions are for relatively small sums so it is not even worth the work trying to determine accurate profitability, especially if you are going to do other things with it.
|Things in this market are way too volitile. I would not pay, nor expect anything more than 3 X Monthly rev. Maybe 6mo. |
You are right that it's a risky business but I would never sell a site for only 3-4 months of revenue, I'd rather keep it myself then.
What a bargain hunter, 3-4 months revenue, LOL!
|Hi usually the worth of a website is some factor times the current yearly revenue (simply put). |
That's a joke.
5 years revenues minimum as the price.
I would not sell my sites for 150 month current revenues.
It also depends on your personal expertise and your site's purpose.
If you are an expert in widgets and keep your site sticky and up-to-date, then it stands a good chance of remaining differentiated.
There are a few competing sites to mine that I'd pay 12 months revenue for, since I know that they have solid and numerous backlinks, and that I could develop content.
Should I e-mail my competitors now and offer 3-4 months revenue? Um . . . .
Depends on the TYPE of site too.
And on how "evergreen" the content on it is.
And on the impact of losing its founder.
Personally, I wouldn't sell my site for even three year's revenue. Revenue is growing, for one thing, and for another, it fits into my life neatly. It would be hard to replace.
But someone else would be foolish to pay more than, say, six month's revenue because it would start to lose value once I was no longer involved and adding content.
I note that a lot of sites for sale on Ebay violate the TOS! LAst time I looked there were gambling and MP3 download sites for sale. Advertised as goldmines with a price tag of peanuts. Hmmm.......
Anyway, I can see the difference between worth to the owner, and worth when it comes to buying.
I know my site's earnings are up. Just had a promotion in the serps to #1, and an increase in income. To me, that, coupled with 2 years adsense earnings makes it worth a good deal of money.
However, should I decide to sell, potential new owners don't know that the serps position will remain the same, they don't know that the income is stable (despite the history) and therefore buying it would be a gamble for them. Consequently the site wouldn't attract what *I* think it's worth. Somewhere along the lines there is a happy medium, but I suspect that any site that is a good quality earner is not likely to sell too readily or cheaply.
When buying a site, say, for 6 months revenue...how do you know their revenue? Are you just asking them outright? What prevents them from lying about the revenue in order to sell at a higher price?
|I refused to sell a site for 3 x last annual revenue simply because its rate of growth is not your average 5 to 15%, its 50 to 100% with room for more.., so potential for growth should be more than an equalizer to the extent of outweighing all known risks involved, which anyone buying an online property is well aware of in the first place. |
A site is not worth the consensus of opinion of its worth. Neither is a site worth what some formula suggests.
A website, like pretty much anything else, is worth whatever someone is willing to actually pay for it. Unless, of course, it's worth more than that to the current owner.
Websites are a hard case, however, in that the our market is volatile, each website is different, the work to maintain them is mostly unknown -- as are the skills necessary to do that work. And, of course, 'our market is volatile' conceals several dimensions of volatility: unpredictable search engine behavior, shifting fads and trends, constantly evolving monetization options, the possibility of 'banning', etc.
Buying a website is a gamble and most people don't like to gamble when they don't know the odds. The current owner, on the other hand, probably has a good idea of a sites worth.
My websites, for example, are worth far more than 12 months earnings. If you don't believe me, just try to buy them! ;)
|By what sensible model would somebody buy a business based upon a multiplier of its annual revenue, as opposed to its earnings? |
That's right, site values are often quoted in multiples of net profit. But the people who buy and sell regularly use the correct terminology: net profit. To some others profit, revenue, income, earnings and salary are all the same thing.
I have spent a lot of time over the last two years studying the buying and selling of websites (and other online businesses), and that's what my site is largely about. It's amazing how many people haven't the vaguest idea of how to make even a rough estimate of net profit. Some even get annoyed if you ask them to factor in a fair wage for their own time and to deduct that from the profit. I've been busting my ass off for 80 hours a week... but I didn't actually pay myself a salary, mate!. Arrghh!
Many webmasters who decide to buy there way in on the web instead of building their way up, tend to have a completely different mentality then the actual seller. A seller knows what had to be done and how well the website will, most likely do in the next few months. But for a buyer, its blind roll of the dice unless the website has had third party records proving stable income for atleast 12 to 24 months. Even then, a simple change at one of the major search engines on how they rank relevance can completely change that overnight. Never buy (unless its a bargain) a website that has all its eggs in one basket.
I paid $6,000 for a lyrics site that was earning $450 a month from Adsense. The traffic collapsed within 2 months of purchase following the Allegra update. There is no way I will pay more than 8 months revenue again for an adsense site again.
derekwong28, sorry you had a bad experience. I've bought many sites and not all of them were successful. The trick is to take that same "eggs in basket" advice... and spread your investment money over several web properties.
That lyrics site is a good example of what buyers should really go into. Examining just the volume of traffic and Adsense cheques is highly inadequate. I usually go into a lot more research; get copies of the stats files to examine for a number of specific factors (including sources of traffic); check WHOIS and WHOIS history; detailed link:, linkdomain:, and site: checks in a variety of SEs; archive.org checks; copyscape.com checks; and a lot, lot more. The most important is, I think, the stats. Any excuses about having changed hosting companies and losing stats causes me to walk almost straight away (even if I believe the story). One expensive disaster was avoided when my examination of stats revealed that 80% of traffic came from a single IP.
Buying is not for the novice webmaster but there are riches to be had via this route.
I agree, as a buyer, it's a gamble - especially if AdSense is the site's only revenue.
A sensible price will vary a lot with the site. How old? how much traffic? How many links? Income from where? How much content? Original? Any high-risk SEO tricks? etc etc.
I've bought some small AdSense only sites recently for about 12x monthly profit. Which I feel comfortable with, for the sites I bought.
That multiple would be too little for some sites, and too much for others...
I can't ever imagine selling my sites at 1,2,3 or even 10X annual revenues. I have a hard time understanding why anyone would. Adsense is just a current source of income that can be switched at any time for another. Think of your website as an income generating property and adsense being just one of the current tennant. (and no, AS is not the only tennant) Unlike a real building, websites require much less maintenance. No need to buy a new water heater or reshingle the roof. All maintenance is done by labour and labour is dirt cheap because you do it yourself. Just like people will always need a place to live, advertisers will always need a place to advertise. I think of my websites as investments that never mature. I figure they will always generate revenue... forever! I do not build websites about widgets in 2005. I build website on widgets in general knowing that 40 years from now people will still be searching on widgets. I guess if I was an american without universal healthcare and needed an operation then I would sell just to get the cash needed to save my life. Other than that, I think of my websites as a legacy or trust fund that I will leave to my children. Looking at it from that point of view the value of any one of my website becomes exponential.
mrSEman, I tend to agree with yu, but the "40 years" bit is much too optimistic.
I am in elecronic publishing since the '80s ("web publishing" didn't even exist then), and since then a lot of things have changed.
Most of the contents I developped then is no longer usable today, for a variety of reasons, technical and non-technical.
Only after a few years I learned the golden rule of electronic publishing:
"Your contents MUST overlive the current technologies"
This means that contents and technologies must be well separated and anyway you have to plan everything VERY well.
Always store a copy of your contents as plain-text, image and uncompressed audio files.
And (small detail), do backups, and label some of them as "VIP", and every jan 1st do a new copy of the VIP backups.
Remember that CDs fail too, my first CDs (burnt in 1991-1993) are happily failing :-)
Yes, in 40 years time all you widget publishers will be sunk. I've just invented a 'hoojit', and when hoojits take off, it'll make all you widget people obsolete, and I'll have cornered the market. And from what I've read in this forum, I'm sure it'll never occur to any of you to enter the hoojit market.
Adapt or die is the usual maxim, I believe. It doesn't apply so much in long-established industries such as property or shares, but in technology terms there might not even be an internet in 40 years, but something else that's much, much better. (And SERPS might be a deadly infectious disease).