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What is a site worth?
ricey

5+ Year Member



 
Msg#: 11552 posted 10:15 am on Jan 15, 2006 (gmt 0)

Has somebody actually came up with a formula to work out what a site is worth with adsense.

FOR EXAMPLE (THESE AREN'T TRUE FIGURES)

If you had a site with

10,000 pages (5,000 indexed with google as being unique).
Had 5,000 unique visitors a day.
Had 100 clicks averaging $1 a click = $100 a day
making $36,500 a year.
What would the site be worth?

As I say this is a hypethetical question but it would be nice to hear different views.

For what it is worth I think you'd have buyers around the $50,000 region providing you could see stats.

ricey

 

Tropical Island

WebmasterWorld Senior Member tropical_island us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 11552 posted 10:33 am on Jan 15, 2006 (gmt 0)

There have been many threads in WW about this subject.

From what I can remember the general consensus was that a multiple of from 7 months to one year of net earnings is generally accepted as the guideline.

In your example that would mean from around $21,000 to $36,000 less what ever expenses were needed to get the 5000 visitors per day.

irock

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 11552 posted 11:34 am on Jan 15, 2006 (gmt 0)

From what I can remember the general consensus was that a multiple of from 7 months to one year of net earnings is generally accepted as the guideline.

I take it this is for sites without potential for growth.

Heartlander

5+ Year Member



 
Msg#: 11552 posted 11:40 am on Jan 15, 2006 (gmt 0)

I'd like to see a site averaging $1 per click.
If that is the case, I'd be willing to work at something I have no interest in.

But lets be honest- there are many many factors involved in what a publisher receives per click, are there not?
My site about green widgets might get significantly less per click than yours.....on the SAME ads!
Am I right?

webpro00801

10+ Year Member



 
Msg#: 11552 posted 11:43 am on Jan 15, 2006 (gmt 0)

Yes I have asked this question several times in several places and there really is only one answer - a site is worth whatever someone is willing to pay for it. It is pretty hard to sell any small business - since the "business" is usually the person running it, and really that is what most of us here probably our, small businesses. Also, the smaller you are, the easy it is to just reproduce whatever it may be you are selling - so why pay for it?

I have not been actively trying to sell our site but once and awhile we get interest, and after doing as much research as I could and talking to a lot of people I am more and more convinced that there just really isn't a formula - you need an interested buyer first. Currently someone is looking at us, and at the end of the day my price to them is simply "this is what I need" - not a multiple of anything really, but the simple fact of I am making X amount of dollars a year, I have been doing this for 11 years, etc. and I would need so much to let it go (applying various valuations of publicly sold websites we could be valued anywhere from 200k to 6 million). Not very scientific but an amount that would satisfy me. The best piece of business advice I ever got was: "Your first offer is usually your best offer" If someone is ready to offer you cash - listen.

shallow

5+ Year Member



 
Msg#: 11552 posted 1:15 pm on Jan 15, 2006 (gmt 0)

10,000 pages (5,000 indexed with google as being unique).
Had 5,000 unique visitors a day.
Had 100 clicks averaging $1 a click = $100 a day

Doesn't really seem like a lot of clicks for a site that has 5000 uniques a day, does it?

not a multiple of anything really, but the simple fact of I am making X amount of dollars a year,

From what I've been told by others who know more about this stuff than I, a site that derives it's revenue solely from programs such as AdSense would have less value than a site that sold their own products.

Is there no value placed on content? Is sales value only dollar/euro/etc. driven?

Like other website owners, I have hundreds of pages in my site, with hundreds of graphics I've personally created (and some images I've purchased). The vast majority of the text is written by me. It would take someone else hundreds and hundreds of hours to start from scratch. Is that not worth something?

Any thoughts?

europeforvisitors



 
Msg#: 11552 posted 3:13 pm on Jan 15, 2006 (gmt 0)

The intrinsic value of the content is likely to count for a lot. If a buyer knows that a site can be monetized in a variety of ways, the site will be worth more than a site that could become worthless if its current source of revenue dried up. That's why media properties, both large and small, sometimes go for outrageous amounts of money. About.com, for example, sold to The New York Times Company for $450 million. And I remember when Jack Rickard, founder and publisher of BOARDWATCH, sold that magazine (which was read mostly by ISPs at the time) for what I believe was $16 million.

team

5+ Year Member



 
Msg#: 11552 posted 3:29 pm on Jan 15, 2006 (gmt 0)

Good information, thanks.

While we're on this topic, are their real estate-like specialists who appraise websites? I have absolutely no intention of selling mine in the foreseeable future but I'd love to know what I could get for it if I were.

Well, if someone offered me $450 million, I might reconsider. Yeah, sure. lol ;-)

Publisher

5+ Year Member



 
Msg#: 11552 posted 4:15 pm on Jan 15, 2006 (gmt 0)

It seems to me that valuing a website would depend on many factors. First of all, the content...how many pages, how long to develop those pages, how meaningful the pages are for the topic & the topic itself. Another would the the guestimated niche size for the site. If your site is geared toward people who weave baskets out of soda straws, it's likely to be a small niche and unlikely to gain much traffic. Also, existing traffic to the site...it takes a lot of time and energy (not to mention know-how) to get good SE placement as well as press releases, etc. in order to accomplish the existing traffic.

If one were to build a site with the idea in mind that they want to sell it in the future, they may want to keep track of their time spent in working on the site. At least you'd know what your total time expended on the site was and you could apply a dollar amount to that as a basis when considering the other elements involved.

Fatkat

10+ Year Member



 
Msg#: 11552 posted 11:34 pm on Jan 15, 2006 (gmt 0)

"While we're on this topic, are their real estate-like specialists who appraise websites?"

Yeah I know someone from downunder here who'd probably give you some help. Dunno if he'd charge anything, but might be worth a try.

Not sure if I can link directly to him/his site without contravening these forum's rules?

Nick Jachelson

5+ Year Member



 
Msg#: 11552 posted 11:46 pm on Jan 15, 2006 (gmt 0)

Well, assuming there is no growth...

The best savings account today has a return of 4%. Therefore, $36,000 * 25 = $900,000.

Now having a savings account is certainly MUCH more safer that some website you buy, so I'll cut that multiple to 10 for around $360,000.

But I think it's certainly more than $50,000, with $50,000 you would have a whopping 72% annual return on your investment.

wonderboy

10+ Year Member



 
Msg#: 11552 posted 12:25 am on Jan 16, 2006 (gmt 0)

But a potential 100% loss if a number of (not too unlikely) events occur. I would never consider purchasing such a site unless I had that amount of money to throw away. I'd liken it to placing $50,000 of chips in a game of blackjack. Fun, but too many variables that are not in your control.
W.

aris1970

10+ Year Member



 
Msg#: 11552 posted 12:30 am on Jan 16, 2006 (gmt 0)

Hi all,

It really depends on many factors. I can confirm that a recent site purchase I am aware of, was done at about 15 times its annual earnings (not profits).

10,000 pages (5,000 indexed with google as being unique).
Had 5,000 unique visitors a day.
Had 100 clicks averaging $1 a click = $100 a day
making $36,500 a year.
What would the site be worth?

That way, it could be worth $550,000. But that's just a case!

uhwebs

5+ Year Member



 
Msg#: 11552 posted 12:34 am on Jan 16, 2006 (gmt 0)


As much as someone is willing to pay for it.

OptiRex



 
Msg#: 11552 posted 3:07 am on Jan 16, 2006 (gmt 0)

I would never consider purchasing such a site unless I had that amount of money to throw away. I'd liken it to placing $50,000 of chips in a game of blackjack.

Is your opinion that a contextual advertising site or any on-line site is not worth ANY investment?

That they are all far too risky?

That they are not here for the long-term?

That corporate sites are wasting their money by investing in long-term Internet strategies?

That the Net is doomed to failure and we are all wasting our time and energy?

Hmmm...ok, pass me your portfolio of rejected investments please.

[/smells blood]

Leva

5+ Year Member



 
Msg#: 11552 posted 3:59 am on Jan 16, 2006 (gmt 0)

The thing is, ANY small business is risky. Even if it's a small business with a long and established track record -- circumstances could change tommorrow. Even bricks and mortor isn't safe. Take a store selling widgets as an example. So many things could go wrong.

-- The wholesale cost of your widgets goes up, eating into your profit. You're forced to raise prices, or make less money. If you raise prices, your customers may decide they'd rather buy whatsits instead of widgets, or they might just decide to do without widgets.

-- A competitor goes in across the street and they're selling the same thing for less money, you have to drop your prices to match.

-- A major retailer starts carrying the same widgets you carry and advertising them heavily, for less money.

-- Flood, fire, natural disaster, act of god, big truck smashes your widget store flat, burglar steals your inventory, etc.

-- The city could decide to put an interstate where your store is. You move and your customers can't find you. Or you just have a year's worth of road construction in front of your widget store and your customers decide they don't like negotiating the construction to buy your widgets when there's another widget store in town.

-- In an example that actually HAPPENED to a friend of mine, the building you rent is bought by someone who strongly disapproves of your widgets on religious grounds. You have to move. (In this case, it was a sf/fantasy book store.)

-- Government regulations change; you suddenly have to buy an expensive license to sell your widgets, or there's other onerous requirements. Or you're taxed higher.

-- Somebody breaks a leg in your widget store and sues you; you have insurnace, but your insurance goes up beyond the point of profit afterward.

My point is, obviously, that nothing's a sure thing. You could buy a website and tomorrow Google could decide they don't want to offer adsense anymore -- but somehow, I think that's unlikely, given that paid ads are their major source of income.

europeforvisitors



 
Msg#: 11552 posted 4:24 am on Jan 16, 2006 (gmt 0)

My point is, obviously, that nothing's a sure thing. You could buy a website and tomorrow Google could decide they don't want to offer adsense anymore -- but somehow, I think that's unlikely, given that paid ads are their major source of income.

It's more a question of whether Google might change the rules tomorrow, or whether search (including Google search) might begin filtering certain types of sites.

Obviously, the more a site is designed to exploit a laxity in the rules or a weakness in search algorithms, the more vulnerable it is to sudden change.

Webwork

WebmasterWorld Administrator webwork us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 11552 posted 4:54 am on Jan 16, 2006 (gmt 0)

This is no formula that covers all websites.

Junk, throw them up template sites are likely worth what little change someone has in their wallet.

The more complex the website the more there is to appraise: Domain name, technology/coding, content, traffic stats, inbound links in recognition of authority, membership rolls, past revenue, rate of revenue growth, target market, and intellectual property are a few of the major factors that come to mind.

A formula that doesn't take each into consideration is a fools deal in the making.

Certainly, for smaller easy to reproduce websites with nothing much unique to offer but a history of making income from PPC will be easier to value. However, even then one has to look at the characteristics of the book of business clients for the enterprise - amongst other variables.

shallow

5+ Year Member



 
Msg#: 11552 posted 1:56 pm on Jan 16, 2006 (gmt 0)

uhwebs said "as much as someone is willing to pay for it."

I agree but only in conjunction with: "as much as someone is willing to sell it (this assumes the site is not unreasonably priced)."

For example, if I were to sell my site and had a serious buyer, I'd want at least a *minimum* of one years net income plus a fair and reasonable amount for content and development. The vast majority of my income comes from solid, well-established companies such as Google, Yahoo and Amazon. I suspect they will be around longer than I. As to content, I will NEVER be fully compensated for the hundreds and hundreds of hours I put it each year, but that's par for the course for anyone building a business. However, the content is worth something.

If someone wasn't willing to pay the minimum amount I'd accept, and I had no interest in continuing my site, I'd just stop working on it and let it die a slow death. Don't know for sure how long it would take, maybe 2-3 years (I have a lot of information at my site that was relevant decades ago and suspect much of it will be relevant decades into the future).

I'd make more money letting it die than if I accepted less than a reasonable asking price.

ricey

5+ Year Member



 
Msg#: 11552 posted 2:22 pm on Jan 16, 2006 (gmt 0)

Hi Shallow,

I've never actually looked at it that way:-) So if this hyperthetical site was sold for 50k (which was earning 35k a year) you'd probably get more by simply not updating and maybe year 2 you'd get $20k year 3 10k year 4 $5k and probably a couple of k each year after - in anycase considerably more than 50k. Good point!

ricey

shallow

5+ Year Member



 
Msg#: 11552 posted 2:51 pm on Jan 16, 2006 (gmt 0)

ricey, that's precisely what I mean. I'd still have a little work, of course, such as paying my annual hosting and domain fees but that's all automated anyway. Even payments from companies like Google are direct-deposited into my account.

My scenario assumes things stay fairly constant as far as Google, et. al. are concerned. I don't think it's unreasonable to think that they will for, say, 3-5 years after I stop working on the site.

I would definitely not hesitate to let my site "die" if I couldn't get a fair price. I would, however, try in earnest to find a buyer. I'm passionate about my niche and would hope to find someone else who is too.

richmondsteve

10+ Year Member



 
Msg#: 11552 posted 3:00 pm on Jan 16, 2006 (gmt 0)

Like Webwork said, there's no magic formula. Keep in mind that revenue is not the same as income and income is much more meaningful for valuation purposes.

Even if you're not paying yourself, your time has value. The value of your time can either be thought of as what you could earn with that time doing something else or what it would cost to hire someone with the necessary attributes to manage the site for you. The buyer should have the same thought process.

caran1

5+ Year Member



 
Msg#: 11552 posted 3:11 pm on Jan 16, 2006 (gmt 0)

A site with an associated optin mailing list, which sells a service/product is certainly more valuable than a site which just receives traffic from search engines and earns money through advertising

oddsod

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 11552 posted 3:32 pm on Jan 16, 2006 (gmt 0)

The intrinsic value of the content is likely to count for a lot.

EFV, In should do... but it doesn't. :(

99% of buyers are looking at monetary returns. Content itself is not accorded a value in their eyes unless it can generate revenue.

are their real estate-like specialists who appraise websites

Yes, there are. I've seen their work, spoken with respect them for a lot of things... except their valuations. They value for the benefit of the person paying their invoice i.e. they'll be glad to stroke your ego for you. And I see thousands of naive webmasters hanging on for asking price on the strength of the "professional valuation" and they end up not achieving a sale.

It seems to me that valuing a website would depend on many factors

I would say there is only one factor: Money. There is a rare exception like the recent sale of TW (for those of you who know it), but a site is treated like any other business. People buy it for the money. Niche size, number of pages etc all boil down to one thing at the end: earnings. Even amount of time the site requires boils down to money (more later).

I would never consider purchasing such a site unless I had that amount of money to throw away.

I understand where you're coming from and I agree. Even with the more careful scrutiny a purchase can go wonky. All it takes is one corrupt employee at a registrar.

A formula that doesn't take each into consideration is a fools deal in the making.

The formula itself, if there is one, takes into account none of those factors you mentioned. The facts that lend themselves to mathematical manipulation are earnings and potential earnings and that allows the buyer to arrive at the present value of future earnings. I would say that some of the factors you mention are more due diligence/risk assesment than pricing calculation.

I agree but only in conjunction with: "as much as someone is willing to sell it (this assumes the site is not unreasonably priced)."

With respect, uhwebs is 100% correct. His quote is probably the oldest cliche in the business. The conjunction you speak about is only required for an actual sale.

The problem with a lot of webmasters looking to sell their sites is that they don't realise that selling a business is a specialised skill. Heck, most webmasters don't even appreciate that if they've spent 20 hours a week on the site they've got to deduct a fair salary from the profit and reduce the profit by the amount they would have had to pay for someone else to do the work they did - otherwise they are guilty of a criminal act: Fraud. (If this sounds weird to you sticky me for a link to a page that explains it).

<added: just saw richmondsteve's post and sorry, one of my points above repeats what he said>

europeforvisitors



 
Msg#: 11552 posted 4:30 pm on Jan 16, 2006 (gmt 0)

The intrinsic value of the content is likely to count for a lot.

EFV, In should do... but it doesn't. :(

99% of buyers are looking at monetary returns. Content itself is not accorded a value in their eyes unless it can generate revenue.

When I wrote "intrinsic value," I was referring to long-term money-earning value (not literary value, moral value, spiritual value, etc.). After all, this thread is about serving Mammon, not God or the Nobel Prize Committee. :-)

Intrinsic monetary value is one of the reasons why a company like About.com was worth $450 million to The New York Times Company. Not all of About.com's content is wonderful, but it doesn't have to be--what counts is the fact that it's real, and there's enough of it. About.com's critical mass of XX,000 articles and human-edited directory pages should have more staying power than, say, the pages of a typical MFA site that could easily disappear from search indexes or be banned by the AdSense team. It also can be monetized in more than one way, which adds another measure of profit potential and security.

Similarly, an established digital-photography review site would be worth more to a buyer than a scraper site's collection of stolen Yahoo or Google digital-camera page listings would be, simply because it can earn money from display ads and affiliate links in addition to AdSense, and it doesn't depend on temporary algorithmic weaknesses of search engines for its traffic.

oddsod

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 11552 posted 5:08 pm on Jan 16, 2006 (gmt 0)

an established digital-photography review site would be worth more to a buyer than a scraper site's

I hate to be pedantic (actually, no, I don't :)) but you're attributing a non-economic value.

For argument's sake let's say I've seen all the major scrapers and know the kind of DNA they radiate which will allow Google to exclude them from the index. Let's say there's one that uses a completely different and almost impossible to detect technique (let's say he's scraping content from his own forum which is closed to SEs.) Or, he doesn't rely on SERPs at all.

As a businessman, provided other factors like risk are the same, why wouldn't I'd rather have a scraper site at 12x than a quality content site at a 13x?

BTW, scrapers don't necessarily earn less than the content sites they scrape, they often earn more. Even with smartpricing. But that's a different story for a different thread :)

shallow

5+ Year Member



 
Msg#: 11552 posted 5:12 pm on Jan 16, 2006 (gmt 0)

As much as someone is willing to pay for it.

"I agree but only in conjunction with: "as much as someone is willing to sell it (this assumes the site is not unreasonably priced)."

With respect, uhwebs is 100% correct. His quote is probably the oldest cliche in the business. The conjunction you speak about is only required for an actual sale.

I think we're saying the same thing.

My husband and I have sold a decent amount of property: most residential, some business property alone and an actual business with property. Lots of different scenerios including having more than one purchaser at a time bidding up the price. Suffice it to say, other than an outright distress sale, it takes two to do the negotiating tango.

I am certainly aware that real-real estate and web-real estate are quite different entities. It would be quite interesting to hear from someone who actually sold a site.

oddsod

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 11552 posted 5:25 pm on Jan 16, 2006 (gmt 0)

It would be quite interesting to hear from someone who actually sold a site.

shallow, LOL. You could almost say I do it for a living. I've got a site I'm developing all about the buying and selling of websites. ;)

21_blue

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 11552 posted 5:48 pm on Jan 16, 2006 (gmt 0)

oddsod wrote:
As a businessman, provided other factors like risk are the same, why wouldn't I'd rather have a scraper site at 12x than a quality content site at a 13x?

I can think of several. Eg: business ethics could be a major factor, dilution of branding could be another.

But I can't see the risk factors as being the same between the two, because one presumes that stakeholder interests will always impel Google to promote content sites at the expense of scrapers.

BTW, scrapers don't necessarily earn less than the content sites they scrape, they often earn more. Even with smartpricing. But that's a different story for a different thread :)

Well, I'm interested in hearing your logic behind this, so start the thread!

oddsod

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 11552 posted 6:06 pm on Jan 16, 2006 (gmt 0)

21_blue, I hate to say this - because it could take the thread off-course - but scraper is not a swear word and some scrapers are indeed great sites. It's often argued that the SEs themselves are scrapers at heart. I wouldn't mind owning the Google "brand" :)

one presumes that stakeholder interests will always impel Google to promote content sites at the expense of scrapers.

Which doesn't matter an iota if the scraper is not reliant on Google for traffic. Besides, Google doesn't want all scrapers out, only a specific kind (the ones that scrape SERPs and monetise that "content" with Adsense). If you have a scraper that puts together latest odds from varous betting sites or other "useful" info, and if that scraper has lots of IBLs, do you think Google will try to keep it out of SERPs?

If you start a thread on scrapers (we've already had a million) I'll drop in to comment :) but we need to guard against ricey's thread getting hijacked.

This 67 message thread spans 3 pages: 67 ( [1] 2 3 > >
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