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Is it possible to value a domain based on your annual income from AdSense?
I'm trying to compare the value to a low risk fund or high interest account. You could easily get 10% return on a low risk investment.
AdSense earnings fluctuates so it's not low risk, therefore I think the value of a domain should be 10-15 times you’re based on AdSense earnings.
Is there a school of thought on this?
To paraphrase, would I make more money from the website than an investment over a 10 year stretch for example?
I dont think that is a good comparison if that is what you mean. You might be able to project earnings (very roughly) if you have collected data from your website over a reasonable amount of time probably years. Make a few projections ranging from stable to moderate growth assuming you are going to improve the website. Build in the uncertainity of traffic, conversion rates and the adsense program and your projection will be quite shaky.
Because you're buying it and hoping to improve on it and it will take less time to break even
So even if you double the income which would be very hard to do it would still take 5-7 years to break even.. again not worth the work unless we are talking millions.
My question was a bit long winded. I wanted to know how you'd value a domain based on it's current AdSense earnings.
I also asked a risk assessor I know. He knows nothing about Google Rankings or AdSense, but he wanted to know to quantify a) the probability my site losing rankings (thus AdSense revenue) and b) the likelihood that AdSense revenue will increase.
Rankings are not fixed and will depend on competition, website modifications and a bunch of other factors known only to Google. You can offset the risk somewhat by maintaining a good link profile and clean website (TOS).
Revenue will also depend on competition, traffic, conversion rate, demand or interest level in product and so on.
Make it clear that though you can influence some of the factors, just like stocks, the investment is at risk.