What is my website worth?

[john5000]

How can I determine the value of my website?

Of course, as they say, it's worth whatever a buyer is willing to pay for it.

I've got a classifieds website that receives hundreds of unique visitors per day. The site sometimes gets ten to twenty new ads posted in a day from a variety of site members. The site has nearing 2000 registered members. It's classifieds for a specific market/niche that is rapidly growing and evolving, and I say that seriously not just in a touting way. So far I've only monetized with adsense and the earnings are ok but not super duper.

And the domain is sweet, two words, alliterated, 6 letters altogether, and perfect for the niche yet general enough that the niche could still be broadened.

I posted a classified ad on my website saying the site was for sale and I've gotten about 7 interested persons responding.

They all want me to give a number but I really have no idea what kind of number is suitable. I'm thinking six figures. But is seven figures out of question?

[buckworks]

the earnings are ok but not super duper

Then it's unrealistic to dream of a super-duper price.

It is very common for businesses to be valued by a multiple of the earnings. What figures do you come up with when you multiple the existing annual earning by two, three or four? That's probably the most realistic ballpark.

Note that earnings are what's left after expenses, and the expenses need to include a value for the time you spend working on the site.

Potential buyers will make their decisions based on net profits that can be generated, not just "buying a job".

[topr8]

another way of valuing 'social' sites is by assigning a value to each ACTIVE user.
the value depends on the niche, for instance, life insurance is worth a lot more than kittens, do your users repost or once they've posted an ad is that it?

so, say 2,000 active users at $2 each that would be $4,000 value to the site, my $2 was arbitrary and could be more or could be less.

[weeks]

Right, but you want to shop around. If you can find a good fit for your website where it can be run with little or no additional staff and they have sites that can drive traffic to it, then the value obviously increases.

So, people who buy from you also buy a lot of X as well or are interested in y? Talk to people dealing with x and y. And don't limit yourself to web folks.

Which brings up another point--is there a player in your area who isn't on the web as they should be? You could save them a lot of time and trouble. Ka-ching!

[wheel]

What's the cost to replicate?

I've got a classifieds website that receives hundreds of unique visitors per day.

I can drive hundreds of unique visitors to a site using adwords, for 10 cents a click. So say $20 a day. Or $600 a month.

So for about $6000 I can guarantee (guarantee!) that I have hundreds of visitors to my copycat site. Why on earth would I pay you $10,000? Or even $5000?

You get more money if you have something extra that can't be replicated. If you own a market, you can get extra because they can't do it elsewhere cheaper.

A potential buyer is going to look at 6 figures and decide they can brand bippity-boppity-boop-pepporoni.com for a lot less than that and have the same thing.

And potential buyers are going to want a deal.

You do not get any extra money for a two word domain name. You do not get extra money for a couple hundred random visitors a day. And you do not get extra for 'potential' or 'growing market'.

Given what you've told me, I would think you'd be fortunate to see the far side of $3000. And in the hundreds might actually be more realistic.

[weeks]

AOL’s purchase price 6.3 times HuffPo’s projected 2011 revenue
[blogs.wsj.com...]

[wheel]

And that's an example of someone having something extra. Huffington owned the market and had something not easily duplicated.

I've been the recipient of a website sale that was 40X revenue - sold for a good sum and was producing diddly squat in terms of revenue.

I've also sold a website in a competitive niche that was producing a great revenue stream, for six months income. And was lucky to get it.

The OP sounds more like his site resembles my second example more than it does the huffington post.

[StoutFiles]

They all want me to give a number but I really have no idea what kind of number is suitable. I'm thinking six figures. But is seven figures out of question?

I'll just go out and a limb and say they both are. Your interested buyers are likely hoping for a much smaller sale; domain names aren't quite worth what they used to be.

Test the waters though. Email each buyer and tell them to throw out an offer because you've got other suitors. If you start mentioning six figures I promise you you'll scare them off. You're always welcome to lie about the offers you've gotten to raise the price to a certain point, but if you start too high people won't bother.

[wheel]

(*)re: the site I sold for six months income. The guy made his money back in 3 months. This was a few years ago. He's never touched it since, runs his entire business from it, and I've just been told his rankings are starting to increase again. He seems happy :).

[john5000]

Well, I like to think the site has something special. It's a brand and it has a "best in breed" vibe about it. I've been running it very professionally and the name has a good reputation. Many of the ad posters are regulars and they post often. Me thinks six figures worth of business is exchanged between visitors of the site per month or maybe weekly. A lot of connections are made on the site. Many multi-thousand dollar deals are made thanks to people meeting on the site. I've just got shop it around and see who bites.

[BillyS]

john5000 - Generally (rule of thumb here) is that your site is worth anywhere from 3 to 12 months of net income. That's a big range. Some people here would think the 12 month timeframe is generous. I've had someone tell me they'd offer 36 months (a big name in the industry).

Anyway, you're saying that you don't make a lot of money with the site. Why not?

Why would your site be more valuable to someone else than it is to you? If this is true:

So far I've only monetized with adsense and the earnings are ok but not super duper.

Then how could this be true?

I'm thinking six figures. But is seven figures out of question?

I'm not saying this to be mean, but I'm challenging you to think this through. If they site is so valuable, then why don't you extract that value yourself? Are you calling it quits?

In any event, I wish you the best. Let us know how you make out. I find this an interesting story.

[maximillianos]

Typically you take 1-4 years revenue. More if using profit. Depends on age of site, stability of traffic, market, brand, you name it. Every buyer is different. I had one who was just interested in my traffic. Could care less what the site made. Another just interested in revenue. Could care less about traffic. A third just wanted my customer base. Don't bid against yourself. Make them make an offer. Just provide the serious ones with revenue and traffic details.

[maximillianos]

One more factor. If you don't have a few years revenue history under your belt, you may not be able to command a annual revenue multiple offer. It may only be up to 12 months revenue.

And in this market, potential means close to nothing. Buyers want to see stable revenue numbers.

As an example- If your site is 1-2 years old, and you want a 100k offer. I would guess you should aim for $4,000-$6000/month in net profits. So if you are close to this, you might be ready for a six figure offer.

[fenway]

Sounds like John has a problem in monetizing his traffic, but that aside, I couldn't help but get hung up a little on Wheel's logic of how easy it is to replicate the presence of a long standing, organically indexed domain.

I can drive hundreds of unique visitors to a site using adwords, for 10 cents a click. So say $20 a day. Or $600 a month.

So for about $6000 I can guarantee (guarantee!) that I have hundreds of visitors to my copycat site. Why on earth would I pay you $10,000? Or even $5000?

@wheel This is a fairly aggressive assumption. Very possible its a space where Adwords requires a high 1st page min CPC...possibly even $1.75 or so. In those spaces, you're getting into six figures a year in Adwords advertising(6000 clicks/mo * $1.75 = $10,500 * 12 mo = $126,000) that this guy is getting for free, now.

You get more money if you have something extra that can't be replicated. If you own a market, you can get extra because they can't do it elsewhere cheaper.

What can't be replicated, is that you can't build a site to be indexed by Google in 2004, which often translates into very stable rankings that are hard to surpass today. Very little fluctuation in top spots these days in competitive areas. Just like I can't buy Microsoft stock in 1986.

Isn't the domain name also what can't be replicated?

You do not get any extra money for a two word domain name. You do not get extra money for a couple hundred random visitors a day. And you do not get extra for 'potential' or 'growing market'.

Don't two and three word domains, sell for tens of thousands all the time? Maybe I'm missing something in the logic. I do agree with you on nothing extra for "potential."