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probable value of established domain plus content

I've been told USD$1.8m, but that seems high

1:21 am on Dec 4, 2011 (gmt 0)

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Free online "site value" calculators seem fairly useless, so I thought I'd ask here about educated estimations of the value of a particular domain, including the content, etc, currently live on the domain name.

The site has a global Alexa ranking of 22,040 (US: 8,469) and a Quantcast US Rank of 1,176 with a Global Daily of 59.5K. The site is educational, so traffic (and thus income) varies with the American school year.

The site is free-access with no membership; revenues come almost entirely from advertising and affiliate deals. About a third of the income comes from one particular advertiser / affiliate.

Traffic mostly comes from search engines, though there are many "good" backlinks (from universities, etc).

Revenue may creep into the six-figure range this year, but that does not take into account the fact that nobody is currently paid for services. The site is essentially a one-man office, and much of the perceived value comes from that "one man" being the "face" of the site.

The educational topic is mathematics, and a tutoring forum is currently running on the site. A buyer would need a mathematical background, or would need to hire or subcontract somebody with such, in order to manage the forum and edit / maintain the content. In order to expand the content, the original owner may need to be hired.

I've been told that the value of this site is about USD$1.8m (one-point-eight million dollars, US), but this seems to me to be a bit high (in the sense of the Pacific Ocean being "a bit" wide). I am interested in informed opinions.

Also, I would appreciate advice on reputable website appraisal services, if any exist. Thank you.

2:54 am on Dec 4, 2011 (gmt 0)

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Without being too specific a bit more info about the site's link profile would likely be helpful since defensible traffic and rank (however ephemeral) - from a rock solid link profile - might be where the value lies. (Not just the income.) Also, in "big deal" transactions the opportunity to examine logs/analytics for 12+/- months would be imperative - though one needs to be certain of the "buyer's bona fide intention". (There are / have been cases of SOBs who gobbled up info only to walk away . . and compete.)

Also, the purchase and sale of existing sites often has a component of "I/We can do a much better job of monetizing this site". How safe/solid is the monetization?

I'm sure others can speak to the value of edu leads, but how many pertinent/valuable kwp's does this site rank for in 1-3-5 position at this time? Obviously, the more the merrier.

When the $#s get big it's often a function of a number of variables, each of which carries great weight: great domain, great # of great links, array of kwp's the site ranks for, sources of defensible traffic, undermonetization "as is", value of the leads in the market at the given time, etc.

I'm not aware of any website appraisal service, at least not any that's as able to value a site any better than a small group of experienced site-owning web professionals, i.e., people who know the market value / labor+time costs of linkdev, the value of a lead stream, etc. (Kinda why big questions like this should be dragged in little black boxes to PubCon for late nite discussions in smokey bars. I've seen some pretty amazing brain power assembled, giving advice freely, over the many years I've attened PucCons.)
12:09 pm on Dec 4, 2011 (gmt 0)

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Thank you for your response.

Most traffic comes from search engines, so I'm guessing that the site does well for topical searches and thus for keywords. From my experience, the site tends to land on the first page of search results, usually in the first position. I don't know what "1-3-5 position" means (sorry!), so I can't comment on that.

I'm told that, given the topic area and the traffic, the income is surprisingly good. This may be a result of the one particular client relationship, which suggests that the monetization is not particularly "safe" or "solid".

The traffic is organic, but has taken more than a decade to grow to the current level. Since the site is educational, any advertising at all is generally regarded (within the educational "industry") as a bad thing, so it would likely be difficult to engage in further monetization without a resulting "hit" in traffic.

Thank you.

3:50 am on Dec 5, 2011 (gmt 0)

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I assume you're looking at buying it (if you were selling, you'd have some internal figures such as unique visitors and pageviews per month, rather than external rankings).

Revenue may creep into the six-figure range this year, but that does not take into account the fact that nobody is currently paid for services

You've hit on the main problem there. It's what Dragon's Den / Shark Tank would call a "lifestyle business" that earns enough for one person or family to live on, possibly quite well, but doesn't really have anything left for investors (such as yourself).

One way to calculate a value would be to take the current annual revenue, deduct all costs including hosting AND hiring somebody skilled to run it, and see if there's any net profit. If there is, multiply that by a low figure (if the traffic and income is risky, which it is) or a higher figure (if the income is secure, which is rare). That's your price.

If you can see a way to increase revenue or reduce costs (hard to see where in this case), you can adjust the price accordingly.

Maybe the domain name is great also, could be worth buying just for that then redevelop the site with something more automated, but not many names are worth more than a few tens of thousands of dollars.
9:43 pm on Dec 8, 2011 (gmt 0)

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Just how much value does the 'face' of the site represent?

This might not be that big of a deal, though - as every buyer is different, and with different motivations for buying. While the revenue from the site represents its value to you (an assumption), a buyer could be interested in the site for reasons that might not be readily apparent to you - reasons that might not need the 'face' of the site - such as branding, strategic value within their industry, adding a new product or offering to their current line instead of building it themselves, etc...

If you can quantify the value of the 'face' of the site you're getting closer to a 'better' valuation, keeping in mind the motivations of the buyer, and your motivation for selling. Unless this personality *is* the site, I wouldn't consider this to be that big of a factor in my own internal valuation. Everyone is replaceable...

If they're focused on revenues, I would posit that a buyer of a website in the six-figure+ price range would probably use a more sophisticated model than a raw multiple, such as a discounted cash flow model. Examine 1-3 years of revenue and traffic data, use this to discern a growth rate (if any) that can be realistically applied to future revenue for a 3-5 year time horizon, then apply a discount rate that represents your thoughts on the risk involved with that stream of revenue.

I don't know of any website appraisal services that I would recommend. The market for revenue producing websites is illiquid and lacks any kind of transparency. The unknown motivations of the buyers and sellers, and the complete absence of verifiable sales data in this market makes it difficult for a third party to place a realistic valuation on a website.

9:49 pm on Dec 8, 2011 (gmt 0)

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I went back and re-read the thread, and realized I totally missed that you're probably the buyer, lol.

If you're buying it for revenue, I would still suggest the discounted cash flow model - and use a higher discount rate to account for the 'face' of the site.

As a buyer, my starting point for a discount rate would be 25-30%...


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