Ecommerce Business Valuation

What is my site work?

[JoeHouse]

Hello Everyone

Need some expert advise. I have a website less than a year old. It is doing very well in regards both to traffic and sales.

This site has earn gross sales of 45k in just its first 6 months.

I was told that ecommerce businesses for sale can demand an asking price of 3 to 3 1/2 times its sales if one decides to sell.

Can someone verify this or direct me to a link than can? Thanks in advance for your help.

[jwwceo]

Valuations vary greatly depending on industry. Revenue is not always the best metric to look at because it says nothing of profitability or earnings. That's why stock price is often referred to in Price/Earnings ratios, not revenue ratios.

That said, some e-commerce sites can certainly go for 3-4 times revenues.

James

[KevinC]

I have heard more then a few times that a website is/should be worth 5-10 times is annual net profit.

[peterdaly]

I've heard lots of different rules of thumb number wise, some of which have been tossed around here. A site is worth what a buyer is willing to pay. It would depend on the site and the buyer, but it always comes down to that.

If a site is that profitable, why would you even want to sell?

If you were not you, what would you purchase the site for...and much more importantly why that specific price? It's helpful to go through that excersize.

[ebaydoug]

My site is worth a lot (to me), if I could find a buyer!

[KevinC]

I think thats the biggest issue - is actually finding a buyer. Good luck if you do decide to sell!

[coffeguy76]

Site valuations are similiar to house values . . . all depends on asking price and howz it show. Always, somewhere there's a buyer . . . the problem is finding them.

i.e. Home alarm systems contracts sell for 22 - 30 X monthly revenue. 'Hard' businesses (as opposed to 'soft' or web sites) typically sell for a multiple of revenue/gross profit/monthly whatever, etc. Keep in mind that the final sale price IS the market.

Problem with online store valuations is there is no 'established' marketplace for 'published' sale prices. Could this be a business idea for someone to establish a 'clearing house' to pin down values?

[CernyM]

Finding a place where reputable online business are sold is difficult. Ebay is a big place for selling online sites, but the signal to noise ratio is very, very, very poor.

Unless, that is, there really is a big market for template driven affiliate-only ecommerce sites with obscure domain names.

I would love to find a reputable clearinghouse of sites with provable traffic statistics categorized in some useful way.