Forum Moderators: martinibuster
Perhaps I could cash the next 3 years at this level on one sale? That will make me $18000 today which I could use to improve my other websites and create more. The thing is that Iīm sure the site will increase itīs earnings as is becoming very popular on itīs area, so Iīm not sure on what to do! How much to ask, to sell or not to sell?
Oh great Bill. Every time I sneeze I have to give either my lawyer or accountant $500.Has anyone let their lawyer handle everything?
Who said lawyer?
There are business form sites where you can get NDA's and all that good stuff for free or peanuts.
You only want to get the lawyer involved when you actually make the sale as one site I bought would've burned me bad in the long run but my lawyer was smart and we did an "assets only transaction" and didn't buy the business. I thought the guy was totally legit, due dilligence went well, 2-3 months after the sale all sorts of things came crawling out of the woodwork looking for the owner of the site and I was able to just brush them off with a nice boilerplate email explaining the transaction and how to contact the original owner. A couple of the things that crawled out of the woodwork were Atty Generals in 2 states and a few cops, due dilligence isn't all it's cracked up to be when someone is really shady.
My favorite was some people that were screaming "we'll do a chargeback!" - well, enjoy yourself, I'd suggest doing two or three chargebacks, heck go back as far as your bank allows because (if you were listening the first time) - IT WASNT MY BUSINESS THEN AND IT WONT TOUCH MY MERCHANT ACCOUNT! People are stupid.
Websites of this caliber are 9 out of 10 times bought for 1 years income or less.
This is my observation as well even though I think sites are selling too cheap at this. I think that online risk factors, combined with the fact that it's a "new" industry, knock back the traditional small biz measure of 5-6x annual EBITA.
Seems to me that if you know what you are doing it's best to hang on. Ad money is going to go up, esp when adsense's competition from Overture and MSN start to heat up later in the year.
How much is a quality site that gets its income from Adsense?.... Who knows.
There's too many unknown variables for us to even guess.
$20.00 from 20 impressions, or from 20,000?
How much traffic?
Where does the traffic come from?
From established and durable links?
From organic serps?
From PPC ads?
The list goes on.
Rather than take 6 - 12 months earnings, I'd just put the site on autopilot and keep cashing the checks untill it fell off the face of the net.
Considering how stale some sites that rank fairly well are, that could easily be more than 12 months.
You know how much time is involved in creating 1000 pages of unique content? Is our time worth nothing?
It's taken me 18 mo to build 250 pages of unique content.
Rather than take 6 - 12 months earnings, I'd just put the site on autopilot and keep cashing the checks untill it fell off the face of the net.
Exactly. But, the typical person who sells a site wants the money *now*. In that case, any Adsense type of site will only sell for 6 to 10 months of income unless there is something extraordinary about the site.
I sell a site every 6 weeks or so. Most of them are Adsense and I can tell you for certain 10 months is just about tops. I also track website sales (for what should appear to be obvious reasons) and Adsense sites sell for 10 months or less 90% of the time. Every now and then you get a flyer that will go for more, but that is the exception.
Is our time worth nothing?
Very little actually. What may take you 18 months could take someone else 4 weeks. It is easy to identify a site and hire a writer to remake much of the content. Then you just build the pages and purchase on-topic links. Let it bake for a while and you should have something worthwhile.
As it has been in other posts in this thread - it's tricky selling Adsense sites for the very reason I just mentioned. Too many people, when they identify the site, will replicate it in some form. A few will outright copy the site. So, what once may have been a niche quickly becomes crowded.
So, what once may have been a niche quickly becomes crowded.
Depends on the niche, depends on the site.
People have been chasing my site for YEARS and failed miserably, some get moderate success, but to date nobody has ponied up any real muscle and dethroned my site. I keep an eye on the competition and every time someone steps up to the plate I introduce something new to keep them at bay.
Sometimes longevity and "being there first" has it's benefits.
it does, indeed, mean something.
If that data is correct, the revenue potential of this site is higher than 10,000 dollars per month. Purely through Adsense.
Now if you add on some affiliate programs, sky is the limit.
My principle is this : the true value of your site is what you can make out of it. If you can make only a little, sell off at what price makes you feel good.
the true value of your site is what you can make out of it.
Exactly. I have a hard time believing that anyone who hangs out here would seriously only look at under a year's worth of current earnings in valuing a site, unless they are trying to convince people their sites are worth less than they really are so they can buy them for a low price. There are many important factors to look at when valuing a site - links, penalties, topic, sandbox status, pages of content, quality of the current content, uniqueness of the content, etc.
Earnings potential of a site depend in large part upon the skill and experience of the site owner. When you buy a site the owner changes to you, so what matters is what you can make with the site, not what the previous owner made.
Buying a site based on current earnings to me seems like trying to apply an old school MBA process on a totally new type of industry.
Would you rather have a site that makes $5 a day but has 100 pages of good content and 1,000 one way links from authority sites, or a site that makes $40 a day now, with only reciprocal links from low quality sites and 30 pages of poorly written content? Personally, I know which site I could do more with.
[edited by: Jane_Doe at 6:40 am (utc) on July 1, 2005]
Sometimes longevity and "being there first" has it's benefits.
I agree, but if the site generates it's income from Adsense - it's still valued at less than 12 months.
This is the reality of the current market. I know some of you disagree and that is fine. Nobody is forcing anyone to sell their sites at the going rate. The market dictates the value - not our own perception. Those of use who buy and sell sites on a regular basis understand this all too well. I would much rather sell my sites for 2 or 3 years income, but (with rare exception) it just doesn't happen for internet only businesses.
There are many important factors to look at when valuing a site - links, penalties, topic, sandbox status, pages of content, etc.
True, but not as important with an Adsense site. Too much of an Adsense sites value is due to external forces. Links change or drop, LSI can easily confuse your site, penalties/sandbox bring down established unique sites all the time, algo changes can be ruinous etc... These properties are all very important and each one individually can bring dramatic results upon your site. For better or worse.
At least a retail site usually has the margins to run PPC ads. Not so with most Adsense sites. When the quality traffic dies - so goes the site.
Links change or drop, LSI can easily confuse your site, penalties/sandbox bring down established unique sites all the time, algo changes can be ruinous etc...
Again it depends on your perspective and experience with your own sites. If you have had a lot of sites disappear for reasons unknown to you in the past and have not been able to get them back in the serps, then you would be wise not to spend much money on a site in case that happens again.
Has anyone sold a site to them? Are they legit?
[edited by: Jenstar at 6:53 pm (utc) on July 8, 2005]
[edit reason] No URLS as per TOS, please! [/edit]
A few months back I turned down a letter from a place called ContentHoldings.com. Has anyone else heard from them?
One of my basic rules of doing business online: Never divulge anything important to a website form if there is no way to contact the company or person asking for your info.
That page you list above has no contact info and nothing at all about the company, etc. RUN! RUN FAST! :-)
Buying a site based on current earnings to me seems like trying to apply an old school MBA process on a totally new type of industry.
It is quite normal for a buyer to want the highest price and he may choose all manner of justification for the price he comes up with but often, as the dot com boom demonstrated, promises of "potential", "future profit" etc should be treated as fluff and ignored for the purpose of valuing a site. Proven income is proven income and only to the extent of what's been proven. If the buyer doesn't have that then he falls back on the fluff .... and immediately loses credibility.
Content is cheap to come by. Sure, EFV may take a lot of time and trouble to write his and, without meaning to talk down the quality of his content, content of the same calibre can probably be purchased for far less than it would cost me to employ EFV.
it depends on your perspective and experience with your own sites. If you have had a lot of sites disappear for reasons unknown to you...
realise there's the risk of losing all SE traffic overnight.
That's why I mentioned traffic from established links.
In all the "site value" threads that I've read here at WW I don't recall this being talked about much. maybe I've just forgotten those posts.
But lets say it could be documented that a site gets more than have its traffic from establish durable links.
How would that affect a valuation?
>> how long...
That's an interesting point.
If a site has pumped up the recent numbers using questionable practices in anticipation of selling out, those numbers might not be sustainable.
Nah, you need only to be aware that a lot of websites do disappear for unknown reasons, you don't need personal experience to be realise there's the risk of losing all SE traffic overnight.
There are people who have track records of adding good content and rehabilitating and improving existing sites and turning $5 a day sites into $50 a day sites. People with those skills are going to value a site differently than someone who has the belief and the personal experience that traffic frequently just disappears overnight for no good reason and is impossible to ever recover.
People with those skills are going to value a site differently than someone who has the belief and the personal experience that traffic frequently just disappears
Earnings potential of a site depend in large part upon the skill and experience of the site owner... so what matters is what you can make with the site, not what the previous owner made.
Buying a business based on current earnings is not an "old school MBA" mentality, it's what's done day in and day out thousands of times everyday all over the world.
There are people who have track records of adding good content and rehabilitating and improving existing sites and turning $5 a day sites into $50 a day sites
People with those skills don't value your site differently - they value it exactly the same way as everyone else: By looking at your past earnings (among other things). They may differ from other buyers in what they believe they can do with it. The emphasis on they should give you an idea of who should benefit from the future investment into and development of the site.
Keep in mind the cost of building the site. I don't know anything about your site in particular, but if someone had hired me to build my site for them with all of the functionality I put into it, etc, I would have charged them at least 15k.
Now, my site only makes $5 - $10 per day in Adsense (my only revenue source) at the moment, but I get contacted by people around the country who want to purchase copies of my code so they can use it to build their own versions of my site. (My site is targetted regionally) So the code is an asset that I would keep in mind if someone wants to purchase my business.
It costed you 15K, X could have done it for $5K, Y may not be able to do it for even $50K. The buyer doesn't give a damn what it costed you to build the site. And rightly so. The devlopment cost, the code, the URL all put together earn the money. If he's paying you a price for that earning stream then all those assets are already paid for. What did you think he was paying you for?
[edited by: oddsod at 7:22 pm (utc) on July 1, 2005]
For a site making 10k/month i would be willing to pay 12 months earnings. For those sites you can assume they are doing something right and have a somewhat steady stream of traffic. A site making $600/month can be gone tomorrow!
I think you would be very hard pressed to find a site making 10k a month from a somewhat steady stream of traffic for only 1 years earnings and I did find one I think I would be skeptical of buying the site for fear that earnings couldn't stay that high for long.
Buying a business based on current earnings is not an "old school MBA" mentality, it's what's done day in and day out thousands of times everyday all over the world.
I would have to say that the majority of educated business men aren't going to be buying any business based off of current earnings regardless of the business. Most times a DCF (Discounted Cashflow) model is used to calculate the worth of a business. The inputs to that model directly related to the business being examined are projected earnings growth and perceived risk. The latter is why I would never pay more than 6-10 months earnings for a website that isn't very well established.
I didn't bring DCF into it as that would cause it's own confusions. (I've had great trouble getting across a much simpler concept: the difference between salary and profit [webmasterworld.com]). And, webmasters not generally being seasoned businessmen, do tend to discuss price in terms of multiples of historic average net monthly earnings (on the webmaster forums where sites are bought and sold)
For the purposes of this thread - and before some get too excited ;) - let me emphasise that DCF doesn't take into account the monetising abilities of the new owner. Also, historic earnings play an important part in projecting earnings (decline/growth). There are dampening factors in any good DCF model ... which I won't go into here but yes, risk - or rather, "perceived risk" - is factored in. The longer the history of earnings the better your chance of successfully arguing that the business represents a lower risk (other things remaining constant).
6-10 months (of past "NET" profit) is what websites do sell for. But expectations vary widely and I've had one webmaster ask me for in excess of 1000x (10 years) and he dragged out Yahoo's P/E to support his case that he was doing me a good deal! :)
Content is cheap to come by. Sure, EFV may take a lot of time and trouble to write his and, without meaning to talk down the quality of his content, content of the same calibre can probably be purchased for far less than it would cost me to employ EFV.
EFV's site has around 10K (presumably natural) backlinks developed over a period of years. If that isn't a valuable asset I don't know what is. Even with a brick and mortar business no one just looks at current earnings - even old school MBAs. In business you would also look at things like goodwill and the value of the underlying assets.
Call me a skeptic, but I think I would believe you guys more about valuing sites if you didn't make your living from buying sites. It is simply in your best interest to try to get sites for as cheaply as you can and try to convince people here that their sites are not worth very much.
