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I run my site about 4 years. ifi want to sell a website. How i count my site's value. I have 15k visitor per day. Please give me opinion about this
Thanks
Example:
I own keyword.com and it makes $40 profit a month. Using the x10 valuation method, that site is only worth $400.
Now if i own keyword-online-today-great-deals-keyword.biz and it makes $100 per month, that x10 valuation method says its worth $1000.
If you had $1,000 to spend, which site would you buy?
That is only 1 example. Valuating a website, you need to take into consideration:
1) Target audience
2) Domain name
3) Monthly income (yes, it does give some indication as to site value, but it's not everything!)
4) Industry
5) Traffic source diversity. For example, all (100%) traffic from google makes the site "high-risk", where as a site who gets 40% traffic from google, 20% repeats, and 40% from other NON-SEARCH ENGINE sources has reduced risk. Why? remove 1 source, from the 2nd example, and its only lost 40% of its traffic, where as the first exmaple loses 100% of its traffic.
6) Age of site (the older the better, generally)
7) Is the site seen as a leader in its field?
8) Reputation (maybe the site is getting 15k uniques because newspapers keep writing bad things about it?!)
9) search engine rankings
10) Has the site been banned from any search engines?
11) Has the site been kicked out of programs such as google adsense?
From the point of view of the buyer, also consider does this site fit into an existing network of sites? maybe the site for sale is a major competitor, therefore having ownership of it would allow you to dominate your market?
etc, etc, etc
The list goes on.
A lot of people say "10x the monthly profit".
Personally I disagree with that as the only valuation metric.
Your points are all valid, but they also add "lofty" value to the asset.
10x is used because it is a lower level bottom foundation of return on investment. How many stocks can you buy at 10x.....i.e. P/E 10?
I own over 600 web properties, and I will sell them all at 10x net profit.....so, call me stupid if you wish!
But, I've been around long enough to see how to make a buck and how to pass one on ;)
many who bought in the dot com boom learnt the (un) wisdom of buying at inflated prices.
a website is a tangible asset, you can value it in two ways
... by a multiple of the profit it turns.
or
... by the cost involved in replicating the website (including positions links etc) - on the whole this can be done for considerably less than most people think.
i would even dare to suggest that a website whose main 'value'/earnings comes from organic search traffic is worth much less than percentages suggested - organic traffic can be lost overnight.
...
anything else is ego, however there are always ego buyers around, witness the buyers of football clubs and other sports teams, for instance.
Websites are only worth 6 to 12 month earnings.
This is not a brick and mortar business where 3+ years is norm.
It's just a website. 98.6 percent of them are not that special, despite the 5 billion hours you put into it.
Something else that seems to factor is "potential" which I feel is rubbish. I wouldn't be buying the site if it didn't have potential. But, you can't expect money for "potential". The potential is realised only when I put time, skill, work and advertising dollars into realising it. The subsequent profit it makes is mine; why should it belong to you and be figured into the asking price?
The assumption that everyone here has made is that by looking at things other than 10x the monthly profit the valuation of the site will increase.
That is not always the case at all.
By looking at factors other than just how much income the site makes, you can filter the bad apples from the sites that are most likely to be a sound investment.
Lastly, just because you, as a buyer, may value a site to be worth 12x the monthly, and not 10x, it doesnt mean you have to pay the 12x if the buyer is selling for 10x. does it?
So, is 8-9Xs annual revenue a good model for valuation?
Food for thought.
I think it may be a little cheap, but it is much more in the ballpark than some of the "junk & hopeful" prices that have been paid.
Unfortunately the World is full of wishful thinkers.
If you started the company with your heart and soul behind it, and can only produce 10 x profit, then why on earth does anyone think that some "outsider" could do, or would pay, better?
It is true that there are some great domains, and sites, that don't achieve their revenue potential. Therefore using 10x would be under valuing those sites. e.g. This site!
At the end of the day a web property is always worth what someone is willing to pay for it. WW may be worth several thousand x per year, while johndoe.com may only be worth 1x per year.
Making an accurate valuation is a judgment call! And as such not everyone is going to agree.
My rule of thumb is that it should be based upon what the founder was capable of making from it. Afterall they were supposed to be the person who had the insight into the industry;)
Look at Public .com's, look at the number that can be purchased for less than 10x. Hundreds of them!
To value any site with decent back links at 20x is plainly foolish, heck for 27x to 30x you can buy Microsoft (forget their huge assets in the equation)! and should be able to, but can't, buy Yahoo and Google!
Okay, double the value based on projected P/E if you wish, but, still justify a P/E of over 440? (That is 100 times net profit (paid earnings per share), next year, when compared to a 10 year treasury note!)......total lunacy! (but, yes, it is happening....Again!).
To my mind the branding is at least 50% of the value, maybe 95% in some cases (e.g. Google). The backlinks are chicken feed, important for "free" traffic today, gone tomorrow ;)
I value based upon 95% of revisit visitors, they bookmarked or have it in their heads from marketing, I value only 5% based upon SE traffic and links. The 5% can disappear over night, and that won't stand up to the test of time in a deal of any significant value!
I'm in the business of making businesses out of SEO. But, only to get brand recognition for long term benefit (i.e. A different form of advertising). All SEO's know that the world can cave in at any moment. Doing it for brand recognition, and not immediate monetary value, is the way to succeed over the long-haul ;)
Here's some real world examples--
1) A website currently for sale gets it's sole revenue of $300/month from a single advertiser. This ad space is way over market rates, so there is a pretty good chance the advetiser well pull it at anytime.
2) Another website currently for sale pays hosting costs of $350/month for old crappy windows servers. Given the traffic of the site, a $20 shared hosting account would do the job.
3) A website I tried to acquire but lost was content rich in a fairly good topic area but it did not have adsense. My best guesstimate of just putting adsense on the site was an additional $300/month revenue.
The really good ones and its a fine line between good and REALLY good appear to go for way over what anyone expected. Emotional valuation I guess.
I think to achieve your premium price the records and stats have to be documented like any other business, Ive seen countless sites stating makes $1000 per month or gets 3 million visitors a month but cant prove it.
One thing that does hold there are more sellers than buyers.
