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Forget about Myspace and youtube, those have completely different fundamentals which go into calculating their price. The average joe website, making $50k per year, would probably only sell for $50k MAX.
10x yearly income? I'm sorry but that's just ridiculous.
I've got adsense websites that used to be making $50 per day, now making less then $1 per day. This is a very unstable business with a lot of volatility in the traffic and income and you can't just pretend it's a Brick and Mortar with brand recognition and the best real estate location in town.
Every webmaster in the world with a pie in the sky number and a hope and a prayer of selling out big uses the same arguements: "It's got potential to earn more, be bigger, etc.,..."
But no buyer in the world, especially where the sole income is adsense, factors in any sort of "potential." He or she wants hard numbers bases on the last 3 or 6 or 12 months income.
I'm sorry, but webmasters can dream all they want, but the fact is most websites only sell for 6 to 12 months income. And just because you heard about 1 guy who sold out "big" does not alter the reality.
You can ask 10x annual income all you want, but you'll never sell it at that amount.
Sorry, that's just the way it is.
$50,000 just from adsense in one year
StuntasticAudi, iwannano1 is proposing 10 months not 10 years
This topic get's done to death
99 percent of the websites out there sell for just 6 to 12 months earnings
valuable online properties out there, and they can never be sold for 1 year earnings.
Well, that's true but when they are so valuable, I don't think people are really keen to sell. I got a $50 to $60k a year website that because of it's PERSONAL value to me, I wouldn't sell it for the regular value or valuation I described above.
But I've just seen so many webmasters get carried away in their self-valuations that I hate to see it. Many of them expect or factor in all their hours of hard work at $20 an hour, and it just hardly ever works out that way. Then they try to factor in "Potential" and other crazy stuff to justify the balloon price.
I think people that talk about selling their website are actually desperate to sell it because they need a lump sum of money to finance something else they want (pay off debt, new car, down payment on a house, etc). In otherwords, they need Capital instead of a dividend investment. People that buy websites are looking for dividends, not a turnaround sale that makes them a lot of capital (usually, not all the time). People that need Capital are usually "desperate" for it enough to sell.
The websites I've sold, the buyers came looking for me and I said, "why not."
But this subject get's dragged out once a month and it's funny in a sad way to see those balloon price expectations as if there are 10 buyers around the corner looking to spend that much.
For me it would totally depend on an analysis of the specific site. The charts of AdSense earnings and overall site traffic. The details of the where the traffic is coming from and whether it is likely to continue. The quality and the maintenance requirements of the site itself. Whether there's a realistic potential for further growth or whether the site appears to be fully developed and monetized.
Depending on the circumstances, I can imagine offering just a few months' earnings for the site; I can also imagine offering several years' earnings (doubtful for a site in this price range, though).
joined:Oct 27, 2001
(Mind you, that's just the opinion of a forum member who's been reading "Help! I've been banned," "My EPC is dropping," and "Smart pricing is killing me" threads for a long time.)
Where I live a rule of thumb is a business is worth three times yearly gross income.
Most brick and mortar businesses are worth 3 years annual income, but that's the point webmasters simply cannot get past. We're talking about websites, subject to penalities, hijackings, duplicate content penalities (deservered or not), algo changes, sandbox effect, smart pricing, etc. etc.,
IN the real world of website selling and purchasing, brick and mortar rules just don't apply.
I think a website would have a better chance of being sold at higher valuation if it has been around for 10 years, had multiple streams of income, survived, thrived or had gotten through most Google updates, diviserified traffic sources, had a steady database of past customers, or a customer/user list, repeat customers, good ranking, no black hat seo history, etc, the list goes on. All those things could help it.
But the adsense program itself is only 3.5 years old. Trying to sell an adsense income only website that's 1 or 2 years old that is income propelled by a 3.5 year program for a 3 year multiple is just unrealistic.
Yet, you won't pay one 10th of that value for another company?
We are dealing with a sheep and sheperds problem in this thread. As we have been in many threads before it....!
You trust Google.....but, dealing with the unknown is much more tricky?
So Google is plainly worth 400+ P/E......while others should be valued at 1 or 2 P/E?
The investors are being conned in all cases....the 400 P/E companies are not worth it, and in some cases the 1/2 P/E companies are not worth it.
I can't give you an answer as the reality depends upon hype and a lot of stupid people investing in something that will eventually crash!
You have to pick the bones.....pick the value....the only advise I can give...it is a lot less risky in the 1/2 P/E market than the 400 P/E level!