How Do You Properly Value a Website?

15 replies
My wife has an opportunity to purchase a parenting focused website that is geared to a local area in NYC. She used to write for the site, and currently manages a parenting fashion blog, so the passion to take possession of the site is there.

The site has been around for about 6 years, but has been monetized for only 3. Over those 3 years, average revenue is just under $15,000 per year. Based on that, what would be a fair offer for the site?
#properly #website
  • Profile picture of the author Josh Monroe
    Originally Posted by LAF Riot View Post

    My wife has an opportunity to purchase a parenting focused website that is geared to a local area in NYC. She used to write for the site, and currently manages a parenting fashion blog, so the passion to take possession of the site is there.

    The site has been around for about 6 years, but has been monetized for only 3. Over those 3 years, average revenue is just under $15,000 per year. Based on that, what would be a fair offer for the site?
    I think its something like its yearly revenue multiplied by 6 (6 being months) but im not too sure what the exact calculation is.

    But, as always - it's only worth what someone wants to pay I guess.

    Given its making $15,000 per year, expect to pay out a fair amount though..

    Edit - Just found the formula, most people selling sites at places like Flippa, sell established sites such as this, for 10-12 times the monthly revenue

    so $15,000 / 12 = $1,250 (per month)

    $1,250 x 10 =$12,500
    $1,250 x 12 = $15,000

    This formula does not seem correct though, as if I had a site making $15,000 per year, I'd want to sell it for more than $15,000

    Maybe it should be 10 x the yearly value, which in this case would be a whopping $125,000
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    • Profile picture of the author LAF Riot
      The $15,000 is the gross revenue though. Would the multiple be based on gross or net revenue?
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  • Profile picture of the author Adie
    Originally Posted by LAF Riot View Post

    My wife has an opportunity to purchase a parenting focused website that is geared to a local area in NYC. She used to write for the site, and currently manages a parenting fashion blog, so the passion to take possession of the site is there.

    The site has been around for about 6 years, but has been monetized for only 3. Over those 3 years, average revenue is just under $15,000 per year. Based on that, what would be a fair offer for the site?
    here :
    http://www.warriorforum.com/main-int...-flippers.html
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    Moderator's Note: You're only allowed to put your own products or sites in your signature.

    Signature edited.
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  • Profile picture of the author MrDay
    It seems the average going rate currently is around 10 to 12 X's the monthly revenue, not profit.

    Now that's for a simple average site, it seems an established and authoritative site can get 2 or 3 times that amount.

    So it's really up to the seller.

    Source - Been researching this info for awhile now since I've been interested in selling one of my sites.

    cheers!
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  • Profile picture of the author Rod Cortez
    Originally Posted by LAF Riot View Post

    My wife has an opportunity to purchase a parenting focused website that is geared to a local area in NYC. She used to write for the site, and currently manages a parenting fashion blog, so the passion to take possession of the site is there.

    The site has been around for about 6 years, but has been monetized for only 3. Over those 3 years, average revenue is just under $15,000 per year. Based on that, what would be a fair offer for the site?
    It's generally anywhere from 8 to 12 times the monthly income, not the net profit. However, everything is negotiable.

    Also bear in mind this is a very general and generic forumula and does NOT take into account the value of other potential assets that the business might have. For example, a trade mark, a patent, products and/or services, buyer's lists (yes, some people will sell their website but not their buyer's list), celebrity or other well-known person or expert associated with the business, etc.

    I once had a website that was only making 8,000 per year, but it had a one word domain name (.com) and the buyer wanted it really bad. The domain name was worth a ton more than what the actual site was making. I knew it. The company knew it and they knew that I knew it, so we came to a number (after months of haggling) that made us both happy.

    Ultimately, it boils down to revenue (income), expenses, place in the market (if applicable), list size, value per subscriber, intellectual property, financial stability (how long has the site been earning), JV partners, how many affiliates (if any), etc. and what one is willing to pay for the site.

    RoD
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  • Profile picture of the author Jonwebb
    15 times net earnings is average but I wouldn't pay anything over 12 times net earnings anything under that is gravy. Also need to consider how volatile the earnings are things like that. Hope that helps.
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  • Profile picture of the author Rbtmarshall
    How is it being monetized?


    adsense?
    banner ads?
    selling via autoresponder?
    membership?
    ecommerce?
    digital or physical products?
    lead generation for local businesses?


    ...
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    • Profile picture of the author LAF Riot
      Originally Posted by Rbtmarshall View Post

      How is it being monetized?


      adsense?
      banner ads?
      selling via autoresponder?
      membership?
      ecommerce?
      digital or physical products?
      lead generation for local businesses?


      ...
      banner ads
      sponsored posts
      a local business marketplace (subscription based - this is a new revenue source for the site, has only been live for 5 months)
      occasional sponsored email blasts
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  • Profile picture of the author IlaSchaudta
    I would have to say 6 to 10 months of the monthly revenue for "normal" sites; I know that this might sound a bit low, but with Google making changes every two minutes, your traffic could take a serious hit anytime (providing this is where the traffic comes from).

    Authority sites, sites on great domains, etc. obviously have much higher value.
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  • Profile picture of the author gary lee
    I usually pay about 10 to 12 months revenue. I will start my bid at 8 months because you just never know. I would never pay over 12 months though no matter what.
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  • Profile picture of the author kaposzta
    12-18 X monthly net profit.
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  • Profile picture of the author Isaiah Coe
    It all depends on the monthly revue and if the it's going up or down.

    If it's consistent and if I was interested I would go in at 510k. I can make my money back within a year with low risk.
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    • Profile picture of the author LAF Riot
      This person is asking a lot more than 12x monthly revenue. Part of it is because they are placing a high value on the brand and also because the site owner created an event in 2011 that it brought in a lot of revenue. But that was a one time deal, so I don't think it should be part of the calculations.

      Is there any formula or way to determine the value of a brand? A value that does not have anything to do with revenue per se?
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      • Profile picture of the author Jonwebb
        Originally Posted by LAF Riot View Post

        This person is asking a lot more than 12x monthly revenue. Part of it is because they are placing a high value on the brand and also because the site owner created an event in 2011 that it brought in a lot of revenue. But that was a one time deal, so I don't think it should be part of the calculations.

        Is there any formula or way to determine the value of a brand? A value that does not have anything to do with revenue per se?
        branding is very important, think of coke a lot of people wont drink a product simply because it isn't a coke product. the key when determining the value of any brand is to ask yourself "is the brand a legitimate advantage?" in our coke example the coke "brand" is valued at least at 5 billion, most likely more.

        go through this check list:
        is the brand the reason people are buying from this company ( website)
        is the brand an advantage?
        if so is the brand advantage sustainable?
        how much do I think the brand is worth?
        how long has the brand be valuable( the longer it has been around the more it is worth)

        for me I wouldn't pay more then 15x yearly income for any business I dont care how great the brand is.

        my price scale is 10x = great price, 12x = average 15x = maximum ill pay. this is reserved for the greatest of great companies. keep in mind I am a cheap guy and I want to see a massive return on my investments (10-25% ROI) so I have to buy low keep that in mind as well.
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  • Profile picture of the author kakucis
    It is more valuable than regular websites that are sold on flippa at 6-12 month revenue because:

    - Is it established business
    - Has revenue and traffic proof for 3(6) years

    Such website could be sold for $30-50k if it has well designed, has a lot of useful information and is easy to maintain.

    It would be relatively hard to find the right buyer for such website who would understand the real value of the website but it can be done.
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    MCJOnline.com - Website statistics and valuation
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