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How do you personally evaluate the price of a site?

by Gator515
16 replies
Backstory: a site I have been a part of for a long time is up for sale on flippa and I'm interested in purchasing it. The owners posted his financials, which are strictly from Adsense and he's bringing in $3,500 a month. I've followed the owner for a while and believe him to be an honest person, combined with the research I've done on the sites traffic I believe the income to be accurate. The site is an authority in the field and has tons of content, PR 5.

It's a great site but he's asking nearly 45 times the monthly income. In my opinion the cost and the chance that google could hit the site over the next 3+ years in which it would take me to make my money back (assuming I couldn't increase the monthly income) makes his asking price unreal.

While I will probably pass on the site, I was curious how others would evaluate the price of a site like this.

Thanks, and standard this is my first post apologies if I placed it in the wrong area.
#evaluate #personally #price #site
  • Profile picture of the author Daniel Evans
    I wouldn't ask for anything less than 45 months of income for my businesses, but then again, they are businesses - not Google based cash cows.

    I say you'd be taking an almighty gamble but you're not relying upon organic traffic?
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  • Profile picture of the author wuleinj
    I will go with less than 18 times monthly earnings. It is not an easy task to maintain google rank and adsense income level.
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  • Profile picture of the author youngsiteowner
    Banned
    I don't really know much about pricing businesses. But I can tell you that it is not worth it investing in a site with that much income from only one source and that source being Adsense. There is such a big chance that your adsense account can be suspended that it may not ever be worth making a site based on income from adsense.
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    • Profile picture of the author DonnyBoy
      Originally Posted by youngsiteowner View Post

      I don't really know much about pricing businesses. But I can tell you that it is not worth it investing in a site with that much income from only one source and that source being Adsense. There is such a big chance that your adsense account can be suspended that it may not ever be worth making a site based on income from adsense.
      I agree with you man... Was going to quote the same..
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  • Profile picture of the author Bill_Z
    If it relies on organic search for traffic then I'm shuddering at someone paying 120K for that.
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    • Profile picture of the author Gator515
      Just like some of you guessed he is only bringing in traffic through organics searches. I approached him through the site today and purposed giving him 100% net profits up to what he's been able earn regularly minus the costs of getting the site up to the standards of today. Some really easy seo and social work could have made some easy extra money and the site is begging for a ebook to sell.

      It hard watching a great opportunity pass by because he's unrealistic about what he has.
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      • Profile picture of the author DubDubDubDot
        Originally Posted by Gator515 View Post

        Just like some of you guessed he is only bringing in traffic through organics searches.
        $3,500/mo income for a site limited to AdSense and organic search traffic is a really good scenario for a buyer in terms of upside. The current owner isn't running the site at full throttle, so it's not going to take 45 months to break even. A buyer with a lot of resources (Yahoo, AOL, Demand...) could break even very quickly by injecting network traffic into it and selling ad spots direct.

        Based on the info you've given so far, this probably classifies as an incubation project. That's when a small webmaster gets the wheels turning and hands the keys to a larger company that is willing to pay to avoid going through growing pains. At $150,000 this doesn't sound like something you should be buying unless you've got an office full of people to run it with you and take it to the next level.

        Originally Posted by Gator515 View Post

        I approached him through the site today and purposed giving him 100% net profits up to what he's been able earn regularly minus the costs of getting the site up to the standards of today.
        Pay him net profits for the next X months as payment? People who sell sites like this are generally after a lump sum payment.

        Originally Posted by Gator515 View Post

        Some really easy seo and social work could have made some easy extra money and the site is begging for a ebook to sell.
        If this is the proposed plan you'll never make back the $150k.
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        • Profile picture of the author Gator515
          Originally Posted by DubDubDubDot View Post

          If this is the proposed plan you'll never make back the $150k.
          that certainly wasn't my plan, I was only trying to express what potential the site has.
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          • Profile picture of the author VoiceMedia
            For strictly Adsense, I wouldn't go with anything more than 12x monthly PROFIT. Adsense and organic traffic sites are just too risky.

            Make sure you use escrow.com for the sale, and confirm what the inspection period will be so you can actually confirm the adsense revenue with your own adsense code. You can also ask the seller to confirm the adsense revenue by placing your own code for a day or 2 before buying, to make sure the income he is claiming is legit.
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  • Profile picture of the author Austin E Anthony
    I think 10- 12x or at most 16x is the ideal price to buy a site. Anything beyond that, I would stay away.
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    • Profile picture of the author Steve B
      Gator,

      If I'm doing the math correctly, 45 times $3,500 = $157,500 for the site.

      Yes, that's a lot of money for most of us peons, but it could be that the owner will accept somewhat less if or when he doesn't get any full price offers.

      I would ask him for month by month income stats to verify his claim. Any legitimate business owner ought to feel that kind of request is not out of line given the size of the transaction.

      See if the income is steady or actually increasing some. Be wary if it's going down, maybe his business is stale or the market is getting saturated with similar products.

      You could always make the owner an offer that you are comfortable with, especially if his business revenues are decreasing.

      Another thought would be to give him an offer that would let you, in essence, become his managing partner. You do the bulk of the daily execution, let him step away, and you pay him over time. Be sure to draw up a contract with all the gritty details so you are both protected.

      Steve
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      Steve Browne, online business strategies, tips, guidance, and resources
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  • Profile picture of the author Alexa Smith
    Banned
    Originally Posted by Gator515 View Post

    In my opinion the cost and the chance that google could hit the site over the next 3+ years in which it would take me to make my money back (assuming I couldn't increase the monthly income) makes his asking price unreal.
    I agree.

    Originally Posted by Gator515 View Post

    I was curious how others would evaluate the price of a site like this.
    I'd try to do so mostly on the basis of its potential value to me, largely comprising additional, non-Google-related income sources which I felt confident of developing because of its existing, non-Adsense-derived assets, if any. AdSense is far too precarious an income-source for me to be interested in trying to valuing it from that alone.
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  • Profile picture of the author Dustin Blevins
    Not trying to step on any toes, and I probably will never buy a site like this because of my outlook on it, but I wouldn't pay more than 3x the monthly revenue for a website.

    I was talking with a CPA who was selling her accounts and the value of an account was 80-130% of the past years revenue. But with how sensitive sites are and how fast they can go south I wouldn't pay more than 3 months revenue.
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  • Profile picture of the author nicholasb
    it's usually worth 10 times the amount of income it produces in a year. If the site makes $10 a year it's can be sold for $100
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    • Profile picture of the author Alexa Smith
      Banned
      Originally Posted by nicholasb View Post

      it's usually worth 10 times the amount of income it produces in a year.
      "It must be true: I read it in the Warrior Forum"

      I think you probably meant "month", not "year", Nicholas? I've certainly never heard of an AdSense site selling for 120 times monthly income?!
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  • Profile picture of the author webcosmo
    buying a site that relies solely on adsense for income is too risky investment IMO. if it were membership fees would have been better.
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