If you are buying a site with an income how much should you pay on average for that site? So, say the site makes $300 a month. Should I be paying $600 (2x the income), $900 (3x the income) or more? Obviously, the lower the better, but on average how many times the income would you pay to buy a profitable site with traffic that is making a regular amount?
I just sold a site for 20Xmonths income, but that's more than average, 10xmonths are more often. If you find good source of sites for sale for 2x or 3x months income, let me know, I will buy a few hundreds
Incorrect. If it's a solid earner, and has proof. It's 18-24+ months minimum. Now someone can take less if they so choose, but anyone who know about domains, or internet property will tell you that, a membership site with monthly recurring, for example. Will be worth 24 minimum. However, there are other factors that you take into account. Traffic, links, PR, and so on. However no one in their right mind would let go of a solid, big money earning site with proof of revenue for 10 months. Unless they are desperate for money, or their is something wrong somewhere. That said, some of these flash in the pan sites that are a few months old, or proxies, blogs, with small income via adsense, or no track record of earning may go for less that 12 months. But that is up to the seller. Keep in mind that you have a ton of people on DP low balling with insulting offers that show how little they know about what something's worth. I've yet to see a solid money making membership, or recurring sales site with a track record go for less that 18+ months of revenue. Again, assuming they have proof of that revenue. The simple answer is, there is no simple answer or formula. Way too many sites, and factors to make a nice precise figure. But I can tell you it's not 10 months.
How much does the domain name add value to a site? What do you think of the website value calculators?
The website calculators are way off. If you look at one, it will tell you one thing.. .normally very high. The other will give you one very low. The domain calculators are a little more correct, but still usually off by quite a bit. A good, older domain, with traffic will add to a site's value. Sometimes you will have people who just want to buy the domain only, and not a site. I've had that before, but as long as they are paying what it's worth, and I am unloading the site. I do not care. So the short answer to your question... a old/solid/good seo domain + the site/revenue/links = total value.
Some of this holds true to any business even brick and mortar. It depends on a few factors, some mentioned here already, longevity of income at the current amount, age of business, and niche. Niche maybe not from what you are thinking initially but from the aspect that is this something that customers remain loyal to regardless of ownership. Online that translates to is it a business where ownership is transparent, like informational websites, etc or does it have a customer base that interacts...some forums, retail sales etc where transfer of ownserhip could drop some customer base therefore altering the income. Some DP sites that are 6 months old and now make $50 a day or something..yeah stick with 6 months max. Now a site that is 3+ years old and over the past 12 months has a steady $x income then sure 24 months might be okay...
Highlighted the key reinforcement. You have to be able to justify why you are asking for $X amount. "Potential" for some new 2 week old site is not justification. A three year old site making $4k on average solid for that time should, and would, ask for 24 months income easily. But there are still other factors, such as where does that traffic come from... bought or organic (i.e. will it drop off). Or as mentioned, once the owner is gone. Will all the minions disappear. Such as a busy forum. That's why it's best when members on the board recommend that someone build up the site, and traffic first before selling it off. Otherwise, it's just another turnkey with "potential". In those cases, it's only worth what someone's willing to pay. I see many sites on here where the same old folks are launching sites every week, and using tricks between driving traffic, buying posts, and links to inflate numbers for a quick sale. When they can't unload it, and come back 2 months later. You will see a strong drop off in their numbers. This is why it's key to see all screen shots, and get as much info as possible.
If it earns solid cash daily, then it could be sold up to 10 times it's monthly revenue. That is what I have always thought and that is how I pick my BIN prices when I sell sites, but I do lower my BIN prices sometimes depending on the difficulty of promotion, setting it up, ect. so the buyer is more confident.
I think it depends on how they earn money also. Adsense can go up and down at any time. Affiliate programs paid per sale can have good and bad months. Membership sites would be top dollar if they have high retention.
This is correct. Membership types of sites, and forums are going to command top dollar period. Affiliate sale sites can drop off as soon as you buy them. That is, unless they give you everything they were doing from SEO, ad campaigns, key words, how much money, the time, and what networks. It's very complicated when buying these sites, and you want the most information possible. Adsense is another one I would approach with caution. I see a lot of sites selling off because they get banned by Adwords, or adsense. You want to be conscious of this. Myself personally, I would not pay much for the affiliate or adsense sites because they are too open to fluctuations, and little things not disclosed by the seller prior, or after the sale. But more importantly, I do not care for those sites. I prefer sites with a track history of steady traffic, preferably organic, and solid sales. Again, preferring membership model. That way, should I be gone or busy for a week. I do not have to worry about sales dropping off by 50% like they could in another site. But as I mentioned before, there is a lot of different things that go into figuring out asking price and BIN, but I can tell you that 10 months is not it for solid, money making, can show proof sites. Maybe blog, adsense, and other types... maybe. As you can see, there are a lot of factors to consider. But the 10x rule is not one of them.
Pay on average, one year of sites proven past income. If there is no year record then pay only the total income average of the lesser amount. Karl
Also keep in mind the type of buyer you are dealing with. Some will try and low ball you with insulting, ridiculous offers. Others, typically on SP, will typically be more serious, professional buyers. They know what to ask for, and already have a number in mind should it be something they want. They do not beat around the bush. They contact you directly via e-mail, PM, IM or phone. Not just post in your threads, or leave you replies you may, or may not see. They want to close the deal. Not play silly reindeer games. That's not to pigeon hole one over the other. Just speaking from my experience between the two. Some of the same people are on both, or all sites. Some seem to conduct business, for whatever reason, on one over the other. Oddly enough. I've done plenty of business on both in this example.