Okay, I've searched DP and couldn't find a specific topic related to this, so I thought I'd ask my question ... Basically, when you are thinking about purchasing a website/software business/internet business what "ratio" do you use to determine how much it is valued at in your mind? Does younger (< 1 year) websites go on a different scale than established (>3 years)? Would you value a website that depends on ad revenue differently than one that depends on the sales of a specific product?
I know you base it off profits just like regular business but it is not same amount of time. Business you base off so many years profit would be price. I think 2 to 3 years is price most pay for buisness. Internet companies are tough if site gets listed lower or looses links your profits could fall fast. I am sure someone will list how many months profit sales price is based on.
The simple question is answered by old saying: "it's worth whatever someone is will to pay for it." If your website fits another company's topic and they like it, they'd be willing to pay a lot more than X amount of months/years.
Usualy 10=24 x 1 month income but then again if last month you made 1000$ you can't asck for 20x 1k (must demonstrate constant earnings)
A lot of it comes down to how profitable a website is its no good having a really high ranked site in the serps if it makes no money.
i would say you value it based on the following: - how old is the website - how many visitors you have/month (unique) - what sort of a website it is (Arcade websites are different than loans websites) - domain name (this can play a big role in the value of the website, premium keywords are always expensive) - current earnings/month