Please help me evaluate the website, which makes 2K monthly?

Most people would probably want to hire someone to run site 2 and not spent time on it time themselves. Then you would need to deduct that salary from the $11K and site 1 would probably be the better deal.

 

Spot on. Time is money and should be treated as a business cost irrespective of whether it's your own time or the time of someone you hire.

 

Ok. If we calculate time required for website running - let's say it take not more than 2 hours per week. What is minimal hour rate here?

 

I hate to state the obvious but a website is worth whatever someone will pay for it, it really depends on finding the right buyer for your type of site, some topics relate better to what a potential buyer is looking for so they may be willing to pay a higher price, some buyers always look for the cheap price. If you search on line you will see that almost all websites sell for between 8 * 14 times earnings - some more some less but almost all fall somewhere in between. In the last few weeks I have researched this exact topic and asked variations of the same question in order to compare sales price vs the price that I bid. I wanted to find out if I was making a fair offer or paying to much. Almost every site I looked at sold for 8 to 14 times earnings. I would like to know if anyone else has conflicting info?

 

That doesn't sound unusual. The issue here isn't the multiple itself, it's about the calculation of earnings.

 

In regards to putting a price or value on the buyers time to run a site.... I think anything less than 1-2 hours a day can be written off as standard maintainance. Beyond that, it will vary from buyer to buyer as what they feel their time is worth. A general webmaster / developer doing side work may charge between $25-$35/hr.... So if you guesstimate $30/hr for time spent beyond 1-2 hours.... that may get you to a reasonable estimate on what to subtract from a site's price.

Am I way off here or does this sound reasonable?

 

That sounds very sensible. Every webmaster would have his own idea of what he's worth. And, it's a simple matter of multiplying that hourly rate by the amount of time the site requires and deducting that from the overall earnings.

Yes, the net figure would vary based on how much you value your own time at. But your time does have value. If, as I do, you believe you're worth a lot per hour then you'll probably price the time value based on how much it costs to hire someone to maintain the site. It wouldn't then be logical for you to do low-skill work on the site yourself.

 

What you take as "salary" (and it's really a draw) is relevant. The way to value it is to deduct the fair value of what it would take to run the run business as an absentee owner. Two hours a day isn't something that can just be ignored, and at $25 an hour (depending on what is involved) and 2 hours a day, that adds up to $1,500 a month - so that is something that would normally be factored in to the selling price.

 

I go back to my original post, most sites sell for between 8 * 14 times earnings (earnings = revenue after actual expenses, not supposed hourly salaries for time spent on the site), you will have a really hard time trying to arrive at a sales price using time as a actual income factor, the time factor is important but varies so much based on the person that it is almost impossible to arrive at a realistic number, the best I think you can do when it comes to the time factor vs money is base it on your ability, what takes someone else 3 hours to do might only take you an hour, then again it might take you all day or you might not even be able to do it and then you have to spend money to get someone else to do it for you.

 

You don't arrive at a "sales price" - the buyer does. What you do is propose an asking price. The buyer decides what it's worth to him based on what he sees as the cost of working on the site.

Trying to argue the economics out of economics is like banging your head against a brick wall.

 

Seller = What he wants for the site

Buyer = What he is willing to pay for the site

Selling price = what the buyer and seller agree too

asking price,offer price,bid price,etc do not matter

 

You're just beating around the bush to no avail. The fact is that time costs money and a site doesn't make a "net profit" till a notional amount is deducted as salary for time spent to run the business. End of story. Salary is a factor.

If you don't believe that then speak to a professional. Make it a professional accountant, tax advisor, business broker or local Business Link/Business Advisory service. But continuing to argue a ridiculous point doesn't make the point smart.

 

It is not a question of is time worth money it is how to arrive at the right amount of money, each persons time is worth money but not the same amount. I am not trying to argue with anyone, I will just use the previous few months of websites that have sold on the major forums as examples, they were almost all sold within an 8 to 14 times earnings, time considerations were thought about in each sale I am sure but the bottom line is just because someone thinks they time is worth X does not mean the buyer and the seller will argue on it, so you have to use real numbers, now if someone has an employee running the site then it is much easier to arrive at the time vs money factor, but most sites sold on here are run by one person.