No im not posting this because my sites for sale. It is simply logic. Websites are being sold for less than they deserve to be sold for.
I've been selling websites for years. Many times, I'm not just selling a website, I'm selling the potential it creates for the buyer. Some people judge the value based on 12 months of profit, others value what it means to them.
Its interesting though. Because there is such a difference in the value and sale of websites compared to other investments. And when comparing stability, a website recieving traffic from search engines is a lot more stable then a house with fluctuating property prices, interest rates, taxes etc.
Running website is a business, a virtual asset at best. Unless you're a property developer/agent buying and selling them as commodities, property is a long-term investment to most of us. Ask your accountant or financial planner for a better explanation to what these mean to your life.
Just want to point out that youtube etc selling for 100x revenue NOT because they're technically very good, or uniquely new ideas in market etc. We all know that there are hundred of similar sites even before it exist. Please look at the financial whizz kids, JV bankers behind the deal, who make all these deals happen. In fact they can sell any junks to you just by promising the 'future potentials'. Again this is not any techie on the street can do.
There is an old expression in business, and it's going to apply here. Let's get down to brass tax. Sites being sold on DP IMO fall into 1 of 4 categories. Category 1 - Site owner claims to be making X and tries to sell between 5X and 25X. Sadly the problem here isn't the flawed economical approach but rather the misrepresentation. I would estimate that at least 80% of the sites being sold here are a misrepresentation, either in trying to claim adsense revenue as monthly when in fact it's lifetime. Other techniques include over inflating revenue before a sale or even just creating false screenshots. I went as far as to tell a colleague of mine that people are actually buying and selling something online based on paypal screenshots, he laughed at the absurdity. Category 2 - Sites making no revenue, trying to sell for X because of the time put in, this accounts for maybe 10% of the sites being sold. It's absurd to assume for a second that the amount of time and effort put into something can even come close to relate to the amount of return. While that's a great childish approach to doing business and may have made sense in Sunday school, in the adult world, it just doesn't work. Whether you put in 500 hours into a 20 member forum with 100 post, it's still only a 20 member forum with 100 post. Get over it, it's life, it's business, not personal. Category 3 - Sites that do have real revenue and real opportunity but are overpriced, this accounts for about 8% of the sites being sold. This crosses a lot with Category 2 in that a site ownership often has an over inflated valuation of their time. Fact is, while you do once in a while get lucky, the reality is that the market sets the price, not the seller. I can't tell you how many times I see a site get sold for well more than the value and find myself PMing the seller to tell them the buyer will never come through, guess what, I've been right at least in 95% of the cases. I can say I picked up a lot of fire sales on that Category 4 - Real sites, real value, real opportunity accounts for 2% of sites sold at best. Like beauty, value is in the eye of the beholder and a great site and turn on a dime, fact is there are good opportunities if you know how to make them that. More often than not and too many in recent experience, people expect to buy a great site and let it run itself. Doesn't happen, sorry. There is virtually no way that anyone could ever convince me that sites are under priced and my almost 15 years in ecommerce will say otherwise to anyone. Fact is, real PR links are probably 50% to 75% overpriced and if anyone doubts that, just PM me, I'll sell you PR5's for $10 a year. Fact is, real money making websites are probably 50% to 80% overpriced and if anyone doubts that, just PM me and I'll sell you a PR5 site making $200 a month for $600. Always willing to listen to opposing viewpoints but it's one thing to say something, it's another thing to explain yourself.
Some websites are too expensive here. Mainly because some sellers are scamming people. Pump and dump, Fake Stats, People bidding on there own auctions.
But of course. It's shocking and I've seen it before personally with a few sites I've tried to sell, the idea of a real good deal is just so shocking to people now a days that they can't believe it.
this thread has got some interesting views. Numerous people agree that sites are undervalued and selling for to little while the others disagree. Why would you if you were in the right frame of mind sell a site making $200 a month for $600. The only reasonable excuse for site sellers to be selling sites so low is that they need cash. But apart from that its bad for their revenue, other site sellers and all site sellers. Its only gonna lead to less people owning a majority of sites where they can continue to build their site empires.
People who think 12x is too cheap to sell their sites have buyers like me paying up to 24x. I've had that signature in my profile for ages now. And I've made numerous WTB threads offering 24x. If you think that DP doesn't get you full worth then go list elsewhere. If you think your site is worth a billion dollars then, great, congratulations, you're a fantastic business person and we all respect you. But if you want to prove it's worth your estimate then you have to find a buyer who'll pay that. No, not just a buyer who has an opinion to spare but one with the cash behind him and a willingness to invest. I regularly buy sites and, as my signature says, I pay 24x. I just bought one for over $30K and I'll be happy to give you the URL by PM so you can see the type of sites I buy. But, I have conditions - it's got to be a quality site as per the thread in my signature. Hardly any sites that come up for sale in DP get 24x in open auction. Know why? Because they are crap. They are built on rubbish tips, have flimsy foundations, have straw roofs, suffer from rising damp, and aren't good properties.
General rule in selling anything, know your audience. For argument sake, lets talk about category 4 sites. On DP, expect 3x to 6x revenue. On sitepoint, expect 4x to 7x revenue. On ebay, expect between 5x to 12x revenue. On bizbuysell, expect between 6x to 24x revenue. What does that say? That DP is bad? Nope. The challenge here of course is that you are dealing with some savy buyers who will spot b/s in a second, point out flaws and address issues the moment they come up. More so, people who for the most part are looking for a lot for penny's. On the flip side, if you have a category 4 site, expect to sell it faster on DP than anywhere. I've seen sites go in minutes. Expect heavy competition, often more than ebay and expect to get a fair price, most importantly, it's free. Every other option listed above cost $$ with no guarantee to close no matter how good the site is. Whereas a Category 4 site on DP is virtually a guaranteed close for the right price.
Finally someone I can agree with! When selling anything you need to sell the potential of the business. Yes, I agree that real brick and mortar businesses can't get more than 1 to 1.5 times earnings at best, but the Internet is different. There are so many variables that can be presented as unexploited potential. People will buy what you sell. If you are selling numbers (earnings) they will look at that. If you sell potential... the sky is the limit. I think there is no need to be calling people names. It is possible to have a discussion and even disagree without resorting to that kind of thing.
There are other reasons. What if your adsense got banned or something like that? The revenue will no longer be 200, but it still has a history of 200 a month with the traffic. All the new user has to do is put up his own adsense ads. If the original owner got himself banned on adsense, than the site is worhtless to him/her so why not sell it for 3x revenue
Wonderful post. Right on the money. Couldn't agree more. I just had to say this, even though it doesn't add much value, but DP needs more people with a brain !!!! Now this is something I completely disagree. PR is not everything and I have had some company seo contact me and buy a link for 6 months once. I couldn't believe how much he paid (I would have gotten maybe 1/10th at DP). It all depends on the content, the amount of outgoing links, the trust of your site and so much more but the PR. Fact is, I wouldn't want to sell links here, but I buy them Same goes for sites. I think anything below 12x/monthly earnings is cheap and I would gladly buy a good site, but as you mentioned, most of them are not even worth my time. I have seen sites with auto-generated (rss aggregated) content being sold for $150 and quite frankly I think I could make 20 of those per day myself (they had no PR and no IBL).