I would love to hear the opinions of the business experts here at DP. It regards the valuation process for online businesses. I wrote a white paper that I have since converted into an article on what I call "The Webmaster Delusion", and it raises some questions that I am still unable to find definitive answers for. If you get 5 mins, could you take a look and let me know your opinions on the matter. article: Webmaster Delusion
I know what you're striking at; every so often I do see listings on DP and other forums that just make me shake my head in disbelief; and in those cases its probably a combination of seller bias, over-analysing the value/potential of their sites concept etc etc; plus, of course, a desire to make a big pile of cash. Most of the time though the prices I see are reasonably logical; most people seem to use the "rule-of-thumb" of average monthly profits x 10-12 months. Then again, this is both a boost and a burden for webmasters selling their sites, because a lot of buyers also use the above logic to ascertain what they think is a reasonable purchase price; even though there are occasionally sites with zero income, but an idea/coding structure/design etc that are worth big bucks. I guess its the same across all walks of life and business; over-investment/indulgence in your own ideas and work leading to sheer delusion over its worth. If you really want to see delusion in play, check out people who try to put a pricetag on their ideas (ie $10000 for me to come onto msn and tell you what I think would make for a good website) - thats something i've never understood.