hi, im considering selling a horse racing tipster website business, it will be st time ive ever sold a business and wanted to know how to calculate price? i heard a formula where you calculate the profit in a month and then mulitply it by a certain amount, i already have a buyer interested and have a ball park figure in my mind, my site is in top 4 pages on google and yahoo for the main keywords asscoiated with my business, "horse racing tips" and" horse racing tipsters" and also "horse racing betting" page 1 on couple of them. Now on to figures, on an average month the subscription fees that the current members and new members pay to receive the horse racing tips by email each day amounts to $3000 to $4000 lets say $3500, the bulk of it forom existrng members, what figure would i multiply $3500 by to work out price? some pople have said 12, some 15 some 20, one guy 25 Anybody who can help me to rouighly work it out i would appreciate it. thx andy
Depends on the category the site/business is in. Is it growing? Or is it stable? Or is it a shrinking market? Is the business scalable? Can you break it up into modular units?
Technically your dividing by the rate of risk... Net Present Value That being said, the tricky part once you have the net income for a period is determining what level of risk is inherent to your site. If it is fairly stable you go with a lower discount rate. For example, if you say your site is fairly stable and requires a discount rate of 50% you value it like this: (3500*12)/.5=84,000; The justification for that discount rate would imply you have a fairly stable setup going with multiple years of revenue history, and no visible blemishes on your site. Myspace resource sites might get valued with a 200% discount rate. Domains with intrinsic value (single word domains) might get discounted with a 15% discount rate. If you look into the discounted cash flow model, you will probably notice that almost all assets have a WAY lower discount factor and thus command higher prices than sites. For instance, real estate is typically valued with a 7-12% discount rate. Good luck with your sale though!