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Question about pricing out a website

Discussion in 'Off Topic' started by Jamie, Jan 2, 2011.

  1. Jamie

    Jamie Well-Known Member

    When you're looking to buy new sites, how do you go about pricing out a fair and reasonable price?

    I am looking at buying a couple of similar sites I have found and I thought I would ask for your opinion. I know when I am looking at buying another company like mine (answering service) we price it out based on the equipment, type/number of accounts and an equation of the monthly gross.

    • Do you do similar things for website?
    • What is the multiplier for the revenue of the site? 7 months? 12 months? more, less?
    • Do you pay per user that is active? If the site has 2200 users, but only 300 of them are active do you consider it a site of '2200' or '300'?
    • Do you pay for content? If it has 23,000 messages in 1800 threads, how do you calculate this?

    Thanks for any information or guidance if you have bought or sold sites before. I have bought one other site before, but won't sure if I was completely fair to both sides. I don't think either of us got taken, but in this, it will be a bit more money, so I would like to consider all opinions.

    Jamie
     
  2. steven s

    steven s Well-Known Member

    I can only tell you what I was offered recently.
    It was 3-4 times my annual ad revenue.
    Whether that is fair? IDK.

    Like anything, it is only worth what someone is willing to pay.
     
  3. iTuN3r

    iTuN3r Well-Known Member

    I will Look for Monthly Revenue Details, User Activity Details , No of Registration Per week .
     
  4. Jamie

    Jamie Well-Known Member

    Thanks. If the owners wanted that much I don't think I would be interested. Waiting and hoping for a return on investment after 3 or 4 years in the web world is more than I would want I think.

    I do understand though, sites are worth what the owners are willing to sell them for and what the buyers are willing to buy them for.

    In looking at those numbers how do you multiply to get your figure? How many months do you look at before you 'break even'?

    Jamie
     
  5. grant sarver

    grant sarver Well-Known Member

    I'd only pay 3 - 4 times ad revenue if the site showed steady revenue growth year-to-year. Usually people over-pay. Now, it might be worth more to you if you are cornering a market.

    Indicators are nice, but they're just used to try to project cash flow. Always better if you can measure cash flow and net revenue directly.
     
  6. iTuN3r

    iTuN3r Well-Known Member

    Webmarket (selling and buying) has gone down from what it used to few years back . Well every sites have different kind of community and usually if i am buying similar site and if the site has good income ,Valid traffic permonth , nice userbase and activities i would look for reasonable price not so high nor any low . Keep it between and make your move .
     
  7. Jamie

    Jamie Well-Known Member

    Thanks, I am not trying to corner a market, just grow my niche


    Thanks again for the input.. I am thinking a 12 month x ad revenue would be a starting point.

    Jamie
     
  8. iTuN3r

    iTuN3r Well-Known Member

    Best of Luck for it and hope it works out for you .
     
  9. Jeffin

    Jeffin Well-Known Member

    These would be some of the things I would have in mind during the selection process.

    I would look at how popular the site is ranked on google/bing and whether it has potentials to grow if I were to optimize it for search engines. How can the new site help my old site/s? If it costs 3-4 times the annual ad revenue, I would definitely buy it!

    Definitely do an extensive research on the sites traffic history (back to 1-2 years) so you know how its performing and why the owner is wanting to sell it to you.

    I never bought any site because I can't afford to at this stage. :)
     
  10. Drky

    Drky New Member

    Jamie, in my experience the websites that I have been a part of as a target and acquirer, very low multiples were used - less than 2 times. A factor for "replicative effort" is also valued for unique programming, apps, development, community build-up etc.

    When going in to make an unsolicited offer you can utilize resources like Compete.com, ComScore.com and others to compare logged statistics for sites you're interested in (if the data is available) with sites you know the traffic and ad-revenue for - you can then go to build your own model out appraising and discounting certain variables.
     

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