Article
The Ultimate Web Site Valuation Guide
Valuing Your Own Site
Now that we know all the complex theories behind valuations, we’re going to return to the basics: the best indication of a price a site is likely to fetch can be gained from recent sales of similar sites.
So we’ve taken data from several sales in various marketplaces and compiled some charts to indicate the type of multiples they go for.
Caveats
- Though this study’s results mirror a larger analysis, it needs to be remembered that the sample size here is small and samples are sales that happened in public.
- There is some subjective judgment involved in categorizing web businesses. Some content sites have blogs and forums; some forums have product sales or services.
- Some sites that apparently sold have been left out of the charts where deemed appropriate. This is particularly so when the seller complained that the buyer disappeared without payment, or where the earnings or price were too insignificant and the site was deemed to have been bought for the value of its domain or design rather the earnings.
- There is no standard way of calculating earnings; earnings figures underpinning the multiples here were taken directly from sellers’ claims, and were not verified by us.
- Only English-language sites were included in the study.
- All sale prices were under $100,000. Above that figure, the market may work slightly differently.
- Where prices are quoted as multiples, these are multiples of monthly earnings.
- Where the site has sold for a buy-it-now price, it may not reflect the maximum price open bidding would have reached.
Content Sites:
Content sites range in subject from technology and games to health, antiques and weddings. The “content” ranges from text and articles to video and images.
The average multiple of just under two years’ worth of income is, in reality, probably skewed by the fact that sellers often quote gross revenue as net profit. If we remove the top and bottom two sales in the above chart, we find an average of just 16.35 months of claimed earnings. This is lower than it was a year ago, in the middle of 2007, and may reflect the credit crunch and increased caution in the marketplace.
Blogs
The subjects of blogs range from health and celebrities to relationships and technology.
The lower average for blogs (around 11.25 if we remove the two extremes) reflects that the earnings figures sellers quote are usually gross rather than net, and that buyers appreciate the extra work that blogs entail and discount the price to reflect that.
Blogs are selling for about two-thirds of what they would realize if they were “pure” content sites. That said, the volume of blog sales has risen appreciably since 2007.
Forums and Communities
Forums and community-based sites focus on topic areas as far apart as automobiles, pregnancy, and gaming.
The much higher multiples that forums go for is surprising, until you realize that forums are difficult to monetize, and many sellers have zero or very little proof of earnings.
Also, most forum buyers are site flippers or otherwise experienced at managing and monetizing communities, and are therefore willing to pay a higher multiple of the unoptimized earnings. Removing the extremes in the above chart give us a much more realistic average of 23.5.
Proxies
Proxies tend to be seasonal and less used during school and college holidays. It’s also typical of proxy sites to be heavy on use of bandwidth. The low quality of traffic to proxies, the fact that by its very nature its visitors are actively looking to leave the site, the difficulty in monetizing proxy traffic in general, and the large volumes of traffic from countries not favored by advertisers leaves proxies low down the list of multiples. At under 5 months’ worth of earnings, the multiples are similar to what they were a year before.
Service Sites
Service sites provide free image sharing, site hosting, and freebie services.
The much lower average of 9.86, compared with content sites and blogs, reflects that buyers are aware of the higher overheads (such as bandwidth), often not deducted from the claimed earnings.