When Selling Sites

[TRIPAAA]

I have seen a lot of postings about selling sites and the prices for each site bought or sold seams relative to either party.

But is it safe to say the if you have a site that earns X amount then the average selling price should be

24 times X = selling price.

Or in other words 2 years worth of earnings?

[MJ]

There is a lot more that goes into selling a site, domain quality, content, age, traffic, backlink profile, etc.

[ultra100]

As MJ said, there are a lot of other factors.
The key is future potential of the Website.

[MPC]

Those who buy sites based on revenue typically price on 1 year's worth. I think a site has more value than the revenue it generates.

[Randy Ray]

Those who buy sites based on revenue typically price on 1 year's worth. I think a site has more value than the revenue it generates.

And sometimes it has less. Suppose a site has used a lot of spammy techniques in order to get its rankings? Maybe it's just a week away from being penalized in the SERP's. If you bought the site based on one year's revenue, you'd be disappointed.

Or suppose a site's entire backlink profile is based on the former owners' other sites, and he pulls most or all of those links, causing a huge drop in traffic and search rankings. Again, the site is no longer worth the revenue it was generating when you bought it.

On the other hand, a site with a lot of trust and authority is worth at least 2 years' worth of revenue, and maybe a lot more. The content on the site has value, the domain has value, the backlink profile has value.

As Warren Buffett says, "Price is what you pay. Value is what you get."

Your goal when buying websites should be to get more (or at least equivalent) value than the price would indicate.

[checkingout]

Is there a good spot to find all these websites for sale?

[TRIPAAA]

Randy nice , since i have never bought a site nor sold one at least for this niches. I have never really thought about it.

Or suppose a site's entire backlink profile is based on the former owners' other sites, and he pulls most or all of those links, causing a huge drop in traffic and search rankings. Again, the site is no longer worth the revenue it was generating when you bought it.

i see your point for sure. thx for the tips.

[Squizzel]

some sites also sell for more based on "potential" to make money.

or established sites with strong brand and loyal following which arent dependent on any other traffic except word of mouth and bookmarks.

sites that predominantly earn there money from SEO or only one source of traffic are a risky investment.

[resipsa]

site value = (1) discounted future cash flow of existing site + (2) PV of additional earnings the site will have due to effort of the buyer - (3)buyer's additional costs improving and maintaining the site

(1) = what revenue is the site expected to generated "as is"; appropriate discount factors to apply would include risk of falling in SERPs (if 90% of the traffic is from one search term, this risk would be quite high).

(2) = untapped potential of a site

(3) = all costs the buyer would have for the site after purchase, including value of the buyer's time and effort spent working on the site

The bigger (1) is in this equation, the more you can talk about valuing a site based on X times earnings, but if (2) is the more significant number, then trying to base a price on current earnings is kind of silly and is working backwards to justify a number that was derived in another manner.

[Jeremy]

Valuing sites based solely on SEO and affiliate revenue is very difficult because of what Randy mentioned. A site that has no following, brand, active community, or fixed rate advertising model is a gamble.

I do agree that future earning potential has to play into the valuation process, but even that depends on the overall business model and not just a statement like "it should be easy to rank for xxxxx".

Valuing sites in the gambling affiliate industry is extremely difficult. At the end of the day I think a site is really worth simply what a buyer is willing to pay - as vague as that sounds...