How to value a website for sale?

[asr_guy]

If someone is selling a website, how do you value what it's worth in terms of subjective (legal, intellectual property, content, maintenance, skills needed, emotional value, etc.) and objective (cash flow, costs, revenue, traffic, etc.) criteria?

Are there some rules of thumb re the objective numbers?

Thanks,
Peter

[Rosalind Gardner]

Hi Peter,

Good question! Darned if I know.

Way back when I dimly recall hearing someone say that a business would be worth one year's income... or was it two? Like I said, the memory is dim.

But that would seem to be fair. If your ecommerce business takes in 100 g's per year, it would well be worth at least 200. Actually, I think if would be worth WAY more than that!

Why, are you selling?

Cheers,
Ros

[asr_guy]

There was a site for sale in another forum that was sold at approx. 10 months earnings. It would have been close to one of my ventures and lots of synergy, but I felt it was better to keep the focus on my own thing. i.e. go deeper and not wider at this time.

I didn't bid but learned a lot in the process. There's quite a market out there consisting of people buying and selling domain names and complete web sites.

One thing to watch for is don't just look at the earnings but also the costs - especially if there is a high PPC to get those earnings.

Cheers,
Peter

[Rosalind Gardner]

Hi Peter,

[kthomas]

are you buying a WEBSITE or are you purchasing an active, running BUSINESS?

A professionally designed web site can start near $1,500.00 and go much higher with custom programming.

Business's are often valued with a rough estimate at 3-5 times their gross yearly income.

You'll want to weigh that with;

what physical, tangible assets does the business own?
what intangible assets does teh business own?
what is the quality of the client list and how deep is the client data?
any debt that might come with the business.
real operating costs.

That should get you started.

/kelly thomas
iBlogbarn.com