Buying Sites Without Much History? Be Careful
Sites like this one for sale are the trickiest to value, in my opinion. JohnCow.com has been a huge hit, very quickly, but will it last? For something with such a short term history, the future traffic and revenue numbers aren’t very predictable, so I would only buy this at a huge discount to the valuation according to monthly earnings.
What’s the Value of a Web Show?
I have no idea what a web show is worth, because only a few have sold, and it’s hard to find stats on some of them. But the numbers are enticing enough that my business partner and I decided to try it out. Over the last few months we have built a great team, and the result is that today, The Daily Idea Web Show launched.
For Quick Cash, Try a Community Site
What kind of site makes the most money right out of the gate? I ran a screen on pagerank 0 sites, again under the assumption that most of them would be new sites. Then I graphed monthly visitors versus monthly revenue. Check it out below.
For a given traffic level, communities seem to do much better. (For purposes of our database, communities include membership sites and free registration sites.) So if you want quick cash and have decent traffic building skills, a community may be the way to go.
Flipping a Young Website? Forums May Get The Best Return.
This morning I sat drinking a cup of coffee and wondering what kind of site gets the highest valuation at an early stage. New websites are hard to buy and sell because they are unproven, so you often have to consider future potential. I decided to check it out by running a screen for all sites that have sold with Pagerank of 0. Now to be honest, some webmaster that rely heavily on Adwords traffic may not spend much time link building, and occasionally you can have an old site with a PR0, but in general, PR0 sites will be those that are relatively young.
I graphed the result and was a bit surprised. Of the PR0 sites that have sold in our database, Forums have the best valuation.
Notice the steep forum slope. Also note that blogs come in last at this level. How do we explain this? My theory is that because forums are self-sustaining, if they have any traction at all, people are willing to pay for the potential that they will become solid revenue generators and require little ongoing work. Blogs on the other hand require constant work and updating to keep the traffic coming. So the lesson here is if you want to build and flip a site quickly, try a forum, or possibly a community (the second most popular) but stay away from flipping new blogs.
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How To Value a Pagerank 5 Website
Here is a video using our tools.
Directory Revenue Scams: Buyer Beware
Don’t buy a directory without proof of earnings. Directory owners have the ability to play an interesting game using self-generated revenue. Here is how it works. They build a directory and add a few sites, then let it get indexed by Google. They link to it from a few of their existing sites, or buy some links on high PR sites so that the PR of the directory gets up to a 4 or so. (It’s tough to sell a directory without at least a PR4) Then they buy $300 worth of links in the directory for themselves and their existing sites. The money simply flows from one of their paypal accounts to another, so all it really costs them is a few dollars in transaction fees. They then post the directory for sale and say it had $300 in revenue last month, which isn’t exactly a lie. You bite. You buy. You pay a couple of grand. You make $40 a month. It’s a pump and dump website scheme at it’s best. Buyer beware.
The Best Way To Get a Good Site Valuation
The best way to get a good valuation for your website is predictable and stable monthly revenue. Website valuations are discounted because future gains are not very predictable. Google algorithm changes can halve your monthly traffic and corresponding revenue. Of course, they could also boost your ranking and double your revenue. By showing 6 or more months of consistently high revenue, buyers are willing to pay a premium for that earnings power.
Welcome to Value on the Web
About a year ago I began buying and selling websites. I noticed that people tended to use common multiples like 10-12x monthly earnings to value websites, but ultimately the value in something is the discounted value of all future cash flows, and website monthly cash flows are easy to manipulate. I got burned a few times, and I got some great deals that made me decent profits. But overall, I realized that the 10-12x number was wrong.
I began keeping a spreadsheet of websites that sold at Sitepoint. I tracked pagerank, monthly visitors, monthly revenue, and final sales price. Eventually, I got curious and started running regression analysis on the data. I found some interesting patterns, and found it useful to analyze outliers to see why they broke the pattern. I discovered ways to add value to my own sites. It was very very useful. So useful that I built a website to analyze it all. I don’t know if anyone else is as into this as I am, but I figured I might as well share what I’ve created with the world and maybe make a little money from all the work I’ve done tracking this stuff. The final result is Value On The Web. I hope you like it.