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Thread: How to Value a Website or Blog

  1. #21
    Administrator Clinton is a Premium Member
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    I'd like to link out to Richard Kershaw's (member: qualitynonsense) blog post on valuation last month ... and not just because he mentions me in there

    It's a worthy read and points out how you can increase the value of your site. He touches on multiple income streams, secure sources of traffic and unique content and design, among others. Check it out.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

  2. #22
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    I read the Valuation discussion, but I found that data points too sparse. I have five sites that are now ranking on Google page 1, although not all in the top three positions. I'd kinda like to sell some of them. Given the sparse data, this is my thinking. People who have sold sites, share with me if you think on track.

    1) Start with the sales at the site - yea, I can hear you saying, "Duh."
    2) Is the conversion rate OR traffic high or low (assume the site has good sales - whatever good means).
    A site with low traffic but high conversion can be perceived as valuable. The buyer can gain more sales if they drive more traffic to the site. Or the lazy buyer could just reap the reward.
    Conversely, a site that is making good money, with high traffic, but low conversion is also valuable. The buyer can try to increase conversion - or just milk a cash cow.
    The BAD situation is a site (which still is making money) but has lack-luster traffic AND lack-luster conversion. I think the site does not have a win in either category - and no clear advantage - is less appealing.
    3) Juice!
    I know a guy who runs a huge business selling women's bras online. He is seen as kinda creepy. This is a big business mind you, but not very prestigious.
    If I had a Fantasy Football site that was ranking and making money, I'd value that much higher.
    So the online bra site, might be a cool buy for a woman, but I doubt it has much prestige of ownership for a guy.
    This brings me back to point #1 - not everyone values money the same way. Some people look at a site as a cash cow. They'd be just as happy having money deposited into their bank by an unknown source.
    This is why so many US citizens hate smoking, yet their mutual funds invest in tobacco companies. The investor doesn't care that much about where their money is invested.
    But often people want the status of having an online company. I suspect most of us, on this forum, see websites as a means to an end. Like beef farmers see cows - ultimately to be slaughtered.
    So it is in the Juice section that I need to really think if the average person might like to own one of my sites, and charge for that added value.

    Like it? Share your thoughts on my valuation framework.

    Thanks Eric

  3. #23
    aka "meathead1234" Thomas is a Premium Member
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    Quote Originally Posted by EricTheRed View Post
    I read the Valuation discussion, but I found that data points too sparse. I have five sites that are now ranking on Google page 1, although not all in the top three positions. I'd kinda like to sell some of them. Given the sparse data, this is my thinking. People who have sold sites, share with me if you think on track.

    1) Start with the sales at the site - yea, I can hear you saying, "Duh."
    2) Is the conversion rate OR traffic high or low (assume the site has good sales - whatever good means).
    A site with low traffic but high conversion can be perceived as valuable. The buyer can gain more sales if they drive more traffic to the site. Or the lazy buyer could just reap the reward.
    Conversely, a site that is making good money, with high traffic, but low conversion is also valuable. The buyer can try to increase conversion - or just milk a cash cow.
    The BAD situation is a site (which still is making money) but has lack-luster traffic AND lack-luster conversion. I think the site does not have a win in either category - and no clear advantage - is less appealing.
    3) Juice!
    I know a guy who runs a huge business selling women's bras online. He is seen as kinda creepy. This is a big business mind you, but not very prestigious.
    If I had a Fantasy Football site that was ranking and making money, I'd value that much higher.
    So the online bra site, might be a cool buy for a woman, but I doubt it has much prestige of ownership for a guy.
    This brings me back to point #1 - not everyone values money the same way. Some people look at a site as a cash cow. They'd be just as happy having money deposited into their bank by an unknown source.
    This is why so many US citizens hate smoking, yet their mutual funds invest in tobacco companies. The investor doesn't care that much about where their money is invested.
    But often people want the status of having an online company. I suspect most of us, on this forum, see websites as a means to an end. Like beef farmers see cows - ultimately to be slaughtered.
    So it is in the Juice section that I need to really think if the average person might like to own one of my sites, and charge for that added value.

    Like it? Share your thoughts on my valuation framework.

    Thanks Eric
    You completely lost me.

    It sounds like you're trying to justify reasons why your (I am assuming they don't make much) sites are worth something by trying to find buyers that think owning an online business is a "status symbol". In my experience... it's the complete opposite. Most people haven't got a clue that online businesses even exist, and I've never seen or spoken to anyone who sees it as a status symbol.

  4. #24
    Moderator Kay is a Premium Member
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    3) Juice!
    I know a guy who runs a huge business selling women's bras online. He is seen as kinda creepy. This is a big business mind you, but not very prestigious.
    If I had a Fantasy Football site that was ranking and making money, I'd value that much higher.
    So the online bra site, might be a cool buy for a woman, but I doubt it has much prestige of ownership for a guy.
    It seems odd to me to value a site according to what sex the owner or potential purchaser is. Why is it seen as being creepy for a guy to own a site that sells bras? Theo Paphitis owns (owned?) La Senza and he's a highly respected entrepreneur. I don't think anyone would describe him as being creepy. As for his knowledge about women's underwear, he probably knows more about the subject than most people - because he understands the products he sells. What's not prestigious about selling bras or any other garment when the business makes good money?

    Let's say a site makes $5,000 net profit a month selling pink things (for women) and another site makes $5,000 net profit per month selling blue things (for men). Which of the two sites is the most valuable? I'd say that they were worth the same. I can't imagine any sensible businessman placing a higher value on the blue site just because its audience is mainly men. Some of our very successful members here have sites which one might consider to be targeted at a mostly female audience. Similarly, I own several sites which have a mostly male audience.

    Why should anyone place a higher monetary value on any site just because they happen to be the same sex as its target audience?
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  5. #25
    Top Contributor crabfoot is a Premium Member
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    I think I know what Eric is driving at - so, for you, Thomas, I'm going to revel my thoughts.

    I had a derelict site with a little skeleton text on it which I intended to build out. Now, something whacky happened to the site during the Panda and Penguin updates. I did absolutely nothing to it, but for unknown reasons it climbed from PR2 to PR4. Might have been because some sites linking to it also got brownie points. It did have about 600 relevant backlinks, and it was very old.

    There was a man pestering me - he wanted the domain for a client, he was offering good money, and the site wasn't making any. The reason the site wasn't making money was because I needed to locate an "independent financial advisor" to work with me on it (I have two old friends who qualify, but we've lost touch).

    Suddenly I had a crisis. The slates were blown off the roof by a freak wind, and I was in need of cash. At that point in time I was under the impression that the site was PR3. The only value in the site was in selling links / advertising, so I valued the site by looking at the prices people will buy links for, then saying the site would probably support two or three links out per page. Having looked at it that way, I got back to the pestering man and sold the site. While the escrow was going through I noticed the PR had risen to 4 after the Penguin attack the previous Friday, and I should have asked for more money.

    You can value a site on its "link value" / "juice value", even if you are not selling the links. The links out have a defined market value, which is mainly determined by the page PR.

    You can ascribe that value internally to links you supply to yourself when you're not selling links - and links from sites with PR4 and above have a much higher value in the market than sites with PR less than 4. Too many links out looks bad to Gargyl and dilutes the effect. Two or three per page is about the limit.

    Let's say a site makes $5,000 net profit a month selling pink things (for women) and another site makes $5,000 net profit per month selling blue things (for men). Which of the two sites is the most valuable? I'd say that they were worth the same. I can't imagine any sensible businessman placing a higher value on the blue site just because its audience is mainly men. Some of our very successful members here have sites which one might consider to be targeted at a mostly female audience. Similarly, I own several sites which have a mostly male audience.
    This thought process you disagree about is a "web thing" - one's site is supposed to represent one's interests? It can, however, merely be to exploit what you know ...

    My Uncle Arthur sought an independent existence, tried a couple of things, and finally ended up with a couple of haberdashery shops and market stalls, mainly selling womens' underwear. Why? At one point in his life he worked as a railway porter, when it was common to send most goods by railway. A spell of work in the Lancashire cotton towns taught him where to buy all the goods for such a business wholesale ...
    Last edited by crabfoot; 26 January 2013 at 1:28 pm.

  6. The Following User Says Thank You to crabfoot For This Useful Post:

    EricTheRed (27 January 2013)

  7. #26
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    Thanks crabfoot for getting what I was saying. The truth is that people DO place more value on things based on gender and color (pink/blue). People who don't understand that loose.

    My day jobs have been with large corporations where we see lots of consumer data. It is amazing the buying patterns. I posted this to see how sellers (who actually have sold websites) price their sites. Not, as I have been accused of, to justify my own valuation models.

    Are there other people, who have actually sold sites that have pricing stories or methods that work (or don't). My wife was just offered $3,000 for a domain name. I am not sure the deal will go through. I countered with $5,000, but I think in a week or so the potential buyer will realize a domain name is not as valuable as it once was (like in the days when EMD mattered).

    Who else has site sales experience?

    Thanks Eric

  8. #27
    Moderator Kay is a Premium Member
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    Quote Originally Posted by crabfoot
    This thought process you disagree about is a "web thing" - one's site is supposed to represent one's interests? It can, however, merely be to exploit what you know ...
    Good point, crabfoot. Perhaps I should have said "all other things being equal", which of course is a purely hypothetical concept. As for exploiting what you know, yep. Theo Paphitis and your Uncle Aurthur know more about selling women's underwear than I ever will. A woman pitched her bra-related business idea on Dragon's Den, I was quite amazed by Theo's knowledge of the subject, the construction of the garments themselves and the demand and size of the market for each. I expected him to know about the industry in general, but not to have such in-depth knowledge about the individual products themselves.
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  9. #28
    aka "meathead1234" Thomas is a Premium Member
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    Quote Originally Posted by EricTheRed View Post
    Thanks crabfoot for getting what I was saying. The truth is that people DO place more value on things based on gender and color (pink/blue). People who don't understand that loose.

    My day jobs have been with large corporations where we see lots of consumer data. It is amazing the buying patterns. I posted this to see how sellers (who actually have sold websites) price their sites. Not, as I have been accused of, to justify my own valuation models.

    Are there other people, who have actually sold sites that have pricing stories or methods that work (or don't). My wife was just offered $3,000 for a domain name. I am not sure the deal will go through. I countered with $5,000, but I think in a week or so the potential buyer will realize a domain name is not as valuable as it once was (like in the days when EMD mattered).

    Who else has site sales experience?

    Thanks Eric
    I'm not going to justify how many sites I have sold, but I'd wager it is significantly more than most people you will meet. I have never noticed people buying for sites of a reasonable size based on gender or colour. I'm sure this is true for consumer goods or the lower end of the market (<$50k), but beyond that, investors are far more strict with their criteria. I would argue that people who buy emotionally, lose, not those salesmen who "don't understand" it.

    You are also talking about people who have approached you to buy sites... that is totally different from valuing and putting on the open market. If someone approaches you directly (very rare for them to be serious) then you can almost always get more as they obviously want the particular site or domain. This might work once or twice but is not a repeatable pricing model. I also find that most buyers have their own pricing/valuation strategy... the way you pitch it doesn't really make any difference.

  10. #29
    Top Contributor crabfoot is a Premium Member
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    Eric - I think you've touched a bare nerve of Thomas's - he has an amazing skill set for one so young, and you could learn a lot from him if you don't set about upsetting him.

    [QUOTE​] I would argue that people who buy emotionally, lose[/QUOTE]

    Once again, I can see what you mean - a dispassionate approach to buying and selling sites is to be recommended. OTOH it does help if you understand the site subject, even vaguely, so people will gravitate towards subjects they can personally understand. This happens in lots of situations. As an example, the chap who invented the Workmate portable workbench had to try about 50 bank managers before he found one who was willing to provide funding, because none of the others could see any potential in the idea.

  11. #30
    aka "meathead1234" Thomas is a Premium Member
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    Quote Originally Posted by crabfoot View Post
    Once again, I can see what you mean - a dispassionate approach to buying and selling sites is to be recommended. OTOH it does help if you understand the site subject, even vaguely, so people will gravitate towards subjects they can personally understand.
    Sure... but I think there is a diffference between understanding a subject/niche and emotional decision making.

    Selling a website/business (B2B) is a lot different to selling products to consumers (B2C). B2B sales are less affected by emotions/colours/gender and more by financials/trust/strategy.

    I'm a firm believer in pricing at a level the market will accept and that buyers will actually complete acquisitions at. There's no point me coming up with a brand new valuation model if buyers aren't actually going to be on board with it. No need to reinvent the wheel.

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