+ Reply to Thread
Page 4 of 5 FirstFirst 12345 LastLast
Results 31 to 40 of 42

Thread: How to Value a Website or Blog

  1. #31
    Top Contributor crabfoot is a Premium Member
    Join Date
    Oct 2010
    Location
    East Yorkshire
    Posts
    2,193
    Blog Entries
    8
    Thanks
    489
    Thanked 1,991 Times in 1,038 Posts
    Rep Power
    57
    You are quite right in what you have said, Thomas, and in your line of biz you aim to be reliable for your customers' sake - but there are other circumstances which may prevail. If one has skills in a useful area, it can represent a cost saving. Eg. every football club that fat b'stard Sam Allerdyce manages, immediately saves money because the defence coach is made redundant.

    I have known big time operators pay a 5x annual income price for a site because they believe they have the structure and naus to improve the income to make it into a valid purchase, bring it into accepted rational multiples in a couple of weeks.

    That's insight borne of experience, if you like to rationalize it, but it is also an emotional decision because it cannot be proved until the site is purchased. That's what makes Seth Godin a real wiz, if I can put it that way ...
    Last edited by crabfoot; 27 January 2013 at 5:39 pm.

  2. #32
    aka "meathead1234" Thomas is a Premium Member
    Join Date
    Apr 2010
    Location
    UK
    Posts
    1,165
    Blog Entries
    8
    Thanks
    158
    Thanked 502 Times in 261 Posts
    Rep Power
    26
    Quote Originally Posted by crabfoot View Post
    You are quite right in what you have said, Thomas, and in your line of biz you aim to be reliable - but there are other circumstances which may prevail.

    I have known big time operators pay a 5x annual income price for a site because they believe they have the structure and naus to improve the income to make it into a valid purchase, bring it into accepted rational multiples in a couple of weeks.

    That's insight borne of experience, if you like to rationalize it, but it is also an emotional decision because it cannot be proved until the site is purchased. That's what makes Seth Godin a real wiz, if I can put it that way ...
    Yes, this is correct, but only applies if you get approached to sell by a strategic buyer. It wouldn't be wise to "price" a site at 5x revenue, but doesn't necessarily mean it's impossible. In that situation, the buyer is still going to have a limit to what they are willing to pay... so however you decide to "price" it is still going to be largely irrelevant.

    I would say it's more a strategic purchase than an emotional decision (with an element of risk). They can't prove it will improve, but they will have data to back it up. I recently paid 3x yearly for a site (much higher than I usually pay) because I had data to suggest I could quadruple income within a few months. I didn't buy the site because it was blue or sold golf clubs (that would be an emotional decision ). It was purely strategic.

  3. #33
    Top Contributor crabfoot is a Premium Member
    Join Date
    Oct 2010
    Location
    East Yorkshire
    Posts
    2,193
    Blog Entries
    8
    Thanks
    489
    Thanked 1,991 Times in 1,038 Posts
    Rep Power
    57
    Quote Originally Posted by Thomas View Post
    I would say it's more a strategic purchase than an emotional decision (with an element of risk). They can't prove it will improve, but they will have data to back it up.
    Experience might be a better word.

    Quote Originally Posted by Thomas View Post
    I recently paid 3x yearly for a site (much higher than I usually pay) because I had data to suggest I could quadruple income within a few months. I didn't buy the site because it was blue or sold golf clubs (that would be an emotional decision ). It was purely strategic.
    I really don't know why I'm telling you the accepted terminology about this because you are so much better than I am in practice - but what you want to say is that the perceived risk is a lot lower than the actual risk, although you have yet to prove that fact. And when you do prove it I'll still be a sad old fart mucking about with sites that make 50p per annum... LOL y talk to anyone, wontcha?

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

    Thomas (27 January 2013)

  5. #34
    aka "meathead1234" Thomas is a Premium Member
    Join Date
    Apr 2010
    Location
    UK
    Posts
    1,165
    Blog Entries
    8
    Thanks
    158
    Thanked 502 Times in 261 Posts
    Rep Power
    26
    Quote Originally Posted by crabfoot View Post
    Experience might be a better word.

    I really don't know why I'm telling you the accepted terminology about this because you are so much better than I am in practice - but what you want to say is that the perceived risk is a lot lower than the actual risk, although you have yet to prove that fact. And when you do prove it I'll still be a sad old fart mucking about with sites that make 50p per annum... LOL y talk to anyone, wontcha?
    Yes, it appears we both agree with each other just word it differently.

    I'm still not entirely sure what Eric was trying to say, maybe I should stop working 7 day weeks and chill out a bit before jumping into threads

  6. #35
    Top Contributor crabfoot is a Premium Member
    Join Date
    Oct 2010
    Location
    East Yorkshire
    Posts
    2,193
    Blog Entries
    8
    Thanks
    489
    Thanked 1,991 Times in 1,038 Posts
    Rep Power
    57
    Eric's main point is that there is an intrinsic value in apparently worthless sites if they have other uses than to be seen by "users". Also, people DO get emotional about sites - just like they get taken in by reading long sales letters or similar website pages. I'll PM the rest ...
    Last edited by crabfoot; 27 January 2013 at 6:41 pm.

  7. #36
    Dormant Account
    Join Date
    Jan 2013
    Location
    Canada
    Posts
    104
    Thanks
    95
    Thanked 53 Times in 25 Posts
    Rep Power
    6
    While I have never bought or sold a website before, I have advised on dozens of acquisition and sale mandates for b&m businesses and therefore am going to offer my perspective on this matter. Are there instances where buyers are effected by emotions and over pay for asset? Yes. Should you incorporate this in your valuation when determining a list price for your business? Yes and No. If you couldn't care whether you sold your business or not, and solely are being "opportunistic", the answer is yes. you have nothing to lose. If on the other hand you are a motivated seller (retirement, change business, bored, etc.), the answer is no.

    I agree with the points above that the term emotions used above can be termed as "synergies" or "lower perceived risk". If we are talking about pure emotions effecting a valuation, in rare instances when this comes into play, it usually occurs when the buyer is invested. They have been looking at the asset, doing their diligence, getting more and more excited, and have a difficult time letting go. At the time of listing, I have never seen pure emotions being a factor.

    The other two terms "synergies" and lower "perceived risk" do apply to strategic buyers. If you are selling a smaller asset, these types of buyers are far and few between, so I wouldn't advise a seller to count on one when considering valuation. Furthermore, most strategic buyers (who I have advised numerous times on the buy side) initially take the approach that they refuse to pay for synergies (barring a highly competitive auction) as the value they bring is not inherent in the asset on a standalone basis. At the end of the day, a sophisticated seller will achieve value in the price from those synergies, but never for 100% of them.

    Back to my first point, finding the perfect buyer (emotional, strategic buyer, combination) is very rare in smaller transactions and therefore I wouldn't advise a seller to count on it when determining a listing price unless they were indifferent to the outcome of the sales process. In selling a product to consumers, emotions can rule the day, but Thomas' point about selling to a business buyer was fully accurate from my experience. If the seller couldn't care less about the sale and the status quo is great, price high and wait for that one in a million "bank manager who sees the vision"

  8. The Following 2 Users Say Thank You to MarkB For This Useful Post:

    Chabrenas (29 January 2013), Clinton (28 January 2013)

  9. #37
    Junior Member
    Join Date
    Oct 2012
    Posts
    34
    Thanks
    7
    Thanked 18 Times in 10 Posts
    Rep Power
    4
    Quote Originally Posted by crabfoot View Post
    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
    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.[/QUOTE]

    All the sales trainers and top sales methods say that, in fact, people buy emotionally and justify their decisions rationally. I've no interest in arguing that point. But, if I understand it right, Thomas is saying that he prices his sites based on some formula. Like a ratio of sales to price. I understand. But maybe I missed his formula. I'd like to know what he uses - in general.

    Not sure how I touched a nerve? I'd just like to know how people set prices for the sites they are selling. I've got some sites that are getting offers and I'd like to learn how from the experts who have experience.

    Anyone?

    Thanks Eric

  10. #38
    Junior Member
    Join Date
    Oct 2012
    Posts
    34
    Thanks
    7
    Thanked 18 Times in 10 Posts
    Rep Power
    4
    Quote Originally Posted by MarkB View Post
    While I have never bought or sold a website before, I have advised on dozens of acquisition and sale mandates for b&m businesses ...
    Thanks Mark.

    That is an interesting perspective. When I worked at Ford, I worked with the truck engineers. The truck division sold $50k and above trucks to business and small business owners. So you'd think that these business owners would buy a truck for strictly business reasons. After, to a one person contractor, a heavy truck is a bug purchase.

    However, this is a true story.

    In the US, the same truck can be fitted with a number of engines. With trucks, many have the option of a diesel engine. Which is more powerful. But it's also heavier. So far, no problem ... except that the heavier engine REDUCES the cargo capacity of the truck. The heavier engine, reduces the amount of cargo that the truck can safely hall.

    So why is this a big deal? Because two guys at a bar, with the same truck, start to talk. The guy with the diesel engine gets taunted for his LOWER cargo capacity. This embarrassment actually shows up in sales of the diesel option. And marketing tries to work out ways to reduce this problem.

    I think that is a high-ticket purchase, where it should be a rational decision, yet emotions and perceptions cause some buyers to get the less-powerful engine.

    Pricing of websites may be strictly a income ratio calculation. But I'm not quite convinced. And, while we're on the subject ... what do sellers and buyers use as listing price / offer price? What is the common negotiating range?

    Thanks Eric

    Quote Originally Posted by crabfoot View Post
    Eric's main point is that there is an intrinsic value in apparently worthless sites if they have other uses than to be seen by "users". Also, people DO get emotional about sites - just like they get taken in by reading long sales letters or similar website pages. I'll PM the rest ...
    NO, my main point had nothing to do with, "worthless sites." My point is there can be an intrinsic value in addition to the site's value.

    Eric
    Last edited by Kay; 28 January 2013 at 2:08 am. Reason: To merge posts

  11. #39
    aka "meathead1234" Thomas is a Premium Member
    Join Date
    Apr 2010
    Location
    UK
    Posts
    1,165
    Blog Entries
    8
    Thanks
    158
    Thanked 502 Times in 261 Posts
    Rep Power
    26
    Quote Originally Posted by EricTheRed View Post
    All the sales trainers and top sales methods say that, in fact, people buy emotionally and justify their decisions rationally. I've no interest in arguing that point. But, if I understand it right, Thomas is saying that he prices his sites based on some formula. Like a ratio of sales to price. I understand. But maybe I missed his formula. I'd like to know what he uses - in general.
    As a very general rule of thumb, I would start a valuation at 2x net profit and go from there. That would be a very approximate average but may be increased or decreased depending on the site.

    Some factors that would decrease:

    - lack of age
    - seasonal niche
    - branded round a person
    - legal issues

    Some factors to increase multiple:

    - if it is a forum/recurring product
    - multiple traffic sources (nothing above 30%)
    - completely passive ownership (site has a manager/employee).

    Obviously there is a lot more to that, but most of the variables that make a tangible difference to price are above. There are other variables (such as emotion) but I wouldn't say that increases how I would value a site. That's more of a buy-side element that is too hard to predict on a regular basis. The only data I have to go off is the deals I have personally completed and the buyers I have spoken to.
    Last edited by Thomas; 28 January 2013 at 5:18 am.

  12. The Following 4 Users Say Thank You to Thomas For This Useful Post:

    Clinton (28 January 2013), crabfoot (28 January 2013), EricTheRed (29 January 2013), Kay (29 January 2013)

  13. #40
    Junior Member
    Join Date
    Oct 2012
    Posts
    34
    Thanks
    7
    Thanked 18 Times in 10 Posts
    Rep Power
    4
    Awesome Thomas!

    Thanks for the formula. That really helps me have a place to evaluate my sites.

    One question, when you say,"valuation at 2x net profit." Do you mean monthly or yearly. So a site that generates $10k per month is offered at $20k or $240k?

    Eric

+ Reply to Thread

Similar Threads

  1. looking for an existing blog to buy
    By dummydave in forum Buying a Website, Blog, Internet Business
    Replies: 0
    Last Post: 8 March 2011, 3:10 pm
  2. Flippa Blog - Buying your First Website - Excellent example of a horrible purchase?
    By tke71709 in forum Buying a Website, Blog, Internet Business
    Replies: 22
    Last Post: 22 April 2010, 9:03 am
  3. Valuing a Blog Based on PR (To Eventually Sell Blog Posts)
    By Ajeet in forum Valuing Websites, Blogs, Domains
    Replies: 2
    Last Post: 2 March 2010, 2:39 am

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts