Typically 15 months worth of income in advance. That would be $225,000.
Definitely in the right ballpark at the 225k range. Like a previous poster mentioned as well about the chances of it being banned is very important. If it follows all FB-TOS and it is very safe then he is easily looking at a price between $260,000 and $330,000. That is taking a 1 year income valuation taking an additional 3-5%/month income growth that would roughly be the value 12 months from today.
Being in banking and buyouts previously, anytime you can by a business for the equivalent of a 1:1 ratio of the 12 month multiple you are doing VERY well... as a buyer...
as a seller you might be an idiot unless you know something about a change in service that may kill the business model.
I guess in a changing speed of Facebook, I would only pay the 12 month forward value, because you just never know. If you had a "brick and morter" establishment with a $500/day track record and no chances of shut down, the valuation would come in between $530,000 - $1,050,000 thats a 3% annual growth (obviously facebook apps and online growth rates can trump brick storefronts all day long) using a 3 - 5 year steady increasing pro-forma. With brick and morter you can feel pretty good with 3% annual growth and no major changes in 3-5 years. Online however, he may find buyers are valuing only 6 months to a year out due to the "situations out of buyer/seller control" eg. Facebook TOS.
At any rate it sounds like he has a money maker at any price point above his cost of development and I would recommend with the multiple changes in TOS of Facebook that seem to be happening it may be a good idea to cash out now. The steady income is great, however, when dealing with the 3rd wheel (facebook) they might decide at any point to take your income, and your selling opportunity at any point. I say sell it while you still can.
Hope it helps a bit.
