Site value is not always x12. It's just a guideline. As with any auction, the market drives the value. If they want it badly, then they are willing to pay more. A lot of clueless people out there, but I hope they know how to grow and get their money back from that investment or wait 30 months and hope the income stays what it is.
Moreover, the income is from advertising sales, people tend to believe it as passive income. (half true)
I've sold sites for more than 36x months of profit.
It all depends on the traffic model. IF it has 90% google SEO traffic, then I wouldn't put even 10x months of profit.
If on the other hand traffic model is diverse and much less risky...e.g. 50% affiliate/referrer traffic, 30% direct traffic and 20% Google...then 36x months is a good multiple.
I understand what your saying but i dont see the logic in paying less for a site that gets (taking your example) 90% of its traffic from search engines VS a site that essentially gets more of its traffic using Adwords, referrer traffic as well as direct traffic and lets say 20% Google (or a mix of search engines) traffic.
One of my websites gets 4% of its (organic) traffic from Google, 33% from backlinks, and 60% from direct traffic. The balance (3% is from other sources like word of mouth etc).
The reason I ask is because in theory if you got a large percentage of free traffic from search engines with keywords, it means less money required to spend on marketing to achieve the same results.
I hope i am making sense here...
I understand what your saying but i dont see the logic in paying less for a site that gets (taking your example) 90% of its traffic from search engines VS a site that essentially gets more of its traffic using Adwords, referrer traffic as well as direct traffic and lets say 20% Google (or a mix of search engines) traffic.
One of my websites gets 4% of its (organic) traffic from Google, 33% from backlinks, and 60% from direct traffic. The balance (3% is from other sources like word of mouth etc).
The reason I ask is because in theory if you got a large percentage of free traffic from search engines with keywords, it means less money required to spend on marketing to achieve the same results.
I hope i am making sense here...
Time will tell. The flippa website has a big archive. It's very interesting to check big sales in the past, and how well the websites are performing now. Well you will be very surprised most sold websites don't exist anymore.