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Other than turnover, factors that determine price?

Discussion in 'Site Flipping' started by HighTop123, Jun 30, 2013.

  1. HighTop123

    HighTop123 Junior Member

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    Lets say there are 2 sites and they both turnover $1000 per month and are both in the same niche. One has high PR and lots of good backlinks, the other does not.


    Does the PR and backlinks effect the value of the site?


    What other factors, other than just gross revenue determine the value of a site?


    Thanks!
     
  2. bryanon

    bryanon Executive VIP Premium Member

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    Let's first get some terms straight:

    Neither turnover (the total amount of sales + purchases), nor gross revenue (revenue before any expenses) can be accurately used to valuate a business. A business may generate a gross revenue of $1 million but if it happens to have COGS and expenses of $1.5 million then it's in fact generating a loss.

    The main figure you should care about is the net revenue, as this is the figure that represents the amount of money that the business ultimately makes for its owner.

    But back to your question:

    Yes, there are several factors that may increase or decrease the value of a site. Whilst it's impossible to tell how much individual factors such as Page Rank, the age of the business, the quality of traffic sources etc. influence the valuation, they can be looked at as a bundle.

    At the end of the day, the only reason why factors like the ones mentioned above matter is that they help determine the overall risk and the sustainability of the site's traffic/revenue. The larger the risk, the lower the value of the site.
     
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  3. kvmcable

    kvmcable Supreme Member

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    Any website really generating $1000 a month needs serious investigating and not just a glance at some screenshots or 3rd party analytics. A real website earning that sort of revenue should be in the $6k-$10k range without much due diligence involved. A site in that range should have experts digging into the numbers advertised before any bid is considered.

    Now if the seller is accepting crazy low offers and his history of sold sites shows similar sites then you're probably wasting your time with investigating further. Pass.

    Nobody should be laying out $5k or more without full accounting of everything advertised by real experts. There are a ton of methods used by scammers that only real experts would recognize.
     
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  4. gpacX

    gpacX Newbie

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    It seems to me like the main factors are:

    -Website age/ tenure: Sites that have been making money for longer tend to be worth more
    -Autopilot-ness: Sites that require less management or are on autopilot are more valuable than selling an ecommerce site that requires the new owner to actually learn how to run the business.
    -Net revenue: How much money the actual website makes per month

    Of course you will have to be able to prove all of the above. Sites with larger income are more stable and have a larger customer base, so they are more likely to be "guaranteed investments". For a site making 10k/month, for example, a sale price of 10-20x revenue is normal. For a small site that autopilots $400-500 monthly, a sale price of 4-5x revenue is pretty standard.