|pros • per • ly|

Since Prosperly’s inception, I have been a proponent of Flippa, formerly Sitepoint Marketplace. Flippa is the main website where people go to buy and sell websites. Whenever I have sold websites in the past I have always dealt directly with the buyer and never used Flippa to sell before. I finally decided to try them out to see how it would turn out for me. That is when I realized they have many flaws I couldn’t overlook.

Before I go into those flaws let me just report that I did reach an agreement on a purchase price for the site only to have to deal fall through over the next several weeks.

1. Buyers on Flippa expect to get a steal on a website. The seemingly going rate on the site is 10 months of net revenue. I’m not sure where or how this came to be but in the real business world that ratio is laughable. Most businesses sell for 2-3 years net revenue. I sold a website last year for a 7 year net revenue. Why 10 months? Because you don’t want to have to pay for a business what it is worth?

I think the main problem is sellers are putting their site out on display showing everyone exactly how your website makes money and exactly how much money you’re making. This is a problem because in the internet world the barrier to entry is almost non-existent. Any Joe Shmoe can buy a domain for $8, then go get a free WordPress template and be up and running in 10 minutes. Their thought process is since it is so easy why should they pay a 2 year multiple for a website. Inevitably most people that start these quick websites never achieve the traffic nor the money that the site for sell is doing but it just creates a problem where the market of buyers at a real business price is not there.

2. The fee structure is ridiculous. One of the problems I had with Flippa was the bookend fees they charged. They charge you to list your site for sale with all kinds of listing upgrades. You can easily end up spending $40-$50 to list your site for sale. I have no problem with them doing this. It is normal for businesses to charge listing fees.

On top of the listing fee is the purchase price fee. I can’t remember what that percentage is (I want to say 5%) but they cap you out at $499. That is where my site fell, the $499 cap. So I had to pay $40-$50 to list and then they wanted me to pay $499 once the deal had gone through. I agreed to this reluctantly because I knew Flippa could provide me with an audience. I just think you should make it one or the other. Charge me a listing fee, charge me a final sale fee, but don’t be greedy and charge me both.

3. If a deal falls through your out of luck and money. This one is the flaw that inspired this post. After I reached the agreement with the buyer he gave me the run around for a couple of weeks. During this time Flippa kept emailing me reminding me that I needed to pay the final transaction fee. I ignored the emails because I was still waiting to get paid for the site. It soon became apparent that the guy was not really going to put forth the money and so I moved on with my life.

Well I still kept getting emails from Flippa saying I needed to pay the final fee. I finally emailed them back saying the deal fell through and I never sold the site. I realized that I had taken the risk to pay the money to list the site for sale and since the deal fell through I was out the listing fee. I had no problem with that. But you can imagine my surprise when they emailed me and told me that even though the deal fell through I was still obligated to pay the final transaction fee (in this instance I had set it up to be split between me and the buyer) of $250.

So Flippa was demanding that I pay $250 for essentially nothing. I told them that it was ridiculous to ask me to pay the fee when I never received any money for the site but they kept demanding it and threatened to suspend my account. I told them to go ahead and suspend the account because I had and have no intention of ever paying the made up fee.

Congratulations Flippa! Not only did you lose one customer with your horrible fee policies, but I’m a guy with an audience and I will make sure they know about it too.

Flippa Alternative

If you want to find out where I go to find websites to buy click here.

So where do we go to find good buyers of websites. I have a few suggestions.

The first is a forum I recently found out about called Experienced People. I’m not sure why it’s named the way it is but it is a forum of people with money that like to buy and sell websites. It is a much more mature crowd than at Flippa.

The next Flippa alternative I would suggest when you are looking to sell a site is to contact your competitors. Remember, your competition is not your enemy. They can be some of your most valuable assets. If one of my competitors contacted me about buying their site I would be very interested. I have even tried to buy out my competition before.

Another option is to go directly to a business broker. I would only do this if your website is making over $3k a month. Their fees are high but they will also get you top dollar for your business.

The best option is to wait for someone to come to you. If you build an awesome website with great SEO rankings it won’t be long before people are contacting you about buying your site. This puts you in the driver seat. For example, on the site I sold for the 7 year multiple I had already received an offer for just over a 1 year multiple. The amount didn’t excite me so I passed. I fixed up the site more and got even higher rankings and then sold it for the 7 years of net revenue. That did excite me.

This is from a site we purchased in November of 2008.  We bought Holly for $,2500 (our most expensive acquisition at the time) because we saw serious potential:

1) Increase the site’s rankings (0bviously).  More visitors means more money.

2) Improve the site’s design.  We saw this as seriously low-hanging fruit and you’ll know why when you see the original site.  So…here’s the original:

You see what the site’s lacking?  Focus.

What is the visitor supposed to do when they land on this page?  Click on Adsense? Click on one of those cities listed below?  Try and find a hotel reservation through that form?  And why is there that welcome text there?  Visitors know what they want to do when they’re searching for hotel reservations…they want to make a reservation.  They don’t care about your site.  It’s obvious that the previous owner was adding that content for SEO purposes, but they put it in one of the most prominent spots on the site…bad new.

So here was our first pass with a redesign:

Notice a few things.  Now answer this question in two seconds:  What do we want the visitor to do?

The site is monetized by doing lead generation for hotel reservations.  We’re using the a second-tier middleman.  What this means is that we’re generating leads for Middleman 2, who is paid by Middleman 1, who is paid by the hotels.  It’s obvious where we’ll go once we have traffic worth bragging about:  Middleman 1 (and perhaps a few deals wit specific hotels that would be very lucrative — those types of relationships are profitable, but that’s for a different post all together).

Anyway.  We offer some quick links to cities which sends them to the same page except it has the City form field already filled in.

What’s the real key here?  Giving the user what they want.  Anything else is much less profitable.

Our final design once we ironed out some kinks:

We took out the city bit in the form (it was distracting) and moved the familiar logos (familiarity is key when getting conversion from visitors) to the top.

What about content for SEO?  That’s all where I put the big black box.  What about other content?  Writers are adding content constantly, but the content always plays second-fiddle to the action we desire our users to take:  get a reservation.

What Have the Results Been Like?

Since we purchased the site, traffic is up 1,303%.  But that doesn’t tell us how well the new design is doing.  Here’s the key stat.  Before we purchased the site, revenue per visitor was two cents.  Our revenue per visitor for the prior 30 days is twenty-six cents.  A 1,200% increase.  We can’t wait to get our traffic higher so we can negotiate with a more profitable affiliate provider.

At any rate, do you see what a bit of design does to help you make money?  Instantly?  This is what makes flipping websites so unbelievably valuable.  If you buy the site for $2,500 and then turn around and increase its earnings by 1,200%… (remember, that increase can be attributed directly to the redesign itself, which took us three hours) what is the site now worth?  $30,000.

I know I am jumping ahead in the sequence of how we find a website to buy, fix it up and then sell it but there is information in the middle that we are not ready to share just yet.

People often ask us how we find buyers for the websites we sell. The simple answer to that question is we don’t.

In fact, when we first got started in internet marketing, flipping websites never even entered our brains as a possible business model. It all sort of happened by accident as many new business ideas do.

Our goal was to have 12 websites that all made $300 a day by the end of 2009. That would have been about $1.3 million a year. As we were building up the websites we owned we had people inquire about buying our biggest websites within a two month time span.

We weren’t looking to sell but they really wanted to buy the sites. So after selling the first one and seeing how much we made ($250k) we realized that we were on the right track with the type of websites we were running.

Then as mentioned we received offers for two more of our sites. One buyer wanted both sites. One of these sites was our biggest money maker and we were hesitant at first and then finally conceded to sell. (Keep in mind that at this point flipping websites was not our business model)

Two days before the sale of the websites our big site lost most of its rankings. The buyer backed out with the agreement that if we got the rankings back he would still buy.

That is when we realized that flipping websites was the right business model for us. We saw how quickly the rug could be pulled out from underneath us and realized that selling a website at its peak is the best method. Take a website, fix it up, the site makes money, then you sell for a hearty profit. Repeat.

Why did these people want to buy our sites so bad? Because these sites receive all of their traffic through search engines so we didn’t have to spend money to make money.

Also the sites run themselves (see Prosperly Way). You really can buy one of these and make money without adding much time at all to your work schedule.

You build a good site like this and you will have people asking you to buy. It has happened to us over and over again. We have never put one of our sites on the market and yet we flip websites for a living. Build Prosperly style websites and you will be able to dictate when you sell your websites.

All right I have finally decided to post this. I apologize for making you all wait this long but we had very good reasons which I will not go into here. Considering how much you are paying for the info I knew you would understand. :-)

Now that you have chosen your industry and found out that there is real potential to see if you could make money in that industry, the next step is to go out and find a website that will work for you.

This is when you need to make the decision on whether to buy a website or build one from scratch. In my estimation it is always better to buy an established website rather that build a new one. You let someone else do all of the grunt work and then you step in a make the necessary changes and increase the value of the site quickly.

The only time I would say that it makes sense to build a website from scratch is when you are entering an industry where nobody really knows SEO that well and you are confident that you can quickly enter and move up in the rankings quickly.

The only other reason would be if you look and look and just can’t find a suitable website to buy in that industry and still want to get started.

I have created a video that explains one of the ways we actually go about looking for websites to buy. There are other ways than the one I talk about here but it will give you a good start.

Before I show you the video I need to tell you that we have been contemplating long and hard on whether or not to even continue with this series. We know that some people have begun to abuse the information we have given out and that has disappointed and demotivated us in our efforts to teach others.

The information on internet marketing and website flipping is valid and valuable. We really do want to help others succeed online but there are always those few who ruin it for everyone else.

We have decided to create a Prosperly membership and allow only members to access the video for step 3. The membership is free but we need to be in complete control of who gets access to this free information.

If you still wish to proceed and don’t mind becoming a member at Prosperly then click on the link below:

Watch step 3 video

All right, you should have your list completed from Step 1. Now that you have decided the areas you want pursue we need to find out if there is any money to be made in those industries. For example if collecting donkey socks made your list, there may not be a market for that online right now.

So in order to make sure that all of your internet marketing efforts don’t go to waste we have created a video that explains some of the things we do to evaluate whether there is demand in a certain niche and if it is worth our time to pursue it.

Check out the video below and leave a comment and let us know what you think.