Many of you have been asking me to teach you exactly how I go about buying and selling websites. Well I created this video that will give you the blueprint I have used over the last 3+ years to buy and sell many websites.
How much should a website be making when you sell it? This was a question I received for one of my Prosperly followers.
The answer to this question is a resounding YES. I know, I know, that doesn’t make any sense. In reality I have no idea what the answer to the question is. I guess a good way to figure it out is to ask yourself how much you want to sell it for.
Let’s say you want to sell your website for $100,000. Then I would say you need to be making at least $100,000 from the website in a 12-24 months or in other words $4k-$8k a month. And I’m talking about net profit here not gross revenues.
I know that is a big range but it really depends on how many months multiple you can get a buyer to pay you for the site. I have sold sites at multiples ranging from 12 months to 7 years and everything in between (the latter was a rare exception).
Now if you go to one of the website marketplaces you can expect about a 12 month multiple. If you use a private buyer it depends on that buyer.
If you want a hard figure that you can count on then just estimate low and base the number off of a 12 month multiple and then when you go to sell really try to get at least 18 months.
I know that I am not giving you a clear cut answer but that is because their is no clear answer. Every website sale you ever participate in will be completely unique.
Here is episode 2 of Prosperly TV where I look at a site that recently sold for $50k and explain what made it appealing to buyers.
A good friend of mine contacted me recently to let me know that he has had someone come to him and offer to buy his website. I have been working with this friend for some time now and he has always wondered when would someone come asking about his site.
He had seen me get one offer after another on my websites and was waiting for the same thing to happen since he was following the principles about running a website that people will want to buy. Well it finally happened. He called me up to get my advice on whether I thought the deal was a good one and whether he should take the deal.
This brings me to the purpose of this post. When do you say no to an offer? I mean the allure of getting 5 or even 6 figures for a piece of intangible digital property is very hard to overcome. If you have read my story “Striking Internet Oil” then you know that I was faced with this same issue.
I had a site that I knew had a ton of potential. I had made good progress and within one week two different people contacted me to buy my website. I thought it was strange that they both contacted me at the same time. They both gave me good 5 figure offers for the site but due to my stubbornness or my knowledge of the industry I knew I could make a lot more money if I just improved the site a little. So I turned down both offers and went to work improving. I increased the traffic and revenue on the site and within a few months one of those companies came back and offered a good 6 figure offer. Now was the time to sell.
There was another instance where I was running a different website and the site was rocking. On some days the site was making $1000 all automated income. I got an offer to buy the website. I thought, “why would I give up this amazing income for one lump sum?” So I declined the offer. The guy kept harassing me and eventually I decided to sell the site. 3 days before the deal was going to go down all of the rankings dropped on the site. I still to this day don’t know why I lost the rankings. Needless to say the guy backed out of the deal. If I would have taken the offer when he first made it I wouldn’t have lost high 6 figures.
The point is when someone makes you an offer that you can live with, even if it isn’t the best offer in the world, you take it. You just never know if or when things will change. With so few barriers to entry in the internet world, money talks. Don’t be greedy. Take a good offer when it comes.
What is a good offer? That is something you have to decide but consider this: If you run a website that you are only putting a couple of hours of your time into a week, isn’t a 10 month revenue multiple a good deal? I know this is a subjective thing where we are dealing with time and emotional investments that are hard to let go or put a price on but to quote Tom Hanks in “You’ve Got Mail” it’s not personal, it’s business. Cut those emotional attachments and move on with your life with a thicker wallet.
Figuring out how much you can sell a website for can be a tricky proposition. Much of it depends on what type of website it is. In order to maximize the amount you get for a website you should try to match some basic criteria.
Have a website that is automated. People that are buying websites want a site that doesn’t take a lot of time to run if any. They want to be able to drive traffic to the site and the site will make them money. If you are selling a physical product you will have far less interested buyers because people don’t want to take on the headache of shipping out a product and dealing with returns and inventory. It is so much easier to sell someone elses products.
Have a history of income. People that are looking to buy an established website don’t want to see a couple of months of revenue proof. They want to know that the site they are buying will continue to bring in the amount of money that it has consistently brought in for many months and then they can try to increase the revenue by increasing traffic. You won’t sell a site with no revenue history for much money.
Have a website that gets most of its traffic from places other than Google. Websites that get a lot of traffic from search engines are good but also risky for a buyer because they have the worry that you can lose rankings in an instant and the value of a site is gone. If you have a much more diverse portfolio of referring traffic this adds a lot of stability to the business and thus the value of the website increases. Don’t put all your traffic eggs in the Google basket. Google traffic is good but try to get other sources of traffic as well.
So what can you realistically expect to sell a site for? Well if you look at places like Flippa you see that sites typically can go anywhere from 8 months revenue to 18 months. I know that is quite a range but if you follow the advice outlined above you will help your website be closer to the 18 months of revenue.