I came across a website on Flippa that caught my eye - it is an a space I dabble in and had a great domain name. Before making an offer I wanted to make sure I had some actual reason to the number I threw out. I settled on the following method - averaging three different valuation methods. I figured I would share it here in case it helps someone or if someone can advise me on where it needs tweaked/offer alternatives.
Here is an example using the numbers I ran earlier:
Comparable Website Sales Valuation Method - Worth: $416.56
Comparable Website Criteria Used: Between 14 - 22 months old, Between 750-1500 unique visitors per month, Revenue between $30-$60, Net Profit Between $30-$60. (Real numbers fell roughly in the middle of these ranges)
Matching sales on Flippa (using):
website 1- $220
website 2 - $500
website 3 - $432
website 4 - $1,152
website 5 - $1,250
website 6 - $240
website 7 - $400
website 8 - $490
website 9 - $70
website 10 - $110
website 11 - $205
Per industry standards removing the highest and lowest sale to adjust for outliers (website 9 & website 5), the average comparable valuation is $416.56.
Unique Traffic Valuation Method - Worth: $2.84
1,224 unique visitors per month average (per verified Google Analytics) * $1.37 (highest cost per click bid I could find most relevant to the website's focus) * 0.17% (current average ad click rate http://www.smartinsights.com/intern...ytics/display-advertising-clickthrough-rates/) = $2.84 (thinking I may do a 36 month multiplication of this on next one)
3 Years Future Earnings Valuation Method - Worth: $1, 440.00
$40 profit claimed/verified * 36 months = $1,440.00
Averaging the three out I came up with an offer of $619.80. I would tweak this based on the quality of the domain name - in this case it was good so I left it alone. What do you guys think of this website valuation strategy?
Here is an example using the numbers I ran earlier:
Comparable Website Sales Valuation Method - Worth: $416.56
Comparable Website Criteria Used: Between 14 - 22 months old, Between 750-1500 unique visitors per month, Revenue between $30-$60, Net Profit Between $30-$60. (Real numbers fell roughly in the middle of these ranges)
Matching sales on Flippa (using):
website 1- $220
website 2 - $500
website 3 - $432
website 4 - $1,152
website 5 - $1,250
website 6 - $240
website 7 - $400
website 8 - $490
website 9 - $70
website 10 - $110
website 11 - $205
Per industry standards removing the highest and lowest sale to adjust for outliers (website 9 & website 5), the average comparable valuation is $416.56.
Unique Traffic Valuation Method - Worth: $2.84
1,224 unique visitors per month average (per verified Google Analytics) * $1.37 (highest cost per click bid I could find most relevant to the website's focus) * 0.17% (current average ad click rate http://www.smartinsights.com/intern...ytics/display-advertising-clickthrough-rates/) = $2.84 (thinking I may do a 36 month multiplication of this on next one)
3 Years Future Earnings Valuation Method - Worth: $1, 440.00
$40 profit claimed/verified * 36 months = $1,440.00
Averaging the three out I came up with an offer of $619.80. I would tweak this based on the quality of the domain name - in this case it was good so I left it alone. What do you guys think of this website valuation strategy?
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