Writing for Your Wealth

Let’s wrap up our short series on buying websites by talking about money. Specifically, how much should you offer for an established website? After all, you don’t want to make a mistake, overpay, and flush your money down the porcelain depository.

Fortunately, this probably isn’t as much of a concern as you might think.

The first two sites I bought were mistakes. They were mistakes because I wasn’t knowledgeable on–or even interested in–the niches. But I still made my money back, just from holding them, doing a few hours of work, and then selling them about a year later for more than I’d purchased them for. (I’d actually made my money back before I even sold them.)

I hadn’t set out to be a site flipper, but sometimes that’s what happens when you lose interest in a site or topic. My point is that even if you screw up (i.e. pay too much or get into a niche that isn’t right for you), it can still turn out to be a profitable experience.

As long as you buy an established content site with incoming links and search engine traffic, you’re probably not going to lose your investment moola. Unless you buy the site and then abandon it completely, it’s mostly just a matter of how long it will take to make your money back. Of course, the less you can get the site for, the sooner you’ll reach that break even point.

So, what’s a fair amount to offer? What’s a site worth?

Ultimately a site is worth whatever someone is willing to pay for it, but the industry does have a few formulas that might guide you in making an offer.

Industry Formulas

The folks who buy sites regularly will often quote 10x to 12x monthly profits. A savvy seller with a good content site will usually hold out for more, and rightfully so. For an established, original content site, 18x to 24x monthly profits is not uncommon.

Of course, if you can find a motivated seller who needs cash and is tired of working on the site (and maybe hasn’t updated for a while), you could get it for significantly less (this is more likely to happen when you’re out there looking for sites rather than simply shopping on auction forums).

These rules are pretty loose and don’t cover everything. For example, how would you make an offer for a site that isn’t currently monetized (but could be)? Or what if the site is under-monetized and you know that simply shifting ads about would double the monthly income? How much would you offer then?

Other factors to consider in valuing a site:

• Monthly Traffic — Search engine traffic is particularly desirable.
• RSS Subscribers (for blogs) — I wouldn’t put a lot of weight on this, as existing readers can actually be a hindrance. If they’re there because they like the current blogger’s writing style, they might bail when a new writer comes on board.
• Domain Age — The older a site, the better, because it’s more likely to be considered an authority by the search engines. A 10-year-old site probably isn’t worth 10 times more than a one-year-old site, but age does increase value.
• Links — The more links pointing to a site, the better. In particular, old, aged links are highly valuable.
• Good Domain Name — Keyword-rich domain names are great. If you’re buying a site, a “brand” type domain name probably isn’t going to be as ideal (another case where folks loyal to the brand may be irked when a new owner/writer takes over), and something like someone’s name dot com is horrible.
• A Niche You’re Interested in — This “factor” doesn’t come up a lot when talking official site valuation considerations, but it’s worth mentioning. If a site is right up your alley–you know you’ll enjoy writing for it and marketing it–it makes sense to pay more than you might for a site you’re just going to flip or hand off to another writer.

How much are each of these factors worth? It’s hard to say (there probably aren’t any hard and fast formulas out there), but they’re definitely worth considering, especially when you’re dealing with a site that isn’t currently monetized. Valuing a site by its Google Adsense revenue can make things simple, but some of the best deals will come in the form of sites that aren’t easy to put a price tag on.

Sometimes, you just have to go with your gut.

Now, good luck and good site buying!

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