Age old question - Value of a paysite
 

So you have a paysite and are looking at selling it... but how to price it?

First some quick site facts:
--------------------------
Niche : Very hot selling niche
Domain : Extremly good domain (matches the content pefectly)
Content : Non-exclusive niche content
3rd party feeds: None
Design : Tested and tried design converting like mad on mostly full month subscriptions (trials are only used on untarget traffic)
Members : Growing from typin and high target SE placements - no affiliate program (yet)
Retention : 2,5-3,0 months average (own merchant account)
Site age: 2 years
Backend : Custom made backend with tons of features, which makes the site run on auto pilot.
Affiliates : None
Profit/Cost: 75%/25%

So how to price it?

monthly gross * X months + the value of the above = price

If so, then how many months is average to the industry for a paysite such as my example?

Well, honestly it depends on whether you are trying to find the site's actual value or just an asking/selling price.


To answer your example above, however, it depends on the person you ask. Personally, I think 6 months is about right for that equation. But I would only use that equation for a ballpark figure.

Thank you EdgeXXX, I hope others will give their input :thumbsup

Would the amount of months change, if it was net?

monthly net * X months + the value of the above = price

There is no real figure. His suggestion for the 6 months is a baseline. The cheap skates will tell you it's 3 months, and the bawlas will tell you 12.

In the end it comes down to two things honestly..

What someone's willing to sell it for.

What someone's willing to pay for it.

If you do a search on GFY, you will see some people who would not consider an offer of less than 12 months (or more) in worth. Then other's who will sell their cookie cutters for 3.

There's no hard fast rule.

:Oh crap

Bingo :thumbsup. That information alone determines it's Actual Value.

Honestly, it depends on the amount of difference between the Net and Gross figures. On the average, I would say you could take that figure out to 9+ months; however, the differences in the final figures (asking price) of both equations shouldn't be too far apart.

if the domain is good enough and will continue to get type-ins I'd say up to 12months

Is 18-24 months gross unheard off?

I know some domains sell for this, when they are undeveloped... does a developed site really have less "monthly" value?

I guess the sky is always falling in adult, but buying an etablished business with 75% profit for only 18-24 months - that seams "cheap"... maybe I´m wrong?

IMHO, most people wouldn't even consider touching a deal like that. Here's why:

With the Internet still somewhat in it's infancy, things tend to develop and change VERY quickly. In Internet terms, 2yrs can be considered a lifetime. Now, let's say that you set the asking price at the equivalent of 18-24mos Gross (assuming that Net is 75% of Gross). That means that at the current profit point, it would take the buyer 24-32mos just to recoup the initial investment and "break even" (in other words, 2-3 years before they would even see a profit). To most people, the risk in this scenario is probably not worth the reward. Keep in mind, however, that certain factors and variables have the ability to greatly affect how the risk-vs-reward is viewed.


:2 cents:

Good points, and to add in, it would depend on a number of factors.

For example, someone who's selling a site of non-original reruns would not (nessesarily) get as much as someone who produce their own material. Also there is the micro niche versus hardcore, and the whole 'rights' issue.

If you were selling a paysite that was a number of years old, all of the original (produced) content, licenses, DVD, library, whatever you want to call it. Then it would be worth much more than just a rerun.

Why?

Because whomever bought it would have to right to resell the material, hence making more return on the investment. Plus you also have additional revenue streams. Atleast in theory.

If someone was selling a site of 2+ years of material, as well all their rights to the content they produced, original DV's, or library, DVD titles, and so on. I would consider a longer term asking price.

If someone was selling a rerun non-exclusive in a saturated market, they I would not consider more than a few months.

However...

I would also have to take into consideration traffic sources, revenue streams, rebills, and so forth.

To the original poster.. as you can see it's not a cut and dry formula by any means.

:2 cents:

I see, but must say that I´m learning alot from this :thumbsup

Of course not all sites are equal, but if someone from an investment point of view was buying a site with 75% profit for its 18-24 monthly gross, then its alot better than many other investments out there. After the 24-32 months, then the site should still be worth the same. However if its resale value is only worth 75%, 50% or even 25% of the orginal price, then its still a good investment, because he has made his money back doing the 24-32 months, anything beyond that is pure profit.

It might even be possible to finance the price of the site, if someone is willing to lend the money (the site doesn´t have to be the collateral), and just pay off the loan + interest with the profits from the site, and pocket the difference from day 1 :)

Are anyone buying paysites using that kind of logic?

Nope. Not all sites are. You have to consider that when using the formula from a buyer/seller perspective. If it's a micro niche, or all original, that may play into the more months, or money.

But if it's just a cookie cutter rerun of nonexclusive, getting 3 months may be a godsend.

:2 cents:

As people have said, there IS no rule that applies everywhere.
And depending on how you value your own stuff, you may never be able to sell at a price you consider fair.
Just as an example, I know I would never be able to find a "fair" deal for all of my stuff, because I would want 2-3 years of gross revenue. That seems fair to me because I know what the financial history and future is - because I've spent 12 years (offline and then online) building a brand name, dominance in a niche, customer awareness/loyalty, and traffic, and know without doubt what ballpark my income will be for the next 3-5 years. But a buyer would never be able to "justify it" to himself or his investors without that same background/knowledge/certainty.
I think the key is whether you are "personally invested" in your stuff, or whether it's just goods to be bought and sold.
Just my :2 cents:

That was more than 2 cents worth :thumbsup

As a ground rule, then every site in our portfolio is always for sale, if we receive the right offer ;) Of course the right offer is always subjective, but reading what others think their sites/network is worth gives a better idea, so thanks to eveyone how have 2 cents to add :)