Buying a website - why do they sell?

[Dale Dough]

From what I understand, websites sell for about a year's revenue. If there was a really complex business behind it, it wouldn't be called a 'website', so it must be possible to either let it run on its own, or hire someone to do it fairly cheaply.

That means thy have to break even fairly quickly. What's the catch? How on earth can it be worth it to sell now, when the site is likely to generate 100% ROI within a year, and everything else is gravy?

[avfletch]

One of the main motivators is generating cash for a bigger project. I know Farang (I think that's his s/n, apologies if I got it wrong) is selling a couple of his sites because he wants to generate capital for bigger plans and free up some time because he's spending too long maintaining lots of smaller projects.

[Thremp]

I know you make way more money doing this if I am correct. Build a site, generate traffic and then sell it for 1-1.5 its yearly revenue in guranteed money with no work.

[Frinkenstein]

Also, Some are totally hands free websites, but most websites require time to maintain and update regularly. Some sell their websites to free up time to work on other or newer projects.

[Dale Dough]

On a second thought, after scouting the market a little bit, this appears to be the case - something like 10K/year in profit sounds nice, until you start figuring in what these 'only two hours of work per day!' amount to... I guess it's not feasible to hire someone and still make huge profits without doing any work

[DOTTT]

I was gonna start a new thread when I saw this one. I'm also interested in buying a profitable site for sale right now, but don't know what kind of questions to ask. What should I be looking for?

[BradleyT]

DOTTT,

Go to the sitepoint or digitalpoint forums and the Sites for sale section on each forum. Look through threads that have a lot of replies and see what kind of questions those people are asking.

It's usually questions like -
Can I see referrer stats
How much do you spend on advertising
How much time does it take to operate
How many of the incoming links/traffic are from your own site and will they stay

[Diecast321]

I think one years revenue is pretty cheap. I think if you realy wanted to sell a website you should figure out what the Present Value of all future cash flows is. This is how stock price/ appartment buildings, ect are figured out.

[avfletch]

[ QUOTE ]
I think one years revenue is pretty cheap. I think if you realy wanted to sell a website you should figure out what the Present Value of all future cash flows is. This is how stock price/ appartment buildings, ect are figured out.

[/ QUOTE ]

That's a lot harder to do for a website. The Internet moves so quickly that predicting its future, even just for a year is very difficult. Think of all the sites that didn't exist or were just starting out 12 months ago and the explosion some of them have seen.

[BradleyT]

There's always risk involved. Google can change their algo and all of a sudden your site is nowhere to be found and your traffic drops by 75%. A competitor can pop up that has a better site and take away a lot of your traffic.

In general though, older established sites that have been around 3-5+ years do often go for more than 1 year revenue. A lot of the sites that go for less than 1 year revenue haven't even been around 1 year to prove themselves.


However you are correct that in general they are extremely cheap for the ROI they can return compared to any other investment in the world.