Member Avatar for Lumpynumbnuts

I am interested in buying websites.

However, from my search, there are so many sites for sale out there with a lot of sellers asking way too much for their sites. Some of these sites do not even have any history of revenues. The sellers are so enamoured with their sites that they have this magic number they want for it. Any good business transaction only results in a fair price that works for the buyer and seller. It's not a one way street!

I am only looking at buying established websites with a history of reveneues.

My question is: Is there a standardized formula in deteremining a fair price to pay for a website that has some history of revenues?

Some people say, to project 1 year of gross revenues, others say 2 or even 3??? Most sites for sale now only have a few months of established revenues. My business experience would tell me that that based on only a few months of revenues, a fair price would only be 1 year's projected earnings.

Any one here has any input into this?

Thanks,

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A practical way to think about this — and the clearest reply to — is that there is no single universal “formula,” but there is a repeatable framework buyers use to turn reported numbers into a fair price. Valuation should be driven by normalized profit and risk, not raw gross receipts or a seller’s sentimental “magic number.”

Start by calculating Seller’s Discretionary Earnings (SDE): take the business’s true operating profit and add back owner salary, one-time expenses, non-cash charges, and any personal costs run through the site. This gives the recurring cash the buyer can expect to own going forward.

Common add-backs to check:

  • Owner wages or draws
  • One-off development or marketing spends
  • Personal expenses on business accounts
  • Depreciation and interest
  • Non-recurring legal or startup costs

Pick a multiple that reflects risk and growth prospects rather than applying a fixed multiplier to top-line revenue. Factors that raise the multiple: recurring/contract revenue, diversified traffic and monetization, strong margins, low owner dependence, and proprietary assets (domain, trademarks, code, patents as hinted). Factors that lower it: single traffic source, thin margins, seasonal swings, heavy owner involvement, or unresolved legal/affiliate issues.

Due diligence must verify claims. Request original merchant/processor statements, hosting and analytics access, tax returns, affiliate/Ad account records, refund/chargeback history, and a list of key dependencies. Protect the buyer with escrow, an earnout or holdback tied to verified performance, and clear transfer of accounts and IP.

Practical workflow: obtain verified financials and traffic history, compute normalized SDE, assess qualitative risk items, choose a risk-adjusted multiple or use a DCF for larger deals, then structure payment with protections (escrow/earnout/non-compete). If unsure, use a specialist broker or accountant to validate numbers and handle transfer details.

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Member Avatar for Johnathan

This is one of the age old questions. Where to start. I would start with what do they do and is it going to be profitable for you. How complicated is the site? ie. shopping cart, php, html, database and such. I guess as a business owner we use our site as a test project for new recruits but if we sold our site we would sell based on many different factors such as patent rights. We cant patent the .com but the name hopeful pc is patented so then the value would go up because your buying a business not a site. I would if I were buying take the time of activity and do it in 6 month chunks, ie. 6months = 1 year.

Member Avatar for ithelp

It is 10-12 months of revenue unless it is a short/ one word dictionary domain.

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