How do you value your site? What's it REALLY worth?

So, I've had some folks ask me (some more legitimate than others) if I'd be interested in selling one of my sites. Even though I wasn't looking to sell, I thought that I'd entertain the idea and see what I'd get as an offer.

But, when I was asked...."How much do you want for it?", I didn't know how to answer. You see, I have put A LOT of hours into this site and I cannot ever get the equivalent of that time spent, I understand that. But, with the site making money, am I supposed to take 2 years worth of revenue based on the current monthly revenue? Is there another formula to how to place a value to my site?

We've all clicked on those "what's my site worth" tools and had various and inconsistent outputs. I've had anywhere from $3500 to over $10,000 in recent checks of those tools.

So, how do we know what our sites are really worth?

 

I think to us, as the creators and administrators of our sites, they are invaluable. I wouldn't ever sell my site unless it died and I had no interest in reviving it. In this situation, not too many people would be interested in buying it - but if they are, I'll give it a shot. It would have to be some overwhelming amount that makes my jaw drop and doesn't give me time to think twice. :p

Nobody can run my forums like I do so I wouldn't even sell it to somebody if we agreed (via a legally-binding contract) that they would manage the site to the best of their ability, attempting to keep it alive. I feel like it is my duty and responsibility to my members to keep the site going the way they are used to it and the way they want.

So my sites are priceless, in all honesty.

 

I don't think I've ever valued my site. Infact, nowadays my site is redundant. Normally, I'll stick around with a community for 3 years (community being my site) and leave when I accomplished whatever I wanted to do.

My previous site had a little over 30 thousand members with atleast double of that pruned due to inactivity. one day I had enough and closed it down. Granted, it's not the best way to operate but then I'm not your average admin/owner that values a site like maybe somebody values an object.

 

The financial value of a website should not matter. The personal and community values, however, should.

 

This is about the best response I could have given. Very well put, Nick.


P.S. Those "how much is your site worth" websites are extremely inaccurate and far-fetched. They will most likely give you "false hope".

 

To me my site is priceless, I know that sounds corny but I really do enjoy having the site and the people on it. Yeah sometimes I get frustrated with it most when dealing with member issues but I still stick with it.

I don't think I could ever sell the site if I had to step away for one reason or another I'd probably just hand it over to my co-admins.

 

Valuing for a sale is always an interesting question. I'll apply my business degrees & background, maybe some concepts will be useful.

First principal of selling anything
It is worth what the market says it is worth. That is, what someone else is willing to pay for it.
What you paid for it or put into it is irrelevant to the selling price. The buyer decides what it is worth to them.

Why: The buyer may not give the same value to features that the current owner does. An example is a house with an expensive built-in sound system. The seller may want to add to the price of the house on that account. But buyers may think the sound system is nice, but not necessary, and are not willing to pay any more than they would for a comparable property without the sound system. If the seller insists on a higher price the property doesn't sell, the buyers buy better-priced comparables instead. If that's the way all the buyers feel then the sound system may help the house sell before the comparables, but it won't add to what the seller can get for it.

(These days a lot of people trying to sell a house are finding out that what they paid for it has nothing to do with what they can get now.)


So what does the market say it's worth?
To know that you must have data from recent buying/selling of comparable properties. That's why real estate people are so diligent about published record-keeping of all property sales. This is probably a tough issue with forum sales - is there an accurate and available record of sales anywhere?

If there is no market data to go by, what's it worth?
Back to the beginning - What a buyer will pay for it. What basis are they willing to use to settle on a price? The two years of income sound like a good start.

The other side of the question is, at what price is the seller willing to sell? I know what price I would NOT take for my forum because the income over the next several years is worth more to me. In terms of income I am looking well past 2 years - do I want to be without that income stream in 4 or 5 years (assuming I keep it running and productive?) As the seller, think ahead, long horizon! Do you believe the forum will be productive in 5 years, in 8 years, and would it be enough to be important to you if you still had it at that time?

A market = buyer & seller agree on price and sale takes place; so whatever one side is willing to give or take, the other side has to be willing to go forward at that price, otherwise it isn't a market price

What is the income from your forum?
This answer is not as obvious as it first sounds. My forum has a seasonal income trend, it doesn't make the same amount every month. I'd like to see income growth over a stated number of months and years. And, is income from paying members, advertising, both? Does it come in regular monthly amounts, or occasional big chunks from advertising sales, or ... ?

There is a concept called "run rate" in businesses (some people claim the term is out of fashion but I like it anyway.) The run rate is the base periodic amount (usually monthly) that the income doesn't go below. Whatever the run rate yields yearly is what someone can count on for annual income (if they keep the business going as is.) If the monthly income each month for several months was 1500 1200 1600 1000 1100 1000 then the monthly run rate is 1000, and 1000 x 12 = the yearly run rate. Seasonal or occasional increases, if they have been regular over time, can adjust the run rate (with a footnote as to when those $ are to be expected.) And, is the run rate growing or decreasing over time? (There are mathematical techniques to calculate that if the income stream is 'bouncey,' doesn't steadily increase or decrease.)

Oh and by the way, what is the definition of income?
Be clear about this to yourself - are you thinking just the incoming revenue, or the revenue less the cost? That is, the profit, if there is one. Business analysts look at run rate in terms of revenue and cost separately, and together as profit/loss (= income to some people.)

So ... for the 3rd time, what is the forum worth, what price do I ask?
If there is no market data and no comparables offered for sale, you have a classic sales job. Whatever amount you decide you would give it up for, you can make a case for that value to interested parties using data such as the income you've been able to count on, growth over the past _ years/months, that sort of stuff.


So that's a lot of information without a real answer as to what your forum is worth. Hope it helps.

If you wanted to pm me I would be glad to take a quick look at numbers for you and make some suggestions. That is, ideas for you to consider, I could not tell you what is right for you.

 

Wow, Mary - excellent post!

 

Mary, I appreciate the time that you took to post. I'm getting ready for work, but noticed the response to this thread and just had to say thanks. I'll read it in detail later and probably send you a PM as well

Just to clarify, I am not looking to sell my site(s), but have been approached by some folks that 'seem' to be very interested, so I just want to be prepared for it.

 

How much my site is worth depends on how much time I have put into it. And that also includes promotion time.

Over the past 2 years I have posted over 320 videos on youtube to promote my forum. The amount of time and effort that took would be difficult to determine. But all of that time would be included in the price. If they want the actual videos, that would be extra.

 

Fantastic post, I really enjoyed reading this.

I am saving this to my computer to refer to if I ever decide to sell anything. This does not only apply to selling forums, but as you used as examples, homes or any other valuable.

Thanks SO much for taking the time to write such an informative post...

 

That is about as far as I got back in college before switching degrees.

Anyhow, very good post:thumbup:

 

You can buy a forum, but buying the community is a different matter. You buy the code I've written, the database, hosting and domain name, sure. The intermember relationships I've forged? You might rebuild that with time, effort, and cash, or at least something approximating it, but I think if you're the sort of person to put a simple dollar value on a forum, you're not going to be the sort of person who considers what an investment that is.

 

On Sitepoint's marketplace, at least, the rule of thumb seems to be 10x average monthly income, but that doesn't take into account the intangibles 3phase mentioned.

 

It wouldn't feel right just giving up a forum for money. You should only sell if you either don't have time for your community or don't enjoy it anymore.

 

Exactly right about the monetary value of the forum you describe being greater than the cost. This is why the value of what it cost to assemble, including someone's time, isn't the market value of the forum. I used an example of the home with the built-in sound system where an add-on wasn't necessarily worth what the seller might hope. But your example is even better, the value to you and to the next owner of the intrinsics you worked hard to develop. In your case very possibly the actual cost does not begin to reflect the the much greater value to the owner going forward. That is called building value, and building a business. It's the whole point of enterprise.

There's a larger dynamic to enterprise than investing dollars and hard work. It's creating value - and that comes from creating energy and relationships. Monetizing that is what makes great fortunes. As did Bill Gates, Warren Buffet, Andrew Carnegie, Henry Ford ... Whatever criticisms people have of them, they created something greater than the inputs they used. Not everyone could have done that, or has done that, with the same inputs.

Special people of great energy and insight are what make enterprises of far more significance than their inputs. Not all such special people are rewarded monetarily as they might be. That's a further next step they must have special energy and insight to achieve.

 

Yes, in an ideal world that would be so, but even forum owners need to eat.

 

Excellent post, I agree with all of the points.
And if for some reason I would have to step-down from my admin position I would just leave the site to the rest of the staff by up-ranking some of them.

 

I have seen so many active forums sold to bigger companies and go to crap, the administration of a forum differs and sometimes members cannot handle the change.

We would never sell our forums, we intend to keep them until were old and grey and give our children them when theyre older

 

Passing the ownership on, generation to generation.