How to Calculate the Price for a Website?

[alessandrop]

Hello, can you advise on how the price for a website is calculated when selling?

1. As I understand it, the website's revenue from revenue share or CPA or hybrid is considered, and what is the usual payback period for which it is multiplied? I heard that a payback period of 4-5 years is also offered. Correct me if I'm wrong, I'm new to this topic.
2. But how is the price calculated if the site is sold without accounts in the affiliate program, and also with them?

[universal4]

4-5 years is far too long of a period in this industry (or almost any other) now.

At any time income can change drastically if any one or more of the affiliate programs supplying a large portion of the revenue changes terms, goes out of business, decides to get rid of or shave affiliates more, runs into regulatory issues (100 other reasons not mentioned).

Rick
Universal4

[clientica]

Usual valuation practice:
Calculate the average income per month for the last 12 months. For example, $1,000 per month.

Average multiplier for a white site promoted by white means, without special risks: x30.

The multiplier can be increased in cases:

• When there are several different sources of income rather than one.
• When the site has different sources of traffic

When income and traffic are diversified, the multiplier can reach x45-x50

Similarly, risk factors can serve to reduce the multiplier, then the multiplier can be reduced to x15-25.

The risk factors can include:

• Uniform link profile.
• Generated content.
• Factors showing randomness of current data, for example - one big sale for 80% of revenue, one type of links, auction domain randomly fired.
• Gray staff.

[Juan Roman]

It depends on so many factors, but a 4-5 year multiplier is way too much in the current volatile climate.

Average monthly earnings over the last 12 months are usually used to set the price and 18x-24x month (1.5x-2x year) multiplier is more likely with accounts included.

[baldidiot]

Definitely less common than a few years ago, but you do still get the odd 4x-5x bagger cropping up for very profitable brandable sites that have a strong userbase (although at that level I think they tend to be part cash, part shares and part earn out). For example, if CM ever decided to sell I bet he'd easily get 5x.

But yeah, for normal sites you should probably be happy with 2 years rev at the moment.

For comparison, adsense sites are still pulling a solid 36x month multiplier (ie: three years).

[alessandrop]

got it, thanks guys