View Poll Results: How much would you pay for a website that averaged $1K in revenue per month?

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  • Less than $3,000

    3 4.29%
  • $3,000 to $6,000

    6 8.57%
  • $6,000 to $9,000

    14 20.00%
  • $9,000 to $12,000

    15 21.43%
  • $12,000 to $15,000

    10 14.29%
  • $15,000 to $18,000

    7 10.00%
  • $18,000 to $21,000

    3 4.29%
  • $21,000 to $24,000

    4 5.71%
  • $24,000 to $27,000

    2 2.86%
  • $27,000 to $30,000

    0 0%
  • More than $30,000

    6 8.57%
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  1. #1
    MichaelCorfman's Avatar
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    Question How much would you pay for a website that averaged $1K in revenue per month?

    How much would you pay for a website that averaged $1K in revenue per month?

    Let's assume the revenue is from a number of players, that the revenue has been pretty steady for the past year, that the traffic to the website is based on organic traffic that you would expect to continue, and that the revenue is based on a natural turnover of old players and new players signing up, and that a few hours of labor a week will keep the site running well.

    Besides voting in the poll, share the factors you think are important in deciding a value you would pay for a site.

    Michael
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  2. #2
    DanHorvat's Avatar
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    Since the revenue has been steady for the past year, I'd value the site at more than 30k, probably even 40k. That would mean three years before I start getting return on my investment, and that's perfectly fine. If we assume I pay 36k, and am capable of bringing the average up to $1200 with just one minor improvement of the site, I'm out in 30 months. That's not too bad.

  3. #3
    FictionNet is offline Closed by Request
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    I voted less than $3k in error. Please delete that vote.

  4. #4
    MichaelCorfman's Avatar
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    Quote Originally Posted by FictionNet View Post
    I voted less than $3k in error. Please delete that vote.
    I don't think there is a way to actually remove a vote in a way that would let you cast a revised vote. If you send me a pm of how you would like to change your vote, however, I would be happy to make that change for you.

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  5. #5
    FictionNet is offline Closed by Request
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    No worries. Based on two year revenue, I'd value it at $24,000, plus any assets. I wouldn't sell for less, but I'd attempt to buy for less.

    ETA: including associated affy accounts
    Last edited by FictionNet; 30 October 2013 at 5:14 pm.

  6. #6
    Simmo! is offline Public Member
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    The problem with buying any website from someone you don't have any background on is that there are two many unknowns and potentially too much risk. The main one is, how is that website ranking? If it is on links, then it's position is tenuous. These days, the projected value going forward is in the knowledge and the authority a site demonstrates, not the history, in my opinion.
    Last edited by Simmo!; 30 October 2013 at 5:04 pm.

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  8. #7
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    18K depending on what else the site has going for it. I would stick to 1.5 X Gross Revenue given that they have been in business for a few years and showing growth.

  9. #8
    MichaelCorfman's Avatar
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    Quote Originally Posted by FictionNet View Post
    No worries. Based on two year revenue, I'd value it at $24,000, plus any assets. I wouldn't sell for less, but I'd attempt to buy for less.
    Since you said plus assets, and since $24K was exactly at the boundary between two choices, I changed your vote to the range $24K-$27K.

    Michael
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  11. #9
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    There are too many x factors here. The site might be averaging $1,000 per month, but how long has the affiliate been building the player database, and is the affiliate account being sold with it? What sort of marketing, seo and link building strategies have been utilized, and will they harm the site in the long run? Is the $1,000 from this site only, or from a collection of other sites that might drive traffic to this site? Will the traffic to this site stop after I buy it because the affiliate is no longer directing traffic to it from other sites, has changed some 301's or stopped a ppc campaign. What market is the site built for, and do I have enough visitors from that market to make the site profitable for me? Too many variables
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  13. #10
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    Quote Originally Posted by MichaelCorfman View Post
    share the factors you think are important in deciding a value you would pay for a site.
    My point of view, that this factors is:


    1.) Traffic Source (1k$/mo from organic search or 1k$/mo from forum community -
    this is big difference. In first case, income more volatility).


    2.) Targeting visitors/markets. Gambling law and rules change very often. Site that generate $1к/mo and targeting for one language/country/jurisdiction must be cheaper, then site that genetate $1k/mo from players from different countries.


    For example, we have two sites. Site #1 and site #2. They both generate $1k/mo.
    But first site - targeting for UK visitors. Site #2 targeting for Russia & CIS Countries.
    And in case #2, you may wake up at the morning, and see, that your providers blocked your site by goverment decision. One moment, and you lost all.


    3.) Players base and affiliate programs. For example if you have 100 real money players in Mainstreet Affiliates or 100 real money players in Asian-based program like Dafa888 or Bodog88 - i think this is big difference too. In first case you recive your 40% from players net revenue without any conditions. In second case, Dafa888 block your payment if you sent them less than 5RFD/month. And doesn't matter if your players genetarate good revenue at this month. If you sent only 4RFD they block your payments.


    4.) Gambling Affiliate Union Membership. If your site member of GPWA/AGD/CAP i think this must increase price too, becouse this organisation try to help you, if you have problem with affiliate program.


    5.) Brands, that your site advertises.


    6.) Most important - you site must be simple. Last year i sold one of my site. This site use wordpress, but i am change wordpress theme and admin area for myself. For me this was very easy, to manage this site, but for another people this was very difficult. This was are main argument from buyer, to decrease price.
    Last edited by Moonlight Cat; 30 October 2013 at 7:10 pm.

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  15. #11
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    As already mentioned by other users it is hard to decide. There are many factors that are important in answering this question. I think the previous users mentioned them already.

    I've never bought a site in the past. But if I had all factors and they would satisfy me I would be prepared to pay up to 20k for a website.
    In the poll I voted 15k to 18k.

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  17. #12
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    I voted 18-21 but it depends on a lot of factors.

  18. #13
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    I suppose it would depend on a number of factors and what valuation approached you used.

    Income valuations could be used, but you could also use the balance sheet values.

    The real way to do it would be to produce a Net Present Value of future cashflow calculation at the appropriate discount factor, but no-ones got time for that ****.

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  20. #14
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    Although you tried to give us a lot of info Michael - it's still a very open question.

    Revenue of $1K is tiny, and using the likely 80/20 distribution of income you might find that it is driven by as few as 1 or 2 main players. These players will not go on losing at the same place forever.

    Typically, internet gambling affiliate websites are rated very low on the earnings price multiple, because :
    1/ there are almost no barriers to entry for competition,
    2/ there is always possible risk of legislative change,
    3/ gaming partners can stop trading, or close down
    4/ existing player streams do wind down.

    Depending on the niche, I am sure we could all think of a dozen specific events or situations that could negatively effect revenues, ranging from another UIGEA event, UK tax hikes, a partner failure like FullTilt, or even basic things like a penguin 2.x penalty to lose Serps.

    This means that a number of something like 6-12 x monthly GROSS PROFIT (not revenue but PROFIT after costs but before wages) is often seen as fair value for a website that has not made a significant name for itself ... and at $1K revenue this is a small website.

    IF we assume no PPC campaigns, but some basic hosting costs and a gross profit of $900 per month then a figure of $8K to $9K is reached.

    If that sounds absurdly low (and I agree it is not high) then be aware that MANY real world bricks and mortar businesses such as restaurants and cafes will trade at around 12 months PROFIT plus stock and assets. Just look in any business broking advert in the classifieds to see just how little money small enterprises are sold for.

    Now if the website can grow - if it can span multiple channels - and be earning $1K+ at multiple partners - and establish itself with good ongoing traffic - and (probably) be incorporated as a company then it has a stronger economic base and may command prices at the higher end of the valuation spectrum.

    Even so ... those 4 key risk factors are always going to be there for internet gambling affiliate websites ... so I do not see a time when they will ever be traded at the P/E multiples that you hear bandied about for the big tech stocks.
    Last edited by TheGooner; 31 October 2013 at 5:42 pm. Reason: spelling

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  22. #15
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    I would pay for 18 months of revenue. With any business it is just the revenue of the business times some valuation factor. With this being somewhat of a business that is hard to enter, I think that extra 6 months of revenue is justified. Since the revenue is steady you do not have to factor in any growth rate, but if revenue grew by say 10% year over year you have to include that in your valuatiuon as well.

    The tricky part to valueing any business is the factor you multiply revenue by. In other businesses you can find an industry average of the factor to multiply by provided by Standard and Poors or Dun and Bradstreet or other financial firms . Some are as low as 1 but in some businesses with high barriers to entry that factor can be as high as 10. The average across all businesses is about 3 years of revenue.

    I think our business deserves a factor of 3 or higher but unfortunalty it is somewhat of a "weird" business which many people do not understand. With the amount of time required to be successful and the expertise required to rank well, I think it deserves a higher valuation. Unfortunatly there are not buyers out there that understand the business and hence the valuation gets lowered.
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  24. #16
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    A lot of unknowns to accurately price, but taking the volatility of the internet, search engines, etc, into account, I'd be inclined to pay in the $9k to $12k range. It does depend on a lot of other factors though so this may be well over of well under depending.

  25. #17
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    UltimatePokerBonus has some very good advice, but I'm not sure you can even get an accurate valuation unless it were from the affiliate programs themselves. Then considering that the drop off of income most aging players show makes this business opposite of most industries where you would retain customers. So that's where I would start assuming I could.

    I could be wrong, but both my numbers and what others have said, the majority of casino players do most of their lifetime spending with you over just a few months before either finding a new site, with a different aff behind it, or giving up gambling altogether. I think this would place the valuation of a casino and game based operations lower than the poker and finance niche when factoring.

    Since, as TheGooner states, most of the income is probably tied up with only a few players even though a steady steam has been delivered as per the OP.

    Quote Originally Posted by TheGooner View Post
    Typically, internet gambling affiliate websites are rated very low on the earnings price multiple, because :
    1/ there are almost no barriers to entry for competition,
    2/ there is always possible risk of legislative change,
    3/ gaming partners can stop trading, or close down
    4/ existing player streams do wind down.
    "I would probably pay 6k at most" is my short answer, with its history of linking and trust level being the primary deciding factor.

  26. #18
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    Really depends on the site. I gave it the benefit of the doubt and voted $9k to $12k but there are lots of factors that would negatively affect that price - including whether or not any links have been sold on the site, the quality of the content, how likely it is to get penalised and so on.

    Something else to consider is where it's getting its backlinks from - if they all come from sites the seller owns, are those links staying in place or will they be removed, potentially destroying the sites rankings. And if they are staying, how much is the cost? Similarly if the site has a bunch of paid links pointing at it, what will they cost to maintain?
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  27. #19
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    Would you prefer to buy a site with good volume of high quality traffic with poor revenue but great potential?

    I think I would prefer to pay for a site that could grow and expand, rather than a site with a relatively small steady income.

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  29. #20
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    As many have said here it is depending on many factors but the risk assessment - what is the risk of losing the revenue in the coming months.
    For an online business I think 12 - 18 month's revenue is the optimal amount of money I would give for a website. As you all know in a few months one can easily lose more than 90% of the revenue.
    Personally I would go for something in between 12 - 18 months revenue depending on the risk of losing the revenue in the first 6 months.

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