How much would you pay for a web site that averages 750,000 hits/month?

Question

Looking into purchasing a web site. The current owner says "make an offer". I want to make a fair offer but I also don't want to overpay.

A little more background:

- It's a sports related site

- Current net earnings are around $3,000/year

- The user-base for the site is strictly in the New England area

If you have an estimate, please let me know how you came up with it.

Thanks!

Answer 1

Well depends. Whats the name of the site. I want to go look at it and decide how much it is worth

Answer 2

Does 'net earnings' really count all costs including a cost figure for all personnel man-hours such as the owner's time?  Or does 'net earnings' value the owner's time at zero?  (Hint:  probably.)

If it truly counted all costs, then it shouldn't be worth more than $30K max using a cap rate of 10%.  I picked 10% as a round figure, but compare this  to money market rates or T-bills, which return less but then the return is extremely low risk and the liquidity is quite high, neither one of which is true for your web site acquisition.  

If the net earnings doesn't count all the manhours the owner spent on it, I would say the site was worth considerably less, and possibly quite close to zero.

A lot of web sites are being overvalued -- by the sellers -- because the current owners don't account for how much time they have to spend each week running it; and if they did, they'd probably learn they were paying themselves the equivalent of $1.00/hr.

Anyway, are you sure you couldn't build as good a site yourself and build up to >750k hits/month?

Answer 3

Give us the website's URL so we can confirm that their SEO metatags can draw 750,000 hits per month.  It doesn't make sense with that number of monthly hits, the net earnings for a year is a mere $3,000.