Day in and day out, people consider the pros and cons of selling their website. Those who decide to move forward will have many questions on their mind, including the basics of getting started. Although no two website sales are the same, there are some basic tips you can follow to put yourself on the right track.
Before we get into the finer details of how to sell your website, there is something you need to know: some online properties are easier to sell than others. Buyers are looking for certain things when shopping for a website, including but not limited to: revenue, profit, history, niche, and of course, the asking price. Even if you think you have a gem on your hands, your website is only as valuable as the market dictates.
Tips for Selling Your Website
Now that you understand what you are getting into, let’s take a closer look at some of the best practices for selling a website.
1. Do your homework upfront.
Before your website ever hits the open market, you should do all the background work that will eventually be required of you. This includes everything from collecting revenue proof to digging up traffic stats. The more information and data you get your hands on upfront, the less stress you will face as the sales process begins.
2. Reach out to potential buyers.
Whether or not this works will depend largely on the type of site you are selling. If you have a valuable site in a popular niche, such as tech or finance, you may find that there are many buyers who are willing to hear you out. Reaching out and letting them know your site will be on for sale on Flippa can be a quick way to drum up interest.
3. Start your Flippa auction.
When it comes to the top platform for buying and selling websites, you don’t have to look any further than Flippa. Flippa attracts a large audience, meaning that a website that may not receive much attention elsewhere could quickly sell at a fair price. In the past, I have sold several websites on Flippa. One experience in particular sticks out in my mind. After speaking with several private buyers, none appeared serious enough to pursue. Upon listing my website on Flippa, a seven day auction, the bids began to roll in. After two days on the market, bids had already exceeded my highest offer from a private buyer.
Remember, you can always set a buy it now (BIN) and/or reserve price to ensure that you are not required to sell for less than what you want.
4. Set a fair price backed up by hard data.
In your mind, your website may be the best thing going. But you have to think about things from the perspective of the buyer. Is your price truly fair when compared to past sales? If you believe the answer to be yes, make sure you can back this up with hard data and facts. With a Flippa auction, for example, you have the ability to provide as much information as you want. If you set a BIN, this is your time to shine. Show potential buyers why your website is worth what you are asking. Don’t have a BIN in place? In this case, you should still provide as much information and data as possible. This will give buyers peace of mind as they consider making a bid.
5. Be responsive.
It does not matter how you are selling your website, when somebody shows interest you need to respect their time. This means answering all their questions, no matter what they may be, while also providing additional customer service that can increase your chance of a sale. An action packed Flippa auction could include hundreds of comments and just as many private messages. The last thing you want to do is list your website for sale and then go under a rock until the final day of action. By staying responsive throughout, you will greatly increase your chance of a sale.
6. Do your research.
Are you selling an established site? How about a starter site? Even if you aren’t selling through Flippa, you can still use the service to learn more about past sales. Search through the just sold section, paying close attention to the selling price and comments. From there, compare the site that sold to the one you are selling. Be honest as you compare details such as revenue and traffic. With a head to head comparison, you can get a good feel for where to price your website and what you can honestly expect to sell your property for. Remember: even if two sites are similar, it does not mean they will sell for the same price.
7. Be patient.
It is safe to say you have a selling price in mind from the first day your website is for sale. Wouldn’t it be great if you were offered this number on day one? While this can happen, don’t expect to get this lucky. You should exercise patience, knowing that it can take time to find the perfect buyer. If you are selling via a Flippa auction, you can set the number of days it will last. If nothing else, this will give you a clear idea of how long you will wait to see how much (or if) your website sells for.
By following the seven tips above, you will greatly increase your chance of selling your website. There is a lot that goes into this process, so don’t get discouraged along the way. If you have any questions, please let me know in the comment section below. There are plenty of readers, along with myself, who are more than willing to help.
Content provided by Chris Bibey.
How much do I sell my website for?
Whether you’re selling your hobby site or a bigger business with an established revenue stream, the price tag that you put on it is possibly the most important decision that you need to make. Price it too high and it won’t sell, price it too low and you’ll walk away with less than you could have.
Whilst a large number of very different valuation methodologies exist, arguably the most widely accepted methodology in the industry of buying and selling established websites is applying a multiple to the site’s Net Revenue (or to be more accurate – to Seller’s Discretionary Earnings) to determine its market value.
This approach works well in principle, but what it doesn’t account for is that websites tend to sell for anywhere from less than 1 year of net revenue to over 4 years, meaning that determining the right multiple to apply to your property can be a challenge on its own right.
Determining the “correct” multiple can be rather tricky, but the easiest and possibly most accurate way is by comparing it against other sites that have recently sold.
Whilst this can be a little bit complicated, mainly because sale details (especially at the higher end) are rarely public, you can usually get a good ballpark-idea by taking a look around at public marketplaces such as Flippa itself, as well as looking at the asking prices of brokered sites. Just make sure not to confuse asking prices to selling prices – more often than not, the difference between the two tends to be as much as 10 – 30%, depending on the broker and their pricing strategy.
Compare Apples to Apples
When comparing your web business to other businesses that have recently sold, it’s important to make sure that the two businesses that you’re comparing are indeed similar to each other. The key areas to look for when determining such similarity, beyond traffic and revenue, are:
History – do the two businesses have a similar level of history? A site that was established a mere 6 months ago will always sell for less than one that has been operating for several years or more.
Stability – Do the sites show similar stability levels? Stable (or growing) revenue and traffic always add to the valuation.
Sustainability – Are the business models of the two sites equally sustainable? Sites that depend overly on third parties or carry any other risks to their sustainability tend to be valued at much less than those that enjoy varied traffic sources and are likely to stay profitable for years to come.
Niche and Market – Investors always prefer “clean” niches and markets that are evergreen in nature. In cases where a website operates in a generally unattractive niche (some examples are adult-related sites and gambling sites), or an industry that tends to change rapidly (such as SEO, internet marketing or other industries that have an unknown future), the valuation is always going to be lower.
Barrier to Entry – Is it easy or difficult for potential competitors to enter the industry and take over some or all of the market share of the site?
Owner Operations – Do the compared businesses require the same level of hours and skills from its owner? Needless to say, a business that requires its owner to perform sales 40 hours per week will be valued at a much lower multiple than one that is nearly passive and only requires minor management and monitoring to be done.
Bear in mind that the above list is merely a generalization. There are many more metrics that need to be taken into account, but the above should get you started nicely.
Common Myth: Start High to Gauge Interest
One of the worst suggestions that I keep hearing from sellers of web properties goes along the lines of: “Let’s start the listing at a high price and see if there’s any traction. If not then we can always lower the price later”.
Whilst an approach like this appears logical at first, it would only be true if we had an extremely large number of potential buyers to target.
Unfortunately, we’re operating in a relatively small industry where every eyeball counts, and therefore it’s crucially important to bear in mind that your listing needs to be attractive from the moment it’s launched, and that’s simply because the majority of buyers will only give you one chance.
This has to do more with human psychology than logics, though. While logics would say that it would be unwise for a buyer not to take another look at a listing when its price is reduced, the reality tends to be different. Buyers often completely ignore such price reductions for two primary reasons:
1) “I’ve already looked at this listing”
Most buyers look at a large number of listings daily. When they encounter your listing (with a reduced price), the first thing that crosses their mind is that they’ve already looked at your listing, and decided to pass for some reason. They won’t remember that the reason was the price, but rather that there was a reason – and therefore you will often fail to get a “second chance”.
2) “Something must me wrong
Bearing in mind that many buyers are also fairly new in the industry, they tend to trust the marketplace dynamics when making purchase decisions.
If the market appears to have a lot of interest towards your listing then it must mean that your listing is good/attractive. Similarly, if the market seems quiet then it must mean that something is wrong.
Because of this, lowering the asking price during the listing process often makes buyers believe that the market wasn’t interested enough in your listing at first, as well as giving them the impression that the price reduction may have been carried out as a “desperation move”, making them move on and not take a closer look at your site.
Prior Investments in Valuations
One concept that many sellers, especially those who are in the process of selling off their main business, often need to be reminded of is that any historical investments are irrelevant, as long as they don’t contribute to the site’s current revenue.
Over the years I’ve had a number of sellers tell me how there is no chance they would sell their business for less than $X, simply because of the amount of money (or time) that they have invested in it.
This is perfectly understandable. After all, who would want to sell their business at a loss. But unfortunately, this isn’t how buyers see it.
The harsh reality is that a typical buyer isn’t at all interested in how much time or money has been invested in the business previously – the only things that they care about are how much the business is profiting today and what are its future prospects, rendering the investment amount completely irrelevant when it comes to valuating the asset.
The simplest way to look at it is to always remember that what’s done is done. Similarly to having won a lottery 50 times in a row won’t increase your chances of winning again tomorrow, the amount that you’ve invested into building your business won’t increase its value unless the investment is clearly reflected in the site’s profit or has after-market value of its own.
Value Beyond Profit Multiple
Another aspect that is often misunderstood is when to apply value beyond the profit multiple. Many sellers understand the concept of profit multiples well, but tend to believe that their property is worth more than the multiple, due to some additional “assets” that it comes with.
This isn’t entirely wrong on its own. In cases where there are real, tangible assets, that have value of their own, it’s appropriate to add such value to the overall valuation of the business. But it’s dangerously easy to go wrong in distinguishing whether such additional value really exists or not. To give you an example, some assets that do have independent value are:
- Premium domain name (if it can be sold on its own)
- Tools & Supplies that have an after-market value
It’s however rarely the case that any of the above apply to an online business. More often, we see an “asset” list consisting primarily of things like:
- A large mailing list
- A Twitter profile with a high number of followers
- A bespoke technical platform, made specifically for the site
While it may seem that the items in the above list, albeit intangible, are true assets and should add value, the reality is different. None of these items should be added to the valuation figure, simply because the value that they have is already reflected on the overall Profit & Loss statement.
Let’s take the large Twitter account or Facebook page as an example. As a seller, you would (rightly) claim that social media account is a valuable asset, simply because it helps the web property generate significant revenue. But there are two additional aspects that need to be taken into consideration:
1) Does the social media profile in question already generate revenue?
If the answer to this question is yes, then the value of the Twitter profile would already be reflected in the overall valuation, by applying a revenue multiple to the proceeds that originate from the Twitter profile. This means that adding separate value to the Twitter account would result in double-counting.
If the answer is no, then the first question each buyer will ask is why would the Twitter profile be worth anything if the seller has failed to monetise it so far?
2) Would the social media account have value on its own?
Odds are that, without the website to go with it, the Twitter account or Facebook page would have either no or very little value itself. This is the key distinction between something like this, and a true asset, such as a PC or a room full of inventory, due to the fact that the latter can be easily liquidated separately from the main asset if needed.
The valuation of web businesses is a difficult topic, and one that different people will always approach differently. The above should, however, give you a good starting point when considering listing your business for sale.
Let us know of your own thoughts with regards to valuations in the comments section below, and feel free to ask me any questions that you may have.
Flippa 101 is a series of articles on how to get the most out of Flippa. Check out the previous article on pre-sale preparation.
Conducting an auction properly gives you the opportunity to improve the final auction price and set up a smooth transition of the business to the buyer.
Buyers are more likely to bid and bid higher if they trust the seller.
- Be honest and transparent. Provide clear, factual answers to questions.
- Monitor messages and comments closely so that you can answer as quickly as possible. If you provide fast responses during the auction buyers will trust you to be timely and helpful after the auction.
- Be completely professional. Always respond graciously even when questions are repeated, uninformed or rude.
- Responding to private messages is an opportunity to build relationship with potential buyers. This personal messaging can increase a buyer’s desire to do business with you.
- Keep all communication on Flippa. While users may ask to talk on email or services like Skype, this means Flippa’s support team won’t be able to monitor communication or check back if something happens during the auction or the transfer of ownership.
The first time a person makes a bid, you will have an opportunity to approve the bidder. It is a good idea to look at the profile of each bidder before you accept or reject them. Their profile reveals their history on Flippa.
Note, you will not be able to see the amount of a new bidder’s bid until you’ve accepted them. After you accept them, they can make future bids on the auction without any action on your part.
You may send a private message to anyone who has bid on your auction. It is good practice to send an initial message thanking them for the bid and offering to answer any specific questions they may have.
Keeping Buyers Engaged
Sellers that stay active during the auction attract more bidders and come away with a higher price.
Tips for engaging in the auction:
- Add attachments showing updated sales and traffic information.
- Comment on the auction providing additional information or clarification.
- Via private message, ask the more serious buyers what they are concerned about and what they like about the website you are selling. Respond to their concerns and address the potential objections in public comments if appropriate.
- Purchase a promotion like a homepage listing or twitter blast to attract more bidders.
- Contact bidders who have not been actively communicating.
You or the buyer may want to use a sales contract to make sure all of the conditions of the transaction are clearly communicated and enforceable. Flippa provides a sample contract of sale or you may use your own. If you use Flippa’s document, make sure and read it first, and add any specific items that are included in your website. This may be inventory, post-sale assistance, documentation, or anything else you have agreed to provide to the buyer or the buyer has agreed to provide to you.
Content supplied by Jeff Hunt.
Flippa 101 is a series of articles on how to get the most out of Flippa. Check out the previous article on bidding and negotiation.
Now we’re talking selling! To get the best price for your website it is a good idea to do some preparation before you list it for sale. A few minutes of time, or a few dollars of expense could make a big difference in the performance of your auction.
The Website Itself
Like homes, websites sell best when they are clean and tidy! Here are some tips for quick website renovations:
Does the home page look nice? Consider…
- Adding, replacing or updating the logo
- Consider current design trends, and update your website to reflect them
- Swapping out or adding a key image
- Filling in large white spaces or de-cluttering if it looks too busy
- Fix ads or images that overlap or bump up against text
- Make sidebar content similar in length to the main article content
- If the content is old, add something new
Like cars, websites should be in working condition to get top dollar:
- Test all the menu options
- Test tools and widgets
- Test links and make sure you fix or delete “links to nowhere”
- If you have a shopping cart, make sure it works
- Remove products that are no longer available for sale
- How does it looks on mobile?
- Develop a social media presence
Prepping the Business and Yourself
Buyers are not simply only interested in the content of a website or its function, they want to be assured that it is a working business. Among other things, businesses:
- Track their finances
- Have customer flow
- Have order flow
- Have a developed business model and process
So before you sell, you need to collect detailed information about your website that demonstrates to buyers that the business is real and has a working business model that delivers results.
Two critical items:
1) Analytics. Experienced buyers want to see statistics about the traffic visiting your website. Google Analytics has the best reputation from a buyer perspective because the reports are verified by Google, and buyers are acquainted with the format. If you haven’t had it installed, do it now. Even a few days of data are better than nothing. Other analytics tools can substitute for Google Analytics (but they can’t be verified), but make sure you have something.
2) Financials. The most important factor in the value of a website is its financial performance. Buyers want to know revenue and net income by month. If you don’t already have it, you need to compile a P&L (Profit and Loss statement) that shows the revenues and where they came from, the main expenses and the net income by month. Remember, revenue minus expenses equals net income.
Other Materials to Include
- Screen shots of your backend systems like admin panels, order processing or anything important that isn’t visible on the website
- Awards, certificates, references, articles, news citations about your business
- Detailed sales information by month. The more detail you provide, the more trustworthy you will appear to buyers.
- Business metrics like conversion rates, click through rates, number of products, number of articles, etc.
Because screen shots can be faked, buyers often request proof of sales and traffic. One way to provide this proof is to create a screen capture video. Using a tool like Camtasia, log into your revenue and analytics accounts and record pertinent screens to prove that your website is performing as you claim. Save the recording as a video that can be provided to interested buyers.
Another way to provide proof is to grant read-only access to your analytics and revenue accounts to interested buyers.
Flippa 101 is a series of articles on how to get the most out of Flippa. Check out the previous article on how much you should pay.
After you’ve decided that you are interested in a website and how much it is worth to you, the next step is placing a bid. Keep in mind that you are legally obligated to pay if your bid is above the reserve price and accepted by the seller.
Mechanics of Bidding
You place a bid by entering the maximum amount you are willing to pay in the bid field and clicking the “Place Bid” button. You are then reminded that the obligation to pay is legally binding. You must read and agree to the Bidding Terms and Conditions and click “Place Bid”.
Before your bid is recognized, the seller must approve you as a bidder. The seller will not learn the amount of your bid unless he accepts you as a bidder. After you are accepted there is no additional approval process for any of your future bids on that auction.
Note that you are placing a ‘Maximum Bid’. Flippa’s Automatic Bidding system will bid on your behalf in increments up to your maximum bid. This will enable you to retain the leading bid position until someone places a bid that is higher than your maximum.
To prevent buyers from sneaking in with a low bid in the final moments of an auction, auctions are extended whenever there is a new highest bidder in the last hour. A new high bid resets the auction clock to one hour remaining.
For example, if the current high bid is $1,000 with 20 minutes remaining in the auction, and another bidder bids $1,100, the remaining auction time is set to 60 minutes. This allows time for the previous high bidder to consider and make a bid higher than $1,100. With each new high bid the countdown clock resets to 60 minutes.
Auctions are not extended if the bidding is a result of the Automatic Bidding system incremental bids as in the following example:
Bidder 1 has a high bid of $1,000 and a maximum bid of $1,500 with 30 minutes to go in the auction. Bidder 2 places a bid of $1,100. The Automatic Bidding system bids $1,150 on behalf of Bidder 1. The auction IS NOT extended because Bidder 1 is not a new high bidder.
In a private sale there is no bidding. You make your best offer, click the “Place Offer” button, and the seller decides whether or not to accept your offer.
If your offer is accepted by the seller, the sale comes to an end and no other offers can be made or accepted.
Entering the maximum amount you are willing to pay saves you the trouble of monitoring the auction and having to enter ever increasing bids as you compete with other buyers in the auction.
You take emotion out of the equation by deciding the value of the website or domain at the outset and let the bidding take its course. This means you’re making better business decisions with a clear head.
However, making use of the Automatic Bidding feature by entering your maximum bid early and upfront results in more bids than waiting until the end of the auction to bid.
Auctions with more bid activity are higher up on the “Most Active” auction page and therefore attract more attention and more bids to the auction.
Finalizing the Sale
You won. The auction ended with you as the highest bidder over the reserve price. Now what?
Flippa provides a handy little portal called the “Sale Completion Area”. In the Sale Completion Area you will find:
- Buttons to Pay with PayPal, Leave Feedback, Pay Success Fees and Dispute Sale
- Sample Sale Agreements
- All of your private message communication with the seller
- The email address, phone number and PayPal address of the seller
Tip: Although you can communicate with the seller via email at this point, it is a good idea to continue to use the private message system so that the Flippa support team can find out what transpired in the event of a dispute.
About Sales Agreements
Unfortunately some sellers are unscrupulous. In order to fully protect yourself it is wise to always use an escrow process and a sales agreement.
Flippa provides a sample sales agreement. Flippa does not and cannot enforce the sales agreement themselves; that is your job. But the text of the agreement does contain useful provisions for the protection of buyer and seller in the transaction.
For large transactions consider using an attorney to create or revise the sales agreement.
Tip: You should know what the agreement says and add the specifics of your sale to the document. Make sure that you list the specific assets of the business like the domain, site content, physical inventory and anything else the seller has agreed to provide. Don’t forget services and assistance promised by the seller.