Here’s Your Playbook

Alright! You’ve done it — you’ve scoured the various marketplaces, performed a ton of due diligence, and grilled dozens of sellers about the websites that they’re selling. After all that, you’ve finally found a website that you’re wanting to buy. How much should you actually buy it for, though?…

That’s a fantastic question! And one that’s actually quite easy to answer, once you understand the logic behind website pricing.

One thing to take into consideration is that content websites are relatively low-maintenance and passive. While it’s best to keep adding content to a website consistently to help it grow and stay relevant, if the content is evergreen, you can usually just sit back and collect the ad revenue checks every month.

Because these websites are so passive, they’re typically priced in a way that they pay for themselves after a certain amount of time.

As a general rule of thumb, websites typically cost about 3 years worth of what they bring in in profit.

More specifically, their average monthly revenue is determined from their past 6 to 12 months and multiplied by 36 months.

Now 36x is just a benchmark. Most websites sell for multiples from anywhere between 24x and 48x. Websites on the lower end are typically smaller and simpler, while websites on the higher end are typically larger.

Using this rule, if you have a healthy website making $200 in profit every month, a good price will be 200*36 or $7200… It’s mostly that simple to determine if a website is well-priced or not! However, there are a couple of factors that can make a website cost more or less. Let’s review what those are.

First of all, websites can sell for a lower multiple if they’re more risky or less profitable. 5 main drivers of this are:

Lower monthly earnings

If a website makes less per month, it’s hard to make it an extremely profitable investment. If a website makes $50 per month, doubling traffic and revenue would only result in $100 per month — nothing to write home about.

Bad niche

Some niches are different from others, and a website with a bad niche is a lot harder to monetize, write content for, and scale.

Low quality content

Sure a website may be ranking and making money, but if the content isn’t very great in terms of grammar, language, or accuracy, it’s a much riskier investment.

Newer website

If a website hasn’t been around for a very long time, like a year, then it hasn’t really proven its longevity and is risky.

Little ranking content

If a website only has a couple pieces of content bringing in most of its traffic, it’s very volatile because one article losing its ranking could result in a massive loss of traffic.

Now, considering higher multiples, it’s essentially the opposite of the previous characteristics. Easy!

Higher monthly earnings

Lots of money coming in every month from a website means there are much higher returns on growth efforts. Also, more money coming in monthly can be used by the website owner to invest in other properties.

Great niche

If a website’s niche is profitable with tons of content and monetization opportunities, it’s going to be much more desirable.

High quality content

If content is well-written, thorough, and authoritative, a website has a lot more staying power in search results and be much more appealing.

Established website

If a website has been ranking and earning money for a long period of time, there’s a good chance that it will continue on that trajectory for a while longer.

Lots of ranking content

Tons of content bringing in healthy amounts of traffic reduces volatility and increases the amount of monetization opportunities for a website.

Given this information, you should be able to determine what a fair price for a website is and act accordingly.