What makes for an accurate valuation?
The way I'm thinking is that the price is determined not just by how much a
site is making money, but also how stable it is. And the amount of traffic is
usually a good measure of how stable a site is.
You know, making $x from a lot of traffic should be better than making $x with a
little traffic. But that's just not showing in the stats. I tried correlating
prices vs number of DMOZ listings, number of pages indexed in Goog, number of
IBLs from external sites, number of .gov/.edu links, traffic etc but no big
pattern is emerging ...though it logically should. But then I've been learning a
lot from these stats. You could have knocked me down with a feather when I saw
the multiple forums were going for, it was completely unexpected. On several
occasions I did not believe the results and took new samples to double check.
Thanks for the question.
I just tried inputing some the data into the evaluation tool, changing some figures around, and I'm not sure exactly how does the optional data change anything.
For the moment most of the optional data is not used in the valuation. Data
provided here will trigger specific text: "The high level of skill required to
run your site will result in less competition among buyers and is likely push
the price down." All the explanatory text is considered part and parcel of the
valuation. As further intelligence data is collected from actual sales, I expect
the optional information to come into play some more in the calculation of the
If the buyer sees some potential in a site that nobody else sees won't he be willing to pay a higher price? How is that included in the value here?
You're right in that a buyer may be willing to pay a premium for a certain opportunity he recognizes. But he is unlikely to disclose this opportunity to competing buyers and would bid at a level to just beat the competition. The seller can capitalize on buyers like this by taking a chance on a higher BIN in the hope that just such a buyer would close the auction at BIN.
Why sites that are not making a profit still sell for more than $0?
Good question. The value of past earnings extends only to this: They provide a guide to future earnings. It's only the future profits that buyers are concerned with. When a site has not been making any profit it is difficult to convince buyers with cash flow projections. As a result the site doesn't reach the price it otherwise could reach.
Do you not think that the number of hours to run a site affects the value?
If a value is deducted from earnings for the time cost then this site can be equalized with hands-free sites and treated on par with them for value calculations.
The cost of the labor to run the site is just another cost - like hosting fees or forum software license. In most cases the work can be outsourced.