Websites are sold on a multiple of net monthly profit. We typically take an average of the net profit over the last 12 months and multiply that by a multiple to determine the price.
In some instances where the site is growing or declining quickly, we’ll take an average of the last 3-6 months of net monthly profit. In cases where the business has assets, we’ll add the wholesale or discounted value of the assets on top of the multiplier.
Here is the formula we use:
Sales Price = Monthly Net Profit X Multiple + Discounted Assets (if any) + Wholesale Inventory (if any)
Here are a few examples:
Example 1: Content-based AdSense site that’s made $4,500 in net profit in the last 12 months.
We’ll take the monthly average ($1,500) and multiply by the multiple used to determine the price. A multiplier of 20 would give you a list price of $30K where a multiple of 30 would give you a list price of $45K. You would receive 85% of the final sales price.
Example 2: 3 year old Dropshipping site that was regularly bringing in $50K per month in sales with $20K per month in profit, but in the last 6 months has averaged $80K per month in sales with $40K per month in profit.
Because the site has seen such an increase in the last 6 months, we’ll look at the average net monthly profit from the last 6 months and apply that to a multiple.
A 20X multiple would give us a list price of $800K and a 30X multiple would give us a list price of $1.2M.
To get a rough idea as to how much your website is worth, please feel free to use our Valuation Tool here.