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  1. #26
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    benitez17, you seem to misunderstand the point of valuing your own time. I'm not against webmasters working on their own sites When I talk about buying a job I'm talking about those webmasters who pay for a site that earns them per hour the same rate that they'd earn elsewhere, and nothing more.

    I'd probably be happy to pay $100,000 for a site that required my attention for 30 - 40 hours per week but made $80,000+ without much risk
    So you've factored in 30-40 hours of work i.e. you've put a value to the time. If in due diligence it turned out that the site required 100 hours a week would you still pay $100K? What if you had cast iron guarantees that the seller would do all the work i.e. zero hours for you, would you be willing to pay a wee bit more - say $101K?

    How much value each one puts to their time is up to them. But there is, unquestionably, a value to the time and this needs to be deducted from the earnings to compare investment opportunities. Any seller ignoring time costs when presenting net profit figures is guilty of fraud, IMHO.

  2. #27
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    Fair enough. Where you lose me is declaring that the seller is guilty of fraud if they don't deduct a value for the time they spent from the profit. I guess I find it hard to fathom that a buyer wouldn't recognize the monetary value of the time they spend and request information about the amount of work required, and I don't think it is the responsibility of the seller to assign a price to that time. If a seller stated that they spent 1 hour a week on a site when they really spent 4 hours a day, then that would be fraud.

    If someone is making $5 per hour working on their website, but would otherwise spend that hour watching TV, even if they were making $20 per hour earlier in the day, then I think that was an hour well spent for them. If they could have been making $10 for that hour doing something else, then they need to change their priorities.

  3. #28
    King of Paralysis by Analysis bronze trophy
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    Quote Originally Posted by benitez17 View Post
    If someone is making $5 per hour working on their website, but would otherwise spend that hour watching TV, even if they were making $20 per hour earlier in the day, then I think that was an hour well spent for them. If they could have been making $10 for that hour doing something else, then they need to change their priorities.
    I think the point is this...

    If I buy a site from you that brings me in $10 hour then I shouldn't have to pay you year's income for that site for the privilege of earning that money.

    Let's put it this way.

    Would you be willing to pay someone $40k today to someone who someone offered you a regular 9-5 job today paying $40k a year, with no guarantees that that job would still be around after the year was done or that you would even last the year?

    Probably not, but that's often what sellers are asking for here by excluding time spent on the site from the costs of running the site.

  4. #29
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    I guess I find it hard to fathom that a buyer wouldn't recognize the monetary value of the time
    What the buyer does or does not do is immaterial from the point of view of deciding criminality on the part of the seller.

    If the seller presents gross profit and discloses the time required I've got no problem with that. If he presents the profit as "net" and fails to disclose the time cost - that's accepted as fraudulent on every continent (I'm an accountant by qualification). Time is an input just like rent or hosting costs.

    Further, if the seller is deducting cost of time he can't arbitrarily award himself $5 an hour. The time cost has to be factored at the price the relevant skills normally demand. A top surgeon can't sell his practice, remove his active participation and deduct $5 an hour from the gross profits as the nominal cost of his time (because the new owner can't get a new surgeon at that price). A buyer or holder can put any value he wants to his time. A seller can put only a fair value when calculating net profit.

    You agree that the seller misrepresenting quantity of time is fraudulent. Logically speaking, wouldn't misrepresenting the quality of time be fraudulent as well?

  5. #30
    Programming Since 1978 silver trophybronze trophy felgall's Avatar
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    The seller could have avoided all the embarassment that this thread has generated just by entering a realistic starting price for the bidding relative to their reserve price (whether those are actually reasonable for the site or nit isn't really relevant, the comparison between the two figures is what is important). When an incorrect figure was accidentally entered they should have contacted SitePoint to get it fixed rather than just wasting a lot of people's time looking at something that was never going to be sold at anywhere near the indicated price.
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  6. #31
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    Quote Originally Posted by felgall View Post
    The seller could have avoided all the embarassment that this thread has generated just by entering a realistic starting price for the bidding relative to their reserve price
    The seller could have avoided all this embarrassment by acting professionally in his auction, regardless of the reserve price.

    Picking on potential buyers' typos, refusing to verify the site, etc...

    Anyway, he's relisted his auction with a minimum bid and the such and we all wish him luck in selling his site. The higher the prices fetched by sites in general, the better off most of are.

    The market will decide what the is worth, one way or another. Last year he wanted 3.5 million for this site, now his BIN is one fifth of that and his minimum bid one tenth of that so he's already began to adjust to the market realities.

  7. #32
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    Quote Originally Posted by zipperz View Post
    Something is only worth what someone else is willing to pay for it..

    So if the potential buyer has their own way to validate worth that is what it is worth to them. And they are the ones that might buy it.

    The site seems to be worth a lot to you, probably more then it is to anyone else, so you have a case of someone who overvalues their own site and will never sell it.
    No, this is not the case. I have plenty of pending offers for my site. Some of them structured, some of them just under what I'm trying to get and even 2 of them I might be selling to in the near future. It's hard not to laugh at some of the comments here from users that probably assume they're loaded with wisdom and have all the experience in the world when it's more the opposite.

    Typically just waiting for the right buyer, especially for larger sites that take longer to sell is what's required. You're right about one thing, potential buyers have to valuate their own way, very good. That's been kind of my point. Anyone would buy anything based on how much money it makes by default, it's a very caveman way of appraising something. Some people know they can do more or use assets in another way to push the value much farther, thus making it much more useful / profitable for them. There are also many different types of websites, all having different pieces that are more important and more valuable to them.

    I stick by what I said.

  8. #33
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    Quote Originally Posted by tke71709 View Post
    Last year he wanted 3.5 million for this site, now his BIN is one fifth of that and his minimum bid one tenth of that so he's already began to adjust to the market realities.
    Actually no, that's not why the price has gone down, but nice try! A for effort! You prove more of my points when you try to pat yourself on the back with posts like this than you prove of your own points.

    I do appreciate all the attention you give me though, you make me feel important, thanks man.

  9. #34
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    Quote Originally Posted by pixeldustmarket View Post
    Actually no, that's not why the price has gone down, but nice try! A for effort! You prove more of my points when you try to pat yourself on the back with posts like this than you prove of your own points.
    I thought it was nicer to say that then to point out that under your astute tutelage the site revenue has dropped to 1/6th of what it was last year. Not much of a selling point. Just think, if you had accepted a 12x month offer last year instead of being difficult in that auction as well you would have been well ahead of what you're asking for today.

    But hey, as you yourself posted in the auction thread, if someone wanted to put forth the effort and sell private ads and the such they could make a ton more money with the site. I guess the half million or so a year that you're currently not making compared to just a year or so ago isn't worth the effort on your part to do so though.

  10. #35
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    Some people know they can do more or use assets in another way to push the value much farther, thus making it much more useful / profitable for them.
    I agree with you. A buyer who sees some way of making more profit from the site than it's currently making would be willing to pay more than a buyer who doesn't have that vision. We are agreed then that it's the expectation of profit that drives value.

    One thing is clear - we do sometimes get sites where no buyer has any vision beyond what the current earnings are. We get that quite often. And you'll get that too with this site. Some sellers put the blame on buyers for not having the right vision to match their own high opinion of the site. Others achieve a sale.

    If you believe I'm wrong on valuation advice I've given - or anything else - please feel free to provide a logical argument as to why. Pointing and sneering just makes you look juvenile.

  11. #36
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    All this action on the thread and we don't even get to see what was for sale? I went to the link up top and the listing is not active anymore. My advice to both of you is to move on and (seller: focus on selling your site; buyer: focus on looking at other sites from professional sellers) don't waste time bickering. After all, time is money...

  12. #37
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    The site has been re-listed at http://marketplace.sitepoint.com/auctions/66877 so you can see what all the fuss is about. The site is higher quality than most listed here, and has a rare domain name, so there could be someone willing to pay more than the average sales price that would be based on revenue for the site, but we'll see what happens because revenues have been declining and the seller is openly hostile to potential buyers.

    This thread isn't really about that auction or that particular site, but a trend that I (and others) have seen as someone who is actively looking for sites to purchase where the seller has become fixated on an unattainable sale price based on any or all of the following:

    1. Their time and/or money invested into the site.
    2. An attachment to the site because they built it.
    3. A long list of enhancements that can be made to the site that will dramatically increase the revenue, but they couldn't be bothered to implement themselves (but they are certain will work).
    4. A price that will allow them to meet some sort of financial obligation or desire (bills, taxes, want a new car, etc.) in their personal life.

    I plan to stick to the so-called "crude" approach of valuing the site based on how much money it makes or how much money I know I can make from it when determining the price I am willing pay for a site, rather than on the hopes, dreams, and financial needs of the seller.

  13. #38
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    Further, if the seller is deducting cost of time he can't arbitrarily award himself $5 an hour. The time cost has to be factored at the price the relevant skills normally demand. A top surgeon can't sell his practice, remove his active participation and deduct $5 an hour from the gross profits as the nominal cost of his time (because the new owner can't get a new surgeon at that price). A buyer or holder can put any value he wants to his time. A seller can put only a fair value when calculating net profit.

    You agree that the seller misrepresenting quantity of time is fraudulent. Logically speaking, wouldn't misrepresenting the quality of time be fraudulent as well?
    FruitMedley, I don't disagree that the "quality" of work as you put it is important, I just don't think it is the responsibility of the seller to determine that value, but to just disclose the facts as is. However, I am not an accountant, so I can't really debate with you.

    Would you be willing to pay someone $40k today to someone who someone offered you a regular 9-5 job today paying $40k a year, with no guarantees that that job would still be around after the year was done or that you would even last the year?
    tke, the goal is to buy a site (for $40k in your example) that makes $40k year after year, with an amount of work where the time spent on the site gives me a nice amount of income for the time I spend on it. Obviously, there is a lot of risk involved (the site dies in 6 months and only made $20k or less), but there can be a lot of reward (the site continues to grow and is making $50k or more 2-3 years down the road).

  14. #39
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    but we'll see what happens because revenues have been declining and the seller is openly hostile to potential buyers.
    I would prefer if we did not get into discussing his new thread. I don't think that would be fair. We should let him get on with trying to sell.

    However, I welcome any views on my comments/opinions and if anyone has anything to add to what benetiz has said please go ahead.

  15. #40
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    1. Their time and/or money invested into the site.
    2. An attachment to the site because they built it.
    3. A long list of enhancements that can be made to the site that will dramatically increase the revenue, but they couldn't be bothered to implement themselves (but they are certain will work).
    4. A price that will allow them to meet some sort of financial obligation or desire (bills, taxes, want a new car, etc.) in their personal life.
    Brilliantly put!

    tke, the goal is to buy a site (for $40k in your example) that makes $40k year after year, with an amount of work where the time spent on the site gives me a nice amount of income for the time I spend on it.
    There your logic seems to fail you. You're willing to pay $40K for a site that pays you a salary of $40K for a full time job? That it pays you $40K in the second year is immaterial, the job too would pay you $40K for the second year. So why not take the job? You'd save $40K in purchase price and still get paid $40K a year. The only plus with the site is that the earnings may increase (and that's balanced by the risk of earnings dropping to $0). What are you getting for your $40K purchase price?

  16. #41
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    To set the facts straight, since so many people are just making assumptions.

    1) Yes, originally I was a co-creator of the site but sold out my shares years ago.

    2) I have come back as the GM of the site and as the agent in charge of selling it just recently. (yes I did throw it out on the market over a year ago but the owners had changed their minds about sellling it, after I actually already had it sold to someone for near my asking price)

    3) Yes the traffic and revenue dropped over the last year and a half, as that's typically what happens when a site just sits around not doing anything at all and has no one running it. Hense the dramatically lower asking price.

    4) Since I came back about a month ago, I've tried a few idea's for monetization and even sold some non-standard ad space to help pitch the site to any new owner that really wanted to focus on increasing revenue. The current owner of QJ doesn't care enough about making an extra 20 / 30k a month, if you knew who owned it you'd understand.

    @Fruit - If you really wanted to push a sale based on potential you could take a similar site like IGN.com for example and base it on a traffic multiplier. IGN really monetizes their traffic well and it's basically the same type of traffic. Anyone with the time and energy could do something similar. 120k daily unique in the video gaming market can make a lot of money for someone that knows how to monetize it. QJ just hasn't in the last year and a half had anyone doing much of anything in the way of that. For that reason it's going to go for a fraction of what it could have been worth.

  17. #42
    SitePoint Addict zipperz's Avatar
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    Quote Originally Posted by benitez17 View Post
    The site has been re-listed at http://marketplace.sitepoint.com/auctions/66877 so you can see what all the fuss is about.

    Seems like a big selling point is “don’t look at what it is making now,,If someone just did this it would make so much more $”

    I see this a lot is people trying to sell things for unrealistic prices not just in websites but almost all things.

    “This car just needs a $12 part and 20 minutes of work to run and it will be worth triple.’
    “This house just needs $1200. in work and it will be worth $15000. more”

    “This________ just needs_______ and it will be worth so much more”

    If something is that simple then why doesn’t someone just do it and sell it for “so much more”.

    Then they have all the excuses “don’t have time” “I am so generous I want someone else to make all the money” blablabla.

  18. #43
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    Quote Originally Posted by tke71709 View Post
    Would you be willing to pay someone $40k today to someone who someone offered you a regular 9-5 job today paying $40k a year, with no guarantees that that job would still be around after the year was done or that you would even last the year?
    A great way to put it.

    If the pay off was higher and the cost lower, then there is a price that's worth it.

  19. #44
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    @Fruit - If you really wanted to push a sale based on potential you could take a similar site like IGN.com for example and base it on a traffic multiplier.
    You are correct in that valuing properties - online properties included - a good guide is what the property next door sold for. There are several caveats, for example: The comparative price needs to be recent, for a very similar property, and for a property that doesn't enjoy a significant advantage/disadvantage.

    Valuers of businesses do use sale prices of other similar businesses in reaching their valuation. But, and let me emphasise this, they are not interested in the raw sale price itself but the multiple of net profit that similar businesses sold for. The multiple demonstrates the level of risk that owners of similar businesses factor in and therefore sets a benchmark for level of risk. The professional buyer is still going to project the net profit figures before he applies that multiple.

    I just don't think it is the responsibility of the seller to determine that value
    I won't argue the accountancy principles. I've tried to explain this point here and hooperman has a good post but, at the end of the day, the seller does not need to determine value of time spent unless he is quoting net profit. If he's claiming a figure as net profit then he's certifying all costs - including nominal costs - have been deducted.

  20. #45
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    Maybe "buying a job" is a bad way to phrase it. The $40k is buying you the right to make changes so the site can make $60k the next year, or hire someone to run the site for $30k and make $10k a year with little to no work on your part.

    What I meant was that I am willing to pay an amount for a website with the assumption that it will require some amount of my time each day/week/etc. I view owning the source of revenue as different than being paid for my time by an employer, even if I have to do some work to maintain that revenue from the asset I own.

  21. #46
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    The $40k is buying you the right to make changes so the site can make $60k the next year
    So you make the changes, improve the site yourself and reward the previous owner for that work by building a premium into the purchase price? There's a recent thread around with a derelict car analogy that someone used to explain this point well.

    hire someone to run the site for $30k and make $10k a year
    If you make $10K a year it sounds like your $40K price was 4 years' earnings, not 12 months'. If you believe otherwise you should take over as Chancellor of our British economy

    There is the professional, logical, sensible and accepted way to value a business (including web businesses) and there's the Enron accounting way. But, this point has been flogged enough. I'll say no more in this thread except to emphasise that when you're spending your own money I accept that whatever logic you apply doesn't hurt anyone else so you should feel free to use it.

  22. #47
    SitePoint Co-founder Matt Mickiewicz's Avatar
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    I'm closing this thread since its turning into a flame war.
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