Newbie buyer - help with valuation? 1400/yr net profit, $4k inventory, dropship

[chrispaul]

Newbie here and would appreciate any tips for buying a website. There's a few reasons why I'm interested in this particular website/business: the seller is local, it's cheap (BIN 7800 but he's willing to negotiate), mix of inventory/dropship, $7800 includes about $4000 worth of inventory, the site lacks a good design and has room for much improvement.

However, he's only claiming about $1400 a year ($117/mo) for net profits. And webpageoutlook.com says the website is only worth $584 USD.

I'm thinking that $5000 to $5500 would be a more realistic price. What do you guys think?

[benitez17]

Newbie here and would appreciate any tips for buying a website. There's a few reasons why I'm interested in this particular website/business: the seller is local, it's cheap (BIN 7800 but he's willing to negotiate), mix of inventory/dropship, $7800 includes about $4000 worth of inventory, the site lacks a good design and has room for much improvement.

However, he's only claiming about $1400 a year ($117/mo) for net profits. And webpageoutlook.com says the website is only worth $584 USD.

I'm thinking that $5000 to $5500 would be a more realistic price. What do you guys think?

First of all, webpageoutlook.com and all other sites like it are worthless. Other than that, I agree with you that the site is overpriced.

My main concern is how long will it take you to move that inventory? If the site is only making $100 per month, either he isn't selling much or the items are very low margin. Also, make sure that he isn't trying to unload it on you at retail price, since it doesn't sound like he has been very successful.

What are your plans for the site? Do you feel like you could keep making $100 per month with no work, can you ramp up sales easily due to your past experience or other businesses, or is this something new?

[chrispaul]

Thanks for the reply!

I'm not sure how long it will take me to sell all the inventory. He said that he is willing to just sell me the best-selling stuff. If I do go forward with it, I may just purchase $1000 to $2000 of the inventory. Also, I may utilize some local avenues to unload the inventory faster.

Thanks for the tip about the retail pricing... I'll definitely look into that.

My plans for the site are:
1. This is my first legit business. I want to put as much effort as I can into it to at least (bare minimum) get my money back from the investment within a year but hopefully more.
2. Redesign the logo - better branding, establish better trust
3. New site design - the site and logo look really outdated and could use a complete overhaul. I do graphic design and web design, so this isn't a problem.
4. Create some new sub-sections of the site: written articles, videos, etc.

[benitez17]

Thanks for the reply!

I'm not sure how long it will take me to sell all the inventory. He said that he is willing to just sell me the best-selling stuff. If I do go forward with it, I may just purchase $1000 to $2000 of the inventory. Also, I may utilize some local avenues to unload the inventory faster.

Thanks for the tip about the retail pricing... I'll definitely look into that.

My plans for the site are:
1. This is my first legit business. I want to put as much effort as I can into it to at least (bare minimum) get my money back from the investment within a year but hopefully more.
2. Redesign the logo - better branding, establish better trust
3. New site design - the site and logo look really outdated and could use a complete overhaul. I do graphic design and web design, so this isn't a problem.
4. Create some new sub-sections of the site: written articles, videos, etc.

Sounds like a ton of work with minimal reward and a steep asking price. If the site needs that much work and is generating that little profit, it's almost worthless. I'd try to get a much better price, or look for a better opportunity.

[chrispaul]

You might be right. I just got an email back from him. He has about $3500 of inventory left now. And he said he will sell the inventory for $3000 and the site for $1400 for a total of $4400. Or just go for the site for $1400 without inventory.

I actually don't mind the work because I like doing it. I know it's only netting $1400 a year but with some work I hope to increase that.

[benitez17]

You might be right. I just got an email back from him. He has about $3500 of inventory left now. And he said he will sell the inventory for $3000 and the site for $1400 for a total of $4400. Or just go for the site for $1400 without inventory.

I actually don't mind the work because I like doing it. I know it's only netting $1400 a year but with some work I hope to increase that.

If you can get the website for $1400 and you enjoy the work, it's not too bad of a deal. I'd find out who his supplier is and talk to them directly or find your own supplier to confirm the pricing for the products.

[ebusinesstutor]

I agree that services like Webpage Outlook are not that useful because they don't look at the most important part - the actual profit.

I think 2x to 3x annual profit would be about right. So $3,800 to $5,200.