Whenever I’m in “work mode” I spend most of my time looking for websites to buy. I genuinely feel that the internet is one of the best places to invest your money and get a great ROI if you know what you’re doing. Not only that, the simple fact of making money on the internet means you can run your empire from anywhere in the world.
Since December I’ve spent over $100,000 on purchasing websites and I’ve made a similar figure by selling the ones I’ve built so today I’m going to cover both sides of the process in detail. In short, here’s my position: I like to buy websites I can automate through outsourcing and I sell websites that I no longer enjoy running or have a desire to grow.
The process of selling websites is quite sporadic for me right now so I’m going to cover buying websites first as this what I do most. There are thousands of people who purposefully build websites to sell them (known as site flipping) but that’s not something I’ve ever gotten into.
If you want to buy a website that is making a decent amount of monthly income then be prepared to spend at least 10 months revenue to take ownership. The “work” involved in running most websites can usually be outsourced very cheaply so sellers are often selling because they want a large lump-sum that they can invest into other projects.
There are a number of website marketplaces online which you can think of as an eBay for websites. People who want to sell their sites go here and list all the relevant details they feel prospective buyers need. Those who want to invest in websites browse for and purchase the types of sites they want.
My favourite website marketplaces include sites like Flippa and Digitalpoint. There are many more and a Google search will uncover plenty of smaller ones for you, but these two tend to be the most active. I don’t purchase too many sites from Digitalpoint as they’re generally too small for what I’m looking for but do find some worthwhile investments on Flippa.
There are tons of new websites being added to their site everyday so I don’t mind sharing these resources with so many people.
These marketplaces are generally the best way to buy sites but note that places like Flippa charge up to 5% of the transaction fee simply for being the ‘middleman’ in the process. If you find a site that is a worthy investment, however, the fee should be small compared to the potential income you could be making.
I don’t always buy websites in marketplaces; sometimes I’ll go to site owners directly and see if they are looking to sell. For example, if I find a site on Flippa that is ranking well for a certain keyphrase in Google and it’s making a lot of money, I might not always be able to purchase it for what I consider is a fair price — some bidders are happy to wait over 3 years for a return on their investment.
In cases like that I may type the phrase into Google and contact the owners of the sites on the second page. I know that if I can get them onto the first page of Google then I can make a lot of money and I also know the site is probably not making a great monthly income so I can get it for a good price.
I’ve only purchased 2 sites by contacting website owners directly (most will simply ignore you or ask for extravagant fees) but if you take the time to do it, you’ll find far better deals than you’ll ever see in one of these marketplaces.
If you browse around these marketplaces or even the search results for popular keyphrases, you’ll see that there are lots of different types of websites out there. Some of the most common you’ll find for sale are:
The ones I have highlighted in bold are the ones that I usually go for. Clickbank affiliate ready sites are great if you know the niche and have an audience, but otherwise they’re a lot of work and you’ll need to put the time in to get a return on your money.
I also don’t want ownership of popular Clickbank products as you’ll find that slowly but surely their monthly income tends to die off, rather than stay constant or improve. The reason for this is that usually there is a large marketing campaign prepared for when these products launch and many affiliates send emails to their lists.
They have great stats initially and it looks like you may have hit a goldmine based on their recent monthly income but don’t forget about the obvious launch tactics that have been used.
Although I build blogs myself and I’m fairly good at increasing their number of subscribers and making money with them, they require a lot of work to grow. And, unless you can find a great writer who knows the industry well, it can be expensive (both financially and in time) to keep them making a consistent income.
I like communities that already have large paying audience because the income they are generating is quite safe. You aren’t relying so much on traffic from Google or social media sites for them to continue earning revenue. If you can increase the traffic to these sites then you can earn more money on a monthly basis.
Most recently I’ve been buying niche content sites as I’m very confident with my SEO abilities and can usually tell when there’s more money to be made from an industry. These have been set-up very similar to the process I talk about in Cloud Living and if you can improve or sustain search engine rankings then you can easily automate their income.
When I’m buying sites there are a number of things that I look for. The first thing I want to know is whether I can grow the monthly revenue from the site in any way. Generally, making investments online is fairly safe and if you know what you’re doing you can see a return in a year or so. Because I have skills in this area I want to use them for maximum profits.
For that reason I generally like to buy sites which are making money, but that also have a number of things about them that sucks. This may be in terms of design, SEO or even structure, but I like there to be problems which I know I can fix or improve. The simple reason is that even if the current income the site is making were to drop, I’m still confident the changes I want to make will build that up and hopefully increase the monthly revenue.
As I highlighted recently there are a number of questions I’ll ask the seller of a website before considering a purchase. Some of these include:
Often times there are listings that look too good to be true so make sure you get a clear idea of how the site is making money and learn the business inside out. If you’re going to be spending a lot of cash then this is crucial. A non-compete agreement is rarely necessary but if a lot of traffic relies on connections that the seller has then this is a must. There are a lot of scammers out there, sadly, so you have to watch out for this kind of thing.
Obviously another thing I must have if I’m spending a substantial amount of cash is at least 6 months stats and income proof. If a seller is using Google Analytics then I’ll ask to have them add me to the account. Similarly, make sure you consider any fees from Paypal or other payment processors which the seller may not have accounted for in the monthly revenue stats.
If the seller is involved in the website themselves then you should also account for the expense of hiring someone to fill their position, if you don’t plan on running the website yourself. Most expenses generally come from staff costs, hosting costs and fees from any payment processors that are used.
I will always try to speak to a seller on Skype before buying anything but once I’ve decided that I really want a site, the two options for payment I use are either Escrow or Paypal. Because I am spending so much cash I also have 3 different currencies in PayPal so I don’t lose any money with exchange rates, depending on who I’m purchasing the site from.
Escrow acts as a middleman and in essence you pay them, rather than the seller directly. Once Escrow see that the Whois info has changed on a domain and it matches your details then they will release funds to the seller. From there you receive the website files and set them up on your own servers, on that domain.
A smart strategy a friend taught me when buying large sites is to offer slightly more than your agreed purchase price but split the payment into two parts. Half will be sent upfront and the other half after one or two months, providing that the site is still making the type of monthly income it’s supposed to.
Not all sellers like this and I don’t always do it, but if they are very against the idea then consider it a potential warning sign that there may be something fishy with the deal.
I thought it would be useful to give an example of one site that I would buy so you can see my thought process. I opened up Flippa this morning and picked a website that looks decent. Please note that I haven’t studied this website in full or spoken to the owner so there may be hidden costs I don’t know about or something I’ve overlooked.
If I were really going to buy the site then I would check these things out in more detail. The site I found is Blog Top Sites.com and you can find the Flippa listing here.
There are a few things I like about this listing such as:
I’m not going to buy this site as I’m just using it as an example but from a quick 5 minute check, I like it a lot. The domain isn’t great although it does get a lot of searches each month. If I took over the site, a few things I may change are:
I have a few more ideas but I’m sure you also see quite a lot of potential in this one. As a disclaimer, please don’t purchase the site simply because I have said it looks decent and expect these changes to make you rich. I have literally looked at it for no more than 10 minutes just to hopefully give you an idea of what I look for in websites.
Now that we’ve looked at the type of site I would buy, let’s look at one I wouldn’t. I don’t want to use an overly obvious example (e.g. a site making $500 per month and the owner wants $50,0000) so I have tried to find a site that may look fairly decent on the surface. The site I will use for this example is Admintasia (Flippa Listing).
On the surface this actually looks like a great deal. The site is making $2,000 per month with monthly expenses at a tiny $14 and the owner even has a BIN option for $17,000 – less than 9 months revenue. The first clear issue, in my mind, is that most of the income is generated by clients, rather than products sold on the site directly.
This means that there is an obvious expense missing for the skilled worker who will need to perform these tasks if you want to outsource the work. I actually think this would be a great buy for a designer or simply someone who can afford to spend a lot of time growing the income, but neither are the situation I’m in.
To really promote this I think you would have to connect with the top design bloggers and programming communities in order to raise your profile and hopefully get people talking about you. The traffic is coming from Google so the brand obviously has some strength, but that could very easily die down as the site is fairly new and could have had a lot of early promotion.
I’ve sold around 6 websites in the last few years which isn’t a lot but I do feel I know enough about this subject from selling and buying sites to give tips in this area. Most recently I sold PluginID, a blog with 6,500 subscribers, for a mid-five-figure fee. Because of the way the deal was structured I can’t reveal the exact amount but it was definitely fair for both parties.
I’ll first state that while there are a number of people who make their living by building websites and selling them (flipping) I personally don’t get involved in that industry. For the effort you put in I believe there are much more lucrative opportunities to make money with your skills.
The first thing I do when selling a website is make sure I…
By “what I want” I simply mean the kind of money I want to get for the site. To those of you thinking you can sell a site making a few hundred dollars a month for a six figure sum then snap out of that thought right now. Unless there is a lot of untapped potential, you have an amazing domain name or get very, very lucky, it just isn’t going to happen.
I never buy websites on “potential” and most people I know don’t either, so don’t expect to sell a site on one. You should know how much money your site is making and the amount of time you have invested to have a good idea of a fair amount that you want for the site.
Make sure you set this in stone because a lot of sneaky buyers will attempt to convince you your site is worth a lot less. It’s very possible you have overestimated the value of the site, but don’t let arrogant buyers persuade you that their low-ball offer is the true value of your site.
I think a fair price to sell websites for is around 12 months income, depending entirely on how much time you put into the site for that income to continue. If the site is running on complete autopilot then you may be able to get 2 years revenue or even more.
There is the odd exception – BloggingTips.com recently sold for $65,000 while making $1,000 per month – but that’s usually when buyers already have a large audience in that niche or see some very clear ways to make a lot more money from the site.
Also be very clear that you want to sell your site because usually, once it’s gone, it’s gone. After running PluginID for 3 months I sold it for $1,500 because I wasn’t happy with the slow growth of the site. I quickly realised my mistake (I still loved writing there) and pleaded with the buyer to give me the site back.
Luckily, two weeks later, it was mine. Make sure you’re not going through a dip in enthusiasm or selling because of impatience. If you see yourself getting back into a similar industry or running the site again in the future, it might be worth letting it die down for a month or two while you build up your enthusiasm again.
The last thing any buyer wants is to take over a site which involves the sellers connections or audience for it to continue making money. If you’re selling a blog with only one author and most of the audience is there for your unique style of content, then you’re not going to have an easy time selling – at least not with smart buyers.
Before you do put a site up on the market try to find other ways it can be run if it is originally growing simply because of the work you put in. When I sold PluginID I had the idea of Bud Hennekes taking over the writing as a lot of his traits are similar to ones I had when I started the site. This made it very easy for a buyer to purchase PluginID and have it still running smoothly.
I also worked out a unique deal whereby I agreed to continue offering support for Cloud Living (which was semi-included in the deal) for free based on a larger payout over the course of the deal.
It may be the case that the site your selling doesn’t require your involvement because it earns money through search engine traffic or it has a thriving community which does not revolve around you. If that’s the case, then you don’t really have to worry about this.
If you are an integral part of your website, see how you can plan to minimise that side of the equation before selling so that you can squash any doubts a prospective buyer may have about losing the money the website is making or traffic it’s receiving.
If you sell a site via any of the popular marketplaces online then be prepared to be faced with tons of questions. Often you’ll receive the same ones over and over again. Do yourself a favour by taking the time to prepare proper income and traffic stats for a long period of time before listing the site for sale.
Additionally, try to answer the questions that I had above on the actual listings page. Many people are going to want to know your reasons for selling the site, what expenses are involved and whether you plan to build a competing website.
I personally think that setting a lower starting bid is better because it entices more people to take a look at the website. If you want $10,000 for a website but set the starting bid at $9,000, people are probably going to think that you want a lot more. If you set a BIN (Buy It Now) price then don’t enter something ridiculous in the hope that someone will snap up your site and you’ll make a fortune.
It will probably put off most people who were interested in giving you a fair amount of cash. Be polite with anyone who gets in touch or asks you questions but don’t fall for anyone offering you a lower amount of cash and trying to convince you that’s all your site is worth. In other words, be nice and be smart.
You can list auctions for 30 days on Flippa but I personally think setting them for 7-10 days is better. Most bids generally happen in the last few days of an auction (unless you set a BIN price) so by shortening the auction you can expect to get a good idea of how much people are really willing to pay for what you’re selling.
Another option besides selling on marketplaces is to contact people who you think may be interested in the site. That’s exactly what I did with PluginID. I had listed the site on a marketplace and received a few offers but they were quite a bit less than what I was looking for.
Instead, I contacted people in the personal development industry who I knew might like a community or blog similar to the one I was running. I also got in touch with a few smart businessmen who would know that the site was really worth what I was selling it for. This worked for me, and it may work for you as well.
If you follow these steps then you should get a fair price for whatever it is that you’re selling.
Although I don’t build websites purely to sell them, as I have stated, I did once start a website completely from scratch and sell it for $550 at the end of the month. It was a news site that I updated 3 times per day, every day, around a certain topic. Because I was writing so much content (90 posts in a month) I was receiving a lot of traffic from Google blogsearch as the niche was very popular.
I did not monetise the site at all so certainly didn’t sell on any form of revenue, but because I had put in the 2 hours or so of work each day to grow the traffic, a webmaster saw potential to monetise the site. $550 is not a huge amount of money but it wasn’t bad for a 16 year old who could have been playing computer games instead.
You shouldn’t expect sites that have no form of revenue to bring in a lot of money unless you do find the rare buyer who is looking for exactly what you’re offering. More often than not, people want to buy sites which are already making money.
If you have any questions, I’m happy to answer them in the comments.