In this article, we’re talking about one of the most competitive areas of online entrepreneurship – buying and selling websites. Specifically, we’re narrowing in on the buying aspect of website flipping.
If you know how to search the market and evaluate the value of domain names, you can have a high level of success buying from a website seller. If you buy an appropriately valued site, you can then use the site to generate revenue, or sell it again for a solid return on investment. But we’re getting ahead of ourselves. First, let’s address the big question – how much is it to buy a website?
On to the title question – how much does it cost to buy a website? Of course, this is a hugely broad question, and the answer (albeit unsatisfying) is that “it depends.” Because the reality is that the price of a website will be influenced by a multitude of factors. These factors comprise what the website is actually worth, and that is largely based on how much revenue the website generates, and what its future profit potential looks like.
So, the better question is not about how much it costs to buy a website, but what is a fair price for that website. The most important part of website buying is knowing how to evaluate a website’s price. In doing this, you can see what would be a good price to pay in order to secure a good return on investment.
Evaluating a website’s price is no easy task. It requires a comprehensive knowledge of the niche that the website is positioned in, and very accurate due diligence of the website itself. In the next section, we’ll go through a general guide for evaluating a website offering, in order to decide whether the price offers an attractive return on investment.
As explained above, the most important thing in buying a website is not the sale price of the website, but whether the sale price is fair. By fair, we mean whether the price allows for significant value potential, which would generate a positive return on investment.
In this section, we’ll run you through a general process for evaluating a purchase offering, so that you can find success in buying websites:
The first step in buying a website is simply knowing where to look! There are so many different places on the Internet that list websites for sale with Motion Invest being only one of them, and you need to locate these offerings before you can buy websites.
Most people who list websites choose to do so through a website marketplace. These marketplaces are ideal for a potential buyer and website seller, because it allows everyone to congregate in one place. Buyers know where to check for deals, and sellers are happy that their offerings get seen. Different online marketplace sites specialize in different categories of website.
Some sellers even choose to sell through a website broker such as Motion Invest, who handles the listing and sale for them. Often, website brokers will have their listings posted on their own marketplaces.
Basically, as a buyer, there are a lot of places to look. It can get a little overwhelming, so we think the best option is to narrow in on a niche, which we will explain next:
Knowing your niche is vital in having success buying and selling websites. Simply put, there are too many categories of website out there to know everything about all of them. You’ll have much more success if you settle into one area to specialize on. This way, you can really learn the ins and outs of your niche, and you can really learn to identify value. You’ll learn to spot attractive website offerings, and you’ll know when to dig deeper. And speaking of digging deeper, that leads us to our next point:
Once you’ve surveyed the options available (preferably within your desired niche) you might have come across some website offerings that look quite attractive. They look like quality websites, and the price seems fair. However, the work is only just beginning! In order to really get a good idea whether a site is worth your money, you must do extensive due diligence.
Due diligence involves verifying the claims made in the website’s service offering. You need to dig into actual data to see whether it justifies the price. Due diligence will look different depending on the site, but it typically involves evaluating traffic data, revenue data, expense data, and key success factors such as conversion rate, click-through rate, etc. Basically, you’re seeing whether an offering is all it’s cracked up to be.
It is worth noting that due diligence is not just about considering a website as it is currently, but you must also evaluate the future potential of the site. Pay attention to how fast it is growing, and whether you think this growth is sustainable. Also, be sure to consider it in the perspective of the market overall. Future growth potential is a huge part of making sound investments, and that requires projections for the website as well as the industry overall.
Remember, there’s one thing that will influence a website’s value after you buy it – and that’s you! Remember that you’ll be buying the website, so your input and expertise could influence the value of the website going forward. If you are buying a website in an industry that you are particularly adept, then your special blend of skills might synergize quite well with the website’s business model.
This is your last step to effective due diligence, but no less important!
Now that you’ve fully examined the service offering, and done your due diligence on the company itself, you should have a pretty good idea of what the offering is actually worth. At this point, you can compare your perceived value of the product to the actual price. You now know whether the price is worth it to you!
Effective website buying is all about staying true to this process. It is all about effective research in order to find opportunities that are worthwhile. Adept website buyers know how to look at a price, evaluate the price, and know whether it is worth paying. It’s definitely a process that takes time, effort, and experience, but you’ll get better at it the more you do it.
Before we wrap up this article, we’ll check out a few commonly asked questions about website buying.
One of the most common inquiries about website buying is “what type of websites are available?” Of course, the answer is pretty broad, with many different websites being available in all sorts of different niches. In consistence with our advice above, the best idea is to settle on your desired niche before you begin this process.
However, you can also look at these websites in terms of how complete they are. The three most common categories of offering are as follows:
Domains: Firstly, you can purchase websites which are undeveloped, and basically just a domain name. This is for those who want to create the website themselves, and fully from scratch. These offerings tend to be quite a bit cheaper (unless the domain name is really popular), because you have to build the site yourself.
Turn-Key Websites: Turn-key websites are sites which are designed to start making revenue immediately. The website owner has created a business model to sell a specific product, with the intention of selling the website. Buying a turn-key website allows you to start making revenue immediately. Of course, you’ll have to evaluate whether you think the turn-key business has potential.
Established Sites: Finally, you have fully established sites. These are online businesses that are already operating, and already making revenue. They may have been in operation for a number of years, and the owner is just looking to sell them now. The price tends to be higher, as the website has a pre-established revenue model and existing clients.
Buying a website from a broker is a different experience than buying from an online marketplace. Typically, website brokers will pre-vet the offerings they put on their site. This means that some of the due diligence has been done for you, and you can be more secure in the fact that the offering is worth the price. When buying from a broker, you can generally be more confident that you will be receiving a quality website.
In contrast, online marketplaces (such as Flippa) have a less extensive vetting process, so you’ll have to do a lot of the due diligence yourself. The potential is higher for finding a scam, or a website that has been overvalued. However, if you do extensive research, you may also find a site that has been undervalued.
Thanks for checking out our guide to buying websites. We hope we’ve helped you understand how to evaluate the price of a website, and more importantly, how to decide the price you are willing to pay!