Getting into the web site selling business can be very lucrative. It can also account for a very long term means for an income because as long as there is Internet, there will be web sites. And as long as there are web sites, they will be bought and sold.
Just like real estate, web sites, i.e. virtual real estate, can be a long or short term investment for many an entrepreneur, or a second (or even a first) income for a family.
Determining The Value Of A Web Site
There are many different metrics that could determine the value of a given web site. A lot of people look at the monthly profit that has been sustained over a given period of time and multiply that value by 12. So, for example, if the profit for a web site has been steadily around the $5,000 mark, arguably that site could be worth, and ultimately sold for, $60,000, which should be realized within a year in a perfect world.
That doesn’t always work of course as people are selling brand new sites with no income, which by that calculation should be worth $0. New sites sales are different though, and are not part of the “true” definition of “web site flipping.” With a new site, the seller is essentially trading time for money, and the buyer is paying for that time. Not to say that it’s like a standard 9 to 5 because those that are good with technology, have a little creativity, and have 1 or 2 people helping out with different aspects of the site, can potentially make sometimes as much as $300+ per hour after all expenses paid.
For the actual “flipping” of web sites, people generally locate a web property, buy it, fix it up, and re-sell it (or flip it). These people generally have a knack for determining the value of a web site without really looking at the income and without getting information from the owner. There are tools available, free and paid, that could help a potential web site flipper learn the “rough” value of a web site. I say “rough” because one metric may be worth more to one person than an other. For example, someone might value a Facebook fan page at $1 per fan because they have a better understanding of how to leverage that audience more than someone that might value a fan at $0.10.
Studying Flippa Auctions To See What Metrics Are Important
Flippa, by most standards, is considered the biggest and best marketplace for buying and selling web sites. Sure, one could list a site for sale in a webmaster forum or auction site, or other marketplace dedicated to web site and domain sales, but Flippa is a big player. They advertise on TV, on the radio, and are an extension to one of the biggest MMO forums on the web: SitePoint.
Browsing through some of the auctions on Flippa can help a beginner and advanced seller see what the marketplace is looking for. You can find out what is selling and often at what price. Plus you can see what is staying on the shelf. Viewing the comments for an auction can help you understand the customer base and what is important to them. Plus, looking at the metrics that the Flippa auctions provide will give a clear indication of what information is important to determine the “rough” value of a site.
Metrics such as when the site was established, how much traffic the site gets (and how much of it is unique), the amount of revenue and profit, what monetization methods are employed, how big the list is (and other followings such as Twitter and Facebook), whether the design and content is unique, the platform used for the site, and so on… all help gauge the value of the site to the buyer. Looking at domain history is also important so as not to get stuck with an old porn or spammy domain. The Internet Archives (the Wayback Machine) can show you the history of a domain, as snap shots of the site were taken over time.
My suggestion is to spend several days in the Flippa marketplace when new to the business, which will provide a crash course on web site flipping. Then I would recommend one day per month dedicated to “studying” the site to uncover new opportunities and see how the marketplace has changed.
The Steps To Follow For A Web Site Flipping Business
In my opinion, to get into this business, especially for the long term, here are the steps to consider following:
1. Learn as much as you can about the industry of course. Flippa.com is a good starting place as mentioned, and may be the only education that you need. Hanging out in a marketplace, one can learn a great deal. There are paid courses on site flipping though. I remember that Ed Dale of the 30 Day Challenge had one, so look him up to see if it’s still available and updated. It was years ago I wen trhough the course so it might be gone. He goes into great length about determining the value of, and finding, web sites to flip.
2. Once you have a good understanding of what people are buying, learn the different strategies for finding web sites to flip. Some people will buy sites from other less known marketplaces. Others will hunt down web sites that appear “stale” but have value and offer the owner small amounts of money to acquire the site. And others will build sites from scratch. They may sell right away for a quick profit or build the site up before considering selling.
3. Sell the site in the marketplace. Although you will be competing against many other listings and paying what some may consider “hefty” fees, I recommend Flippa. But there are other options including eBay and the Digital Point Forums.
4. Stay in contact with buyers after the sale and give them first crack at new sites that you plan to flip. This can save you loads in fees when selling in the marketplace, not to mention the time creating the listing and answering comments from beginners (not that it’s bad to impart knowledge on those still learning, but we only have so much time in the day to get our cake right?).
5. Have a team of technical, writing, and creative staff to help with after-sale support. Your team may also help the buyer keep the web site going for a given period of time. This service may have been negotiated in the sale price, or may be an up-sell.
I think it was Ed Dale who suggested that to make a web site sale stand out from the rest, you can also throw in a year of up-keep. In essence, you can guarantee the monthly income for a year because you will be doing all the same things to the site that you did before the sale, but the new owner will be making the money. Part of the service could also be to help switch over the ads (and whatever other monetization methods are used on the site) so that the new owner is paid. You can potentially demand 24x or more the monthly income vaue when offering these extras, rather than the 6x or 12x that is commonly calculated.
Skip The Marketplace After Establishing A Client Base
After you impress your customers with high value customer support throughout (and after) the buying process, and deliver a fantastic product, you will have a potential customer for life.
You can start a free membership site with accounts tied to autoresponders and broadcast newsletters. The easiest and quickest way is with WordPress and a great membership plugin, then once everything is in place, you can manually add customers that you get from the marketplace into the membership portal. This is how you “deliver” the web site. After logging in, they could have a section dedicated to their purchase downloads. But at the same time, they could be placed on a buyer’s list (through AWeber, MailChimp, ContactContact, whatever) where you could send emails to about new site sales, and skip the marketplace altogether (providing the customer opted in of course).
You can also have a front-end to the site where you list properties that didn’t sell through the mailing list. Perhaps you can also have a segregated mailing list. One group can be “prospects,” the folks that signed up through the front end and haven’t yet purchased from you. Then you can have groups of buyers, maybe even tiered, based on how much they have spent with you in the past. Then you can start from the top with your pitch when selling a new site. The last email would go to the “prospects” who never spent any money with you in the past.
Then, as mentioned, if the site doesn’t sell through the list, it can then be listed publicly for free through the front end of your site. After a period of time, if it doesn’t sell, worse case you hit the marketplace again, all the while picking up a new buyer to add to your membership portal.
And when it’s time to wrap up your lucrative site flipping business, and if you’re children aren’t interested in taking over, you flip your site flipping site to the highest bidder. Full circle.