Fearful of Paying too Much when You Purchase a Web Site? :: website websites

Fearful of Paying too Much when You Purchase a Web Site? Reprinted with permission of VotanWeb.com I receive a lot of email from potential website buyers. Recently I received a note from a buyer who was very excited about a particular website but he was very fearful of overpaying. The website was a perfect fit for the buyer’s interest and experience. The website was in the same market that the buyer had worked in for the past 9 years. The web site had great traffic and the buyer could see potential to grow it. However, the buyer was still fearful of paying too much. The bottom line was that the buyer believed the seller was demanding about 15% more than the website was worth. This had caused the negotiations to reach a stalemate. The solution to this problem was very clear to me. The buyer himself had provided me with a very compelling reason why this website was an excellent fit for him. He would have the opportunity to grow an existing website in which his experience would allow him to hit the ground running. One way to approach this type of decision is to consider your best available alternative. If you don't buy this website, what is your best alternative? Is it a website with considerably less traffic? Is it a website in a market where you have less experience and so may be blind to potential pitfalls? Is it sitting on your money while this website is purchased by another buyer? Your best alternative may be quite less attractive than paying 15% more for the website. Perhaps this buyer had calculated the acquisition price as a multiple of sales, as is the norm. These calculations are merely guidelines – not straightjackets. These calculations must be adjusted to fit the reality of the buyer. If the buyer were to acquire a cheaper website with less traffic then how long would it take him to build traffic to the level of the superior website? The buyer could invest a lot of time sending email to other website requesting link exchanges to increase the visibility of the websites. But what is the value of the buyer’s time? Perhaps $50 an hour, or $60? The buyer should divide the amount that he would need to "overpay" by $50 -- his hourly rate – to determine the equivalent number of work hours. Perhaps the buyer will quickly justify paying the larger amount when he realizes the actual cost of his time if he purchased a lower quality website. Fearful of Paying too Much when You Purchase a Web Site? :: website websites Fearful of Paying too Much when You Purchase a Web Site? Reprinted with permission of VotanWeb.com I receive a lot of email from potential website buyers. Recently I received a note from a buyer who was very excited about a particular website but he was very fearful of overpaying. The website was a perfect fit for the buyer’s interest and experience. The website was in the same market that the buyer had worked in for the past 9 years. The web site had great traffic and the buyer could see potential to grow it. However, the buyer was still fearful of paying too much. The bottom line was that the buyer believed the seller was demanding about 15% more than the website was worth. This had caused the negotiations to reach a stalemate. The solution to this problem was very clear to me. The buyer himself had provided me with a very compelling reason why this website was an excellent fit for him. He would have the opportunity to grow an existing website in which his experience would allow him to hit the ground running. One way to approach this type of decision is to consider your best available alternative. If you don't buy this website, what is your best alternative? Is it a website with considerably less traffic? Is it a website in a market where you have less experience and so may be blind to potential pitfalls? Is it sitting on your money while this website is purchased by another buyer? Your best alternative may be quite less attractive than paying 15% more for the website. Perhaps this buyer had calculated the acquisition price as a multiple of sales, as is the norm. These calculations are merely guidelines – not straightjackets. These calculations must be adjusted to fit the reality of the buyer. If the buyer were to acquire a cheaper website with less traffic then how long would it take him to build traffic to the level of the superior website? The buyer could invest a lot of time sending email to other website requesting link exchanges to increase the visibility of the websites. But what is the value of the buyer’s time? Perhaps $50 an hour, or $60? The buyer should divide the amount that he would need to "overpay" by $50 -- his hourly rate – to determine the equivalent number of work hours. Perhaps the buyer will quickly justify paying the larger amount when he realizes the actual cost of his time if he purchased a lower quality website.