Read previous articles in this series:
- Part 1: Build Your Preeminence
- Part 2: Communication Channels
- Part 3: Technology
- Part 4: Content and Pricing
- Part 5: Triggers
- Part 6: Prelaunch and Launch
- Part 7: Dealing With Attrition
- Part 8: Set Your Membership Site On Autopilot
Selling your membership site is a real option and worth considering as an exit strategy. If you enjoy the set-up and launch of a membership site, but the ongoing maintenance is not a role you want to perform, you can sell out and move on.
Some people deliberately focus on site flipping, buying under performing sites, optimizing them to increase profits, and selling for a nice gain. There’s no reason you can’t do the same with membership sites, once you understand how they work, or you could start sites from scratch with the intention of building them up quickly to sell off for a big profit.
It’s worth bearing in mind that selling your site is an option at any point. You may have problems with marketing or dealing with attrition, or you just don’t want the responsibility anymore, so your best option is to hand over the site to someone else.
You will get more money selling a profitable, autopilot membership site, but that isn’t necessarily a point you can reach by yourself and if your focus is moving elsewhere, selling your site today is an option. There are plenty of people interested in buying web property at all stages of development.
Preparing for Sale
I have not personally sold my own membership site as I write this, however I have purchased and sold several sites over the past seven years and I know the process very well. Selling a membership site is no different from selling any form of web property, buyers are interested in the same metrics and the more you can do to present your site in a good light, the more money you will make.
If you have ever taken an interest in buying businesses in the real world (bricks and mortar) you might be quite surprised when you head online and investigate the web property marketplace. Web property can be very under priced when compared to their real world counterparts. This might be because the whole idea of buying and selling websites is very new, or it could be because of the virtual nature of the asset. Whatever the reason, your job when selling your membership site, if you want to get a high price, is to prepare well.
Here are a list of the metrics you should collect and provide in a concise document, which you can give to potential buyers who demonstrate serious interest in your site.
- Revenue – How much raw money your membership site generates each month. Provide data for as far back as you can. If you can demonstrate regular income over a long period and a positive growth curve, you will get more for your site. Also be sure to show exactly where revenue comes from, so if you have different membership levels, break down how many members are in each level and how much money is generated. The more specific you are, the better.
- Profit including specific expenses – Revenue is usually the most important metric, but buyers want to know how much profit there is at the end too. In particular, if you can break down the exact source of expenses, potential buyers can determine whether they will be able to reduce the costs after taking over the site and thus calculate potential profits if they become the new owner.For example, if a buyer already has a dedicated server for hosting, they could move the site to their servers and remove the hosting cost component of the expense figures, thus increasing the potential profit. If they don’t know the source of expenses, then they can’t do calculations like that, which could impact the final selling price of your membership site.
- If you treat your membership site like a business then you have accounting records. If you can generate a profit and loss statement for at least the previous year, and a version broken down month by month, then you have the ideal documents to show potential buyers all the details they need to know about revenues, expenses and profits.Don’t disclose this data to just anyone, make sure they demonstrate their seriousness and ability to source the funds to buy your site. Don’t put your profit and loss statements into a document you release to the general public, just reveal summary figures and save the details for the serious potential buyers.
- Website statistics – Buyers want to know how much traffic your membership site gets, including unique visitors, page impressions, Pagerank, Alexarank, how much bandwidth the site consumes and various other website data.The best way to provide most of this info is use the Google Analytics service and print out reports and screenshots. Google Analytics has become the de-facto standard for web stats and buyers trust the data because it is from a third party. You can also provide data from your server logs and statistic packages like AWstats, Webalizer or any stats package currently on your server.
- Source of new leads and conversion rates – Since your site is a membership site, how much traffic you get won’t matter as much as how you source traffic and what rate of conversion you get. You will need to break down exactly how you attract new members, how many members convert from a given amount of traffic by source, and if possible, how long on average members stay in your program given each source of traffic.It’s possible to get quite detailed when collecting data on traffic and conversion and as always, the more information you can provide the better, but for some of you demonstrating the finite details might be beyond your abilities. As a bear minimum, include how you drive traffic to your membership site (the marketing techniques you have implemented) and an average number of conversions per 1000 visitors.
- Level of ongoing work required – Buyers want to know how automated your membership site is and whether there are people and/or systems in place to run the site. It’s important to talk about how many daily/weekly hours is required from the owner in order to keep the site running and what exactly needs to be done. A buyer needs to consider whether they can do what is required, whether they are prepared to invest the time, and how easy it would be to hire someone to perform the roles for them.
- Attrition rate – How long, on average, a person stays a member of your site is a really important metric although what buyers want to know is the lifetime customer value, not necessarily a time period members stay in your program. If you have a well developed membership site, perhaps with different priced levels of membership that you move people through (a back-end), you can really ramp up the lifetime value of each customer. This is an area where experienced Internet marketers shine. Your resources and data collection practices will dictate how much information on attrition and customer value you can provide.
The above seven points represent the main metrics buyers care about, however there is a lot more information you can provide if necessary. If your website is well established and brings in more than six figures a year, expect smart buyers to want a lot of detailed information. They need to be sure they know what they are buying, especially if they are going to spend tens or hundreds of thousands of dollars.
For websites valued over ten thousand dollars (I will explain how to determine a price in a moment) I would suggest compiling a PDF report of about 10-20 pages detailing all the information you can provide about the site, including answers to all of the points listed above. The more detail you put into this report, the less back and forward explaining you will have to do with buyers. However you don’t want the document to get too long either, be brief yet comprehensive.
Offering a concise report will increase how much you get for your site, because you can explain the benefits and lay things out clearly so buyers understand what they are potentially investing in. Make use of graphs and spreadsheet data whenever possible and include screenshots and images to enhance the presentation.
The report is the main selling tool you have, so don’t put in a poor effort or you will leave money on the table. For sites that could go for six or even seven figures expect a due diligence process to occur. The more you expect to get, the longer, in general, you will have to spend demonstrating your site is indeed as good as you claim it is.
Where To Source Buyers
In my experience the best way to source a buyer for a website is to use your existing network. Most of the sites I have sold went to people who just came along at the right time, I knew through somebody else, or came in response to a notice posted to the site explaining it is for sale. You will be amazed once you decide to sell how the right people tend to show up.
If you don’t have an existing network in place you can use online services that specialize in selling sites. Here are some of the most popular –
- The Flippa is the number one place to sell websites and they cater to sites of all sizes (I can spend hours browsing this site for bargains!). I’ve seen sites go for as much as six figures at Flippa (possibly even more behind the scenes) and there are hundreds of buyers. Even is someone doesn’t buy your site directly from Flippa, chances are the exposure alone will connect you with the right person. The listing fee for a Flippa website auction is currently $20 US.
- Websitebroker.com only recently came to my attention but there seems to be some action there, so it’s worth trying.
- DNForum focuses on buying and selling domain names, but they have a section for developed websites as well.
- Tidget doesn’t have a lot of listings, but there is enough happening there to at least take a look.
- Sedo also focuses on domain name trading, but there are areas for selling complete websites as well.
- NamePros is another webmaster focused forum that has lots of activity, but only a small section for buying and selling, and the focus is again on domain names.
- BuySellWebsite certainly has an appropriate name and contains quite a variety of sites for sale, however it costs $59 minimum to list your site. They also have an appraisal service, which isn’t cheap ($449 minimum) but might help increase the final sale price of your site.
- There’s always eBay as an option too, which certainly has a ton of traffic, but doesn’t have the best reputation for finding serious buyers since a lot of the sites sold on eBay are junky templates with no traffic.
Flippa in my opinion stands above the other options as the best site to get maximum exposure, however I am biased since most of my trading has gone at Flippa or through private deals.
The forum based marketplaces are generally a more relaxed environment, however every site above can deliver attention to your sale, which is ultimately what you are really after. You may not sell the site via any of the sites above directly, but they should connect you with a buyer eventually if your membership site offers clear value.
Another reason to browse the above marketplaces is to review how other people structure their site offers. See what information they provide, how the bidding process works, what questions buyers ask, the price sites sell for and you will develop a good grasp of how site trading works.
Work With A Broker
Another option is to work with a broker, however you have to know one to begin with. If you can’t locate a broker through your own network of contacts, you can seek them out via the sites listed above. Most of the sites, like Flippa and Digitalpoint are forums, so you can simply ask if any website brokers are available to help you by posting a new thread.
You may also locate a broker by seeking out people who were involved in recent sales and ask if they broker deals or know of anyone who does. Often there are a few people who tend to be involved with multiple deals, and just asking around will get you in touch with the broker.
If you have a successful membership site for sale I invite you to contact me directly as I might be able to connect you with buyers or could even be interested in buying your site myself. Please use my contacts to get in touch, but only if you have an established and profitable site.
How Much Can You Expect To Get?
This is the golden question – how much is your membership site worth? I’ll open with a disclaimer you will hear from anyone who attempts to appraise a site –
You can never be entirely certain how much a site is worth because there are hundreds of variables involved and ultimately you only get what someone is willing to pay.
Knowing this, you can see why having a concise report is so helpful at increasing the final sale price you attract for your site. The more you can do to remove any ambiguity about your site, the more buyers will be interested. If enough buyers show interest a bidding war could ensue, forcing the final sale price even higher.
Generally the metrics I listed previously will help determine a price range that your site should go for and in particular, the revenue, profit, growth curve, potential for future growth, traffic sources and maintenance requirements, are the key indicators.
As a full scale range, websites have sold for as little as one or two months worth of revenue to as much as ten to twenty years profit. However you will usually find most sites in a marketplace like Flippa will go for between eight and twelve month’s worth of revenue.
If you build a solid membership site and it appears the wheels aren’t falling off it (your attrition rate isn’t too high and you have new members coming in) you should expect as high as three years profit and no lower than two years profit as a reasonable price range.
For example, if your site generates $10,000 a month, with a profit margin of $6,000, then the yearly profit is $72,000, which should sell for around $144,000 to $216,000.
Bear in mind how well automated and how dependent your site is on you for sustainability, is a critical factor. If the site falls apart without your expertise then you shouldn’t expect as much for it.
Also note that sites that show high traffic and/or high revenue but no profit can sell for a lot too. These sites are bought on potential rather than financial data, but for most membership sites I wouldn’t recommend trying to sell until you at least show stable revenue. Membership numbers and how much money you generate counts a lot more than traffic going to your site.
Here is a small sample of some of sales I’ve been involved with or monitored:
- Forum sites produce $1,000 revenue a month (minimal expenses) and sells for $12,000
- Blog has minimal income – a couple of hundred dollars a month – but 2,000 daily readers, sells for $5,000
- BlogCatalog went to auction at Flippa and was listed as sold for $40,000 (this was when it was a directory and not a social networking site).
I hope you have enjoyed this series on how to launch a membership site. I’ve brought you through the entire process from start to finish and by reading over each part in the series you should have a good idea what it takes to successfully create your own membership site.
As I said at the start of this series, I’ve based these articles on my experience with my membership site, Blog Mastermind and all the experience I’ve had running Internet business and making money online to this point.
Blog Mastermind is a site that leverages my expertise and ability to produce content to teach students who are interested in making money from blogging. This type of expert-driven model is fantastic for any person who knows a specific subject matter and has experience and preeminence to back it up. You don’t have to be the best at what you do, just know enough so you can offer value to people who would like to learn from you (who is the best is subjective anyway!).
If you don’t have expertise or you want to base your membership site on a different value proposition, most of what I explained in this series is still relevant. Your job is to choose what product or service you are going to offer, plan your launch, strategize how you will generate traffic and deliver your value and then just get to work executing. It can be a long and intensive process, but the end result is a solid business that produces ongoing value for you, both financially and intrinsically.
This is not the last of what I have to stay about membership sites. I intend to turn this series into an ebook and I have at least one more section to add that will only come with the book version. I also have a bunch of other resources to go along with it and I’ll release news about this as I get closer to launch.
If you are interested in starting your own membership site I expect what I have to offer will appeal, so stay tuned.
Thanks for reading this series. If you enjoyed it I would really appreciate it if you could vote for this post using any of the social media links below.
Here’s to your membership site success,
This series of yours is SO useful! I am sure in future projects of mine I will need this info. I’ve bookmarked it and will use it as main resource.
Man, must have taken you hours to write this one. Nice work!
Wow – never thought of this option for my next business venture – thanks for the heads up – I think this will catch on quickly – best get working on it now before it’s too late
Great article! This has opened up my eyes to a lot of opportunity. I’ve been so stuck on brick & mortar businesses and real estate that I totally overlooked this area.
This is an awesome blog! I never knew how much more money could be made with this type of advertising. I have always thought of having a traditional business as the best way to make the most money, but this has opened up my eyes to new opportunities. Thank you for writing such a helpful blog. I will keep coming back and see what else you post. Thank you.
Great info Yaro. Much appreciated.
One question I have is… If you sell your membership website or any product that is a subscription based product, how can you transfer the current members – including their current subscription setup – to a new owner? I have subscriptions setup through Paypal at the moment and from what I can work out, all the current subscribers would have to resubscribe to the product again so the payments can be sent to the new owner. Is there any way around this?
Alternatively, is there a payment solution provider that you would recommend that make transferring the active subscriptions to a new owner easy without running the risk of losing subscribers in the transfer process?
In your case Pete you might find the best option is changing ownership of that Paypal account. No doubt if you ask people to sign up again and cancel the old subscriptions you will lose a big chunk of customers.
Changing ownership on a Paypal account may not be realistic either, but it’s worth thinking about.
Ideally you want to have a business Paypal account separate from your own personal one, that way when you sell the business the paypal account goes with it.