I want to sell a project, but I know nothing about valuation of a tiny project?
Hi
Well my project is not a startup at all. its very small project managed by me only with few freelancers.
HQ:Dubai
The project is an online test prep course for local exams.
Project Stats:
- 300-500 Subscribers (this year ) last year (100-200).
-Av. order value $69
-Total sales $59K (made since I started 4 years ago), this year ($35K).
-$10K left at my paypal account, ( i used most of the income for developement 12K, the rest is for my own expenses).
What is the valuation of my project ?
Typically, for small Internet based businesses, a yearly multiple of 1.5 - 3 is common (sometimes higher, sometimes lower depending on many different factors).
So you can take your yearly revenue - yearly operating costs (not including a possible salary for yourself) * the multiple.
For example, let's assume you earned $35k in revenue the past 12 months and your operating costs (server, freelancers, any other costs) were $10k. That means you netted $25k. That would result in a valuation between $37.5 and $75.
Hope that helps!
so mostly I'll get low valuation due to my own costs right ?
how to increase the valuation to 100K-150K at least ?
Which will help me the most > more $$ or less cost ?
Don't get too hung up on those guidelines.
Unless you have data to the contrary, no one wants to buy your business and therefore it's worth 0.
The guidelines come into play when there's an interested buyer. It might inform you about the price you'll demand but there'll be no sale unless there's a buyer willing to pay that price.
There are several ways to improve your price.
The best is to find multiple potential buyers so that you can pit them against each other. "I would love to sell you for $50k but I have a buyer willing to pay $55k. Can you do better than that?"
You can try to find a buyer that has a strategic interest in your app so that for him the value is greater than just a multiply of profit.
Then you should try to sell more i.e. to increase revenues.
Then you can try to decrease cost.
Then you should work on your pitch i.e. how you present your business. Buyers are not 100% rational, the story and how you present it matters.
Both lower costs and higher revenue would move the valuation upwards. Two sides of the same coin.
Ultimately a price is what you can negotiate.
That being said, a small saas is sold for a multiple of profits (not revenues).
So first you need to estimate your profit (revenues minus cost of running a business, like hosting fees, credit card processing fees etc.)
How much of a multiple? 1x-5x depending on various factors. If revenues are growing year-over-year, you can ask for more than if the business is shrinking.
You can see some concrete numbers at https://digitalexits.com/sell-software-business/ or https://blog.flippa.com/how-much-is-my-website-worth/
Don't be too optimistic i.e. don't assume you can get 5x multiple because someone got that much.
Many businesses have value of 0 i.e. no one is interested in bying.
You can do your own research on https://flippa.com/ which is auction for selling websites and saas apps. Browser the listings and you can get a sense of current state of the market.
I put this post together recently regarding selling your online business. Hope it helps. https://www.indiehackers.com/@thisdickie/top-5-marketplaces-to-buy-and-sell-side-projects-af1ab990c3
I’d highly recommend asking Empire Flippers to value and sell. Generally they go with 35x - 40x profit but have a free valuation tool which should offer some guidance.
Valuation: https://empireflippers.com/valuation-tool/
Hi,
It would help if you could link to your project as:
1.) People get approached all the time here, with unsolicited offers, from interested parties, looking to buy their projects. Many deals have closed this way.
2.) A post like this, could directly lead to a sale for you. Many examples of this happening on HackerNews.
I'm actually interested in edTech, and have the capital to acquire a project. I'm sure there are other interested readers.
If you share a link, you'd increase the chances of being approached with a concrete offer: adding your email wouldn't hurt your chances either.
Why do you want to sell it?