A Missed Opportunity - A Case Study

September 19th, 20073 Comments

I’m still kind of struggling with an opportunity I missed late August over at Sitepoint because of my lack of resources (both time and money). A very attractive gadget and tech blog (whose url I’m not sure if I should share) came up for sale that had a lot of revenue and traffic. Here are the numbers:

  • PageRank: 5
  • Unique Visitors: 55,000/month
  • Page Views/month: 85,000
  • Born on: March 2005
  • Revenue - Almost exactly $860/month for three straight months
    • Adsense: $460
    • TLA: $220
    • Chitika: $170

The site also came with an additional PR4 Zune blog, a PR3 home gadget blog, and some other branded domains which were not near as popular as the main tech blog. So they had a lot of potential for future success, but not at the same level as the main blog.

Expenses

So to make it a true business instead of a job a few bloggers would’ve been necessary. With one post a day on the main gadget blog, and two a week for the other two blogs with PR that would be 9 posts a week. If I were to pay $10/blog post that comes out to $400/month. I’m not sure how much hosting would cost for a site like this, but a figure $30/month would probably suffice.

Monthly Profit

So a monthly profit would come out to a conservative $400/month. It has unlimited potential, and could realistically be ~$600 with a little work, but let’s just stick with $400.

Selling Price

The blog(s) ended up going for $9,000, which is just 10X revenue, but more importantly ~23X profit.

So what I’m looking for is feedback on this deal. Would you have done it? Sure, there are a many externalities that are involved depending when purchasing the site, but from the numbers alone, consider the following questions:

  • Is this a good investment at $9,000?
  • What is the most you would pay for it?
  • Would a partnership have been worthwhile, since I couldn’t afford the site outright by myself?

Think about these questions, and please share your thoughts in the comments. I’d love to hear what others think about this potentially lucrative online investment.

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A Missed Opportunity - A Case Study

PassivePassion | September 19, 2007

I wouldn’t beat yourself up about it, 23 x profit is hardly a bargain.

Blogs are a notoriously tricky purchase - losing the original owners voice may well have a detrimental effect on subscribers.

PassivePassion

Celine | September 19, 2007

I’m generally quite the cheapskate, so I rarely buy anything from others. Also, I love working on sites fromt he ground up and watching them grow. Sounds a bit girly, doesn’t it?

If I was presented with the same numbers on sites I’m interested in, I would’ve taken it if I had the budget. However, I would’ve leaned towards the partnership more, since it would be hard to manage a set of sites like that without additional help. Plus, it’s a safer move, financially, assuming you’re partnering withs omeone you really know and trust.

The contractors and network of my partner might also help me find more cost-effective content writers. (Then again, I do run a web content service, so I have easy access to great writers with affordable rates)

Nick | September 21, 2007

I used to be an advocate of “build your own site” but I’m trying to move into the more passive online income stream, so I think buying sites is a great way to bypass the whole build up process. With the larger gaps between PR updates, buying keeps looking better…I’ll cover that in the future though

That’s true that I could easily find someone for less than $10/post. But for a reliable blogger who wrote excellent content, I think $10/post is manageable, especially since the blog is so popular. In the search engine’s eyes, $4 posts would be just as good, but the readers would be sure to notice the drop off in quality that comes with paying only $4/post.

I’d go for a very qualified blogger and pay he or she well…

The partner idea is surely less risk…but less reward at the same time…

Share your thoughts!!!

performancing hive

A Missed Opportunity - A Case Study was written by Nick on September 19th, 2007 at 6:00 am and posted in Buying Sites

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