How Much Is Your Blog *REALLY* Worth?
Most bloggers have, by now, seen Dane Carlson’s little widget to help you figure out how much your blog is worth.
Now, I know and love Dane, so I have no problem saying that the tool’s inherenty flawed (and Dane knows it). It’s an interesting piece of data, but yeah, nobody has ever sold a blog for anywhere near what the tool says - mainly because it simply doesn’t take enough data and variables into account.
So when I saw the latest little tool to create a “realistic” valuation for your blog I was inspired.
My problem with the tool was basically that while it was fairly accurate in terms of projecting revenue, I didn’t feel it provided enough data for a blogger to know if it was actually accurate or not. Also, the P/E model, based off an average from the S&P’s average just seemed fatally flawed for me, since it has no bearing on the blog or social media industry.
[[[ before I go any further, here is the model in case you want to download it right now: How Much Is Your Blog Worth, The Blog Model v2 ]]]
So I did a few things.
First, I built a larger model. I give full credit to JLA Ventures (one of the b5media blog network’s, where I’m the CEO, VC’s) for introducing me to this style of modelling, and full credit to Gili for inspiring this larger model. The larger model breaks out revenue and costs to monthly and yearly levels.
The second big change was basing costs on a proportionate basis (ie: if you spend 10$/month on hosting now with 1M pages/month and you grow by 10x, your hosting costs will probably increase relatively proportionately).
The third was bringing in a variable-based valuation model based on a random dataset of purchases at various pricepoints. Now I know data geeks will have more than enough data to disprove my multiples, which is why I’ve dropped the numbers in as in-sheet values instead of hiding them in the formulas. If you think a purchase at a certain level has a higher or lower multiple, just change it.
And, finally, I’ve given a range of valuations. Obviously the tool is ballpark, best-guess, but there’ll always be ranges.
End of the day, purchase price is rarely a reflection of pure revenue, profit, P/E, traction, etc. It’s a balancing act between what the seller wants and what the buyer needs.
So yeah, comments welcome, critiques welcome, here’s the model: How Much Is Your Blog Worth, The Blog Model v2
POSTED IN: General
10 opinions for How Much Is Your Blog *REALLY* Worth?
Mike Malone
May 17, 2007 at 12:19 am
Nice work Jeremy. I think your estimates are about as good as they can get - every website monetizes differently, so it’s pretty much impossible for anyone to create accurate estimates without access to a lot of information that only the site’s owner has.
I like your comment that “purchase price is rarely a reflection of pure revenue, profit, P/E, traction, etc. It’s a balancing act between what the seller wants and what the buyer needs.” Reminds me of my intro to microeconomics professor who stumped the class by asking what would happen if a Monopolist (a seller who has no competition in a market) meets a Monopsonist (a buyer who has not competition). After waiting a minute for someone to guess he said “they negotiate… there’s one buyer and one seller… duh?” Not sure if that humor will translate here, but I found it kind of funny.
Bixpeh
May 17, 2007 at 4:17 am
I think you will also be interesting to look at a simple tool that provide an easy way to calculate revenue from contextual advertising for any site.
http://adsensemeter.com/?url=ensight.org
Please, send me e-mail if you like it. Your feedback is important for me.
Al Carlton
May 17, 2007 at 8:33 pm
That’s the best model I’ve seen so far, very useful. And for a change I just about agreed with what it valued my main site at, thank you :)
John
May 18, 2007 at 9:43 am
Great model, very detailed. I too found it gave a realistic value for the sites I looked at.
Kathleen
May 21, 2007 at 2:55 pm
These widgets are fun but I always end up depressed because I haven’t made monetizing mine a priority. What’s wrong with me? I have a professional level site (arcane but #1 in my industry) but I haven’t gotten off my duff to take advertising -or much of it (I’m getting about $300 monthly in Amazon book links).
I think my reticence (diffidence) is due to not knowing what I should be charging. I hem and haw when approached by advertisers. I don’t want to pull figures out of thin air but I’m wondering if that’s just what I should do and see what sticks. It would be great if these widgets told n00bs like me what we should be charging.
If it’s not inappropriate and someone cares to take pity on me (or can point me to someone I should pay or speak with), I’m getting 4-6K visitors a day, 4.7 page views per visitor, page rank of 6, oh, and that’s another thing, time spent on site. My average is nearly 6 minutes per visitor. Somebody told me the average on the web is 30 seconds. 18-22% of my visitors spend an hour or more on site. I’ve been blogging over two years with about 900 entries. My blog entries are usually quite long (which explains time spent on site). Some exceed 15 printed pages (including comments). Not surprising my comment should be so long either being such a blabber mouth.
Matt
May 22, 2007 at 11:37 pm
Hey, This looks really great. It gets confusing to try and forcast revenue and costs when you are just starting up. I’m sure this will help us at take247.com Thanks a lot.
WordCamp 2007 Notes
Jul 24, 2007 at 12:27 am
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Jul 27, 2007 at 9:24 pm
[…] you write about education technology, current events, or your cat – every blog has value (find out yours). I’ve been contributing to the Grant Wrangler Blog for seven months now, and have learned a […]
The Value of Your Blog « Future Perfect Publishing
Aug 9, 2007 at 2:39 pm
[…] But how do you try and gauge what the value of your blog is?  Jeremy Wright of b5Media did some research on this and, with the help of his team, came up with a model that takes into account traffic / readership size and growth, advertising type / rates, and costs. The model then computes a range of valuations based upon different multiples of net income. (You can download the model - an Excel workbook - at his site.) […]
bayarsaikhan
Aug 9, 2007 at 11:28 pm
Realistic values. Thanks.
According to my calculation, my yearly income from blog is 2000$ ;) exactly what i expected.
Great work.
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