If you are thinking of buying or selling a website, you might be wondering "What is a website broker?"\nA website broker helps to connect the seller (owner or webmaster) and buyer of a website.\u00a0 Similar to a real estate agent, a website broker is paid on commission - a percentage of the website sale price.\nThere are many factors to consider before you hire a broker.\u00a0 You should learn what a broker does and how they do it, and why you might want to hire one.\u00a0 Luckily, you can find out more about these topics in this article, so read on!\nWhat Does a Website Broker Do?\nA good website broker can assist you with valuation, marketing, negotiation, and all the paperwork and technical details of selling a website.\n\nValuation\nA website broker can help you to determine value of your website.\n\nBased on his knowledge of the market and the specifics of your website, a broker can come up with a price that will find a buyer in a reasonable amount of time.\u00a0 I will give more specific information about valuing a website later.\nMarketing\nAn experienced website broker has put together deals before, so he knows what buyers want to see.\u00a0 This means a broker can put together marketing materials faster than you could yourself.\nYour marketing materials are like the prospectus for a publicly traded company.\u00a0 You are telling buyers what they are getting for their money, and giving them the data to support your claims.\nA broker will also advertise your website for sale, making sure that prospective buyers know what is available and at what price.\u00a0 The broker might even take buyers on a tour of the website, to show them what they are getting, and to give a sense of the quality of the content.\nNegotiation\nYou might not like to negotiate directly with another party, or you might not know what your website is really worth.\u00a0 Luckily, your broker can help with both of these things!\nIf the broker negotiates a higher price for your site that more than pays for his fee, then you are ahead on the deal, not to mention the work you avoided!\nPaperwork\nThe paperwork includes marketing materials, as mentioned earlier.\u00a0 Paperwork also involves presenting offers and letters of intent from buyers, preparing responses from the seller, and preparing to transfer the money and property via escrow transfers.\nA good broker can also maintain your privacy as you sell your site.\u00a0 You don't want dozens of people sifting through your private information!\nWhat Determines the Value of a Website?\nA very general rule of thumb is that a website will sell for 12 to 48 times its monthly earnings (that is, 1 to 4 years of earnings).\u00a0 However, most sites will fall somewhere between 24 and 36 times monthly earnings (2-3 years of earnings).\nTo get a more accurate valuation, there are four factors that will influence the value of a website: market, income, traffic, and effort.\nMarket\nNo website is sold in a vacuum.\u00a0 You need to consider what is happening in the broader market.\n\nIn a global financial meltdown, money is tight, and most assets will command a lower price as money dries up.\u00a0 When times are booming, you can command a higher price for the same asset.\nComparing your website to similar properties is one method of assigning value.\u00a0 This is similar to what city assessors do when valuing a home based on similar properties.\u00a0 If you can find a website with income and traffic similar to your own, then the price of that website is a good starting point for your site.\nHowever, the market is not the only factor to consider.\nIncome\nThe income (or earnings) of a website refers to the profit that the site makes.\n\nThe revenue is the amount of money the site brings in from all sources (ads, e-books, etc.).\nThe expenses are all the costs incurred to run the website (hosting, virtual assistants, etc.).\nThe profit is revenue minus expenses.\n\nThe reason profit is so important is that it takes expenses into account.\u00a0 If your revenue numbers are great, but the website is expensive to run, then a buyer will be wary about purchasing the site.\nIn addition to the current revenue, expenses, and profit, buyers will want to look at historical trends.\u00a0 It is desirable to see steady income for one to two years.\u00a0 A sudden spike will make a buyer wonder where the extra money came from, and if it is going away soon.\nRelated to trends is seasonality, or changes in income due to seasons.\n\nFor instance, a Christmas themed website will do most of its business at year end, whereas an outdoor summer themed website will do best between late May and early September.\nAll things being equal, a buyer will want to see steady income with minimal seasonality.\u00a0\u00a0 However, it is possible to buy a few websites with different seasons to "even out" the total revenue of a portfolio of websites.\nIn addition to the amount of income and the historical levels of income, buyers will want to see diverse sources of income. For the same reason that it is dangerous to own only one company's stock, it is dangerous for a website to have only one source of income.\nInstead of only selling an e-book on how to train your dog, a website could also:\n\nrun ads related to dogs and other pets (via Google AdSense or another ad broker)\na course on how to train your dog (goes into more depth than the e-book)\nadd affiliate links to pet care products (on Amazon, WalMart, or other sites)\nsell physical products unique to your brand (dog treats for training that you bake yourself)\n\nThere are other sources of revenue, but the point is that a buyer would like to see a diversified income for the website.\u00a0 If Amazon cuts their affiliate commission rate, the buyer wants to know that ads, e-books, course, and physical products can pick up the slack.\nTraffic\n\nThe traffic of a site refers to the number of people that visit the website to view one or more pages.\n\nThe term page views refers to the total number of times that a page has been viewed by all visitors.\u00a0 (For instance: if you go to amazon.com and look at three different pages, then that counts as three page views).\nThe term unique visitors refers to the number of unique users who went to the website.\u00a0 (For instance: if you go to amazon.com twice in one day, you only count as one unique visitor).\n\nIf the number of unique visitors is close to the page views, then most people are only visiting one page on the site.\u00a0 If the number of unique visitors is much lower than the page views, then a few people are visiting many pages on the site (indicating high engagement).\u00a0 Both of these may be desirable in certain situations.\nThe bounce rate is the percentage of visitors who leave your site after viewing only one page.\u00a0 If your bounce rate is extremely high, a buyer will want to know why, and how your site can succeed in spite of this.\nA high bounce rate might be acceptable in certain situations.\u00a0 For example, you might attract a visitor to a single page via Google search, and then immediately send that user offsite to Amazon to buy a product, thus earning an affiliate commission.\nA conversion rate is the percentage of visitors who complete a desired action on your site.\u00a0 This could mean opting in to an email list, buying an e-book, or enrolling in a subscription membership service.\nA high conversion rate can mean a highly qualified audience of visitors to the website, effective marketing copy on the website, or a combination of both.\nAs with income, seasonality of traffic will be an important metric for a potential website buyer.\u00a0 For instance, some sites see most of their traffic coming in during the holiday season.\u00a0 A buyer will not want to purchase your site in June, only to find out six months later that the site is dead due to a Google algorithm update.\nFinally, your sources of traffic will be important to a buyer.\u00a0 These are:\n\nreferrals - another website (a fellow blogger, etc.) refers a visitor to your site via a link\norganic - your site appears in Google (or Bing, or Yahoo) search results, and a visitor clicks on a link to visit your site\npaid - you pay for an ad (on Facebook, another blog, etc.), and users click on the ad to visit your site\ndirect - a visitor types your domain name into the search bar, or uses a bookmark, to visit your site.\n\nObviously, direct traffic is highly desirable, but will only occur once your website is well-established.\nReferrals and organic traffic will come in time as your website earns authority with thorough, accurate, and helpful content.\nPaid traffic may be desirable if you can earn more per visitor than it costs to bring him to the site.\u00a0 These are all things a buyer will want to know!\nEffort\nFinally, a buyer will want to know how much effort it takes to maintain the website.\u00a0 This is subjective, since something you have been doing for years might take you ten hours per week, while it might take a new owner twenty hours per week.\nThe point is, a buyer does not want to fork over lots of money to buy a minimum wage job.\u00a0 There are a few things to consider regarding the effort to maintain the website.\nFirst, consider the quality and quantity of website content.\u00a0 All else being equal, more and better articles means more security of income.\u00a0 If a competitor sees a website with 100 well-written articles, he is more likely to say "Why bother?" and move on to build a website in a less competitive niche.\nSo-called "evergreen" content will be worth sharing and reading for years to come.\u00a0 This means the new owner will not need to be rewrite articles.\u00a0 As an example of "non-evergreen", most technology websites need to constantly rewrite their content to keep up with changing technology.\nA buyer also considers systems in place for the website.\u00a0 The more you have automated what was previously manual, the more attractive your website will be.\nFor instance, instead of manually emailing a PDF file to everyone who buys your e-book, you have a system set up that does it for you.\u00a0 This saves a massive amount of time as the sales ramp up!\nIn addition, if you need to hire and train help to run the website, chances are that the new owner will need to do this as well.\nA system for finding and testing potential employees will make your site more attractive.\u00a0 Hiring virtual assistants (VAs) is a common task for those who own online businesses.\u00a0 If you aren't sure where to start, check out my article on how to hire a virtual assistant.\nTraining videos for new employees on how to run your website will also help to make the sale.\u00a0 To learn more, check out my article on how to train remote employees.\nFinally, a buyer will think long and hard about the website's dependence on the owner.\u00a0 If the domain name is "johnsmithconsulting", then it is questionable whether the site can survive without John Smith on board.\nOn the other hand, if your articles and products are fairly generic, then visitors to your site might not even notice a transition.\u00a0 A low dependence on the site owner makes it easy for a buyer to transition into owning your site.\u00a0 It also makes the site easier to sell in the future, when the buyer wants to make an exit.\nExamples of Website Valuations\nHere are a couple of examples to give you an idea of how you might value a website.\nExample\nYou are considering a website in the pets niche.\n\nSites with similar traffic and income have sold for 20 to 30 times monthly income.\u00a0 You start off in the middle, with a factor of 25x (25 times monthly earnings), and decide to modify from there, based on what you learn in your due diligence.\nYou see that average monthly revenue is $800, expenses are $750, and profit is $50.\u00a0 This is concerning, since a 10% increase in expenses would mean a monthly loss of $25.\u00a0 You find out that most of the expenses are for content creation.\u00a0 If you cut those costs, you would need to do the work of creating content yourself.\u00a0 So, you downgrade the multiple from 25x to 22x.\nFurther, the site only has one source of income: advertisements via Google AdSense.\u00a0 A small downward fluctuation in ad revenue could also put you into negative profit territory.\u00a0 Thus, you downgrade the multiple from 22x to 20x.\nYou also find out that the bounce rate for the site is extremely high.\u00a0 Upon further investigation, you guess that the reason is the sheer number of ads on the website.\u00a0 You again downgrade the multiple from 20x to 18x.\nFinally, no systems are in place, and the website owner is doing everything manually.\u00a0 You think you can automate things, but this will take time and money.\u00a0 You further downgrade the multiple from 18x to 15x.\nYou end up offering a multiple of 15 times monthly income, or 15 x $50 = $750 for the site.\u00a0 If the seller wants much more than this, you would need to hear a good justification for the price.\nNow, we will look at a site that is doing a little better.\nExample\nYou are considering a different website in the outdoors niche.\u00a0 Sites with similar traffic and income have sold for 15 to 25 times monthly income.\u00a0 You start off in the middle, with a factor of 20x (20 times monthly earnings), and decide to modify from there, based on what you learn in your due diligence.\nYou see that average monthly revenue is $2500, expenses are $500, and profit is $2000.\u00a0 This is great, since expenses are only a fifth of income.\u00a0 As a result, you upgrade the multiple from 20x to 23x.\nFurther, the site only has multiple sources of income:\n-advertisements via Google AdSense ($600 per month).\n-affiliate links to Amazon, Cabela's, and WalMart ($1300 per month).\n-an e-book - a quick guide, which sells for $5 ($400 per month).\n-an online course - an in depth training, which sells for $50 ($200 per month)\nEven if you lost one of these sources of revenue entirely, you still have at least half of your income, and are making a decent profit.\u00a0 Thus, you upgrade the multiple from 23x to 26x.\nYou also find out that the bounce rate for the site is moderate - neither great nor horrible.\u00a0 For this reason, you decide to leave the multiple unchanged at 26x.\nFinally, the website owner has numerous systems are in place:\n-the e-book and course are delivered automatically\n-he has a training video for new content creators (writers)\n-he has two existing content creators who are paid automatically each month\nYou believe the current owner when he says that he only spends 5 hours per week on the site.\u00a0 You further upgrade the multiple from 26x to 28x.\nYou end up offering a multiple of 28 times monthly income, or 28 x $2000 = $56000 for the site.\nYou can consider many different factors, and come up with your own rationale for valuation, either as a buyer or a seller.\nWhy Do People Buy and Sell Websites?\nYou might be wondering why anyone dream of selling a website that is making a solid profit.\u00a0 You might also wonder why someone would bother buying a website when he can just create his own.\u00a0 There are good reasons for both buying and selling.\nReasons to Sell a Website\nFirst of all, a seller may need to raise cash quickly, for any number of reasons.\u00a0 Maybe he needs a down payment for a house.\u00a0 Maybe he needs money for relocation for a new job.\u00a0 Maybe he needs a large chunk of money for medical expenses or college tuition payments.\n\nThe seller may also be bored with the website.\u00a0 The excitement of starting fresh with a new site, writing content, formatting the appearance, hiring writers, and creating systems has faded.\u00a0 The maintenance of the site is a routine task for him now, and he would rather go and start a new site.\nIn addition, a seller may want to sell an existing site and use the proceeds to buy another larger site, which he can then build up and flip or keep.\u00a0 This makes sense if he can earn a higher hourly rate working on a larger site.\u00a0 After all, you only have so many hours each day!\nFinally, a seller may wish to retire, sell his site (or sites), and invest the proceeds in real estate, stocks, bonds, or even CDs to fund his retirement.\nJust remember that there are plenty of legitimate reasons for selling a website.\u00a0 This doesn't mean that the seller will be willing to share his reasons with you!\nReasons to Buy a Website\nSome of the reasons for buying a website are "opposite" (or maybe complementary) to the reasons for selling a website.\nFirst of all, a buyer may have plenty of cash lying around, and he wishes to earn a better return than he can in savings, CDs, or bonds.\u00a0 If he wants a more hands-on approach than the stock market, then buying a website might be just the thing for him.\nA buyer may also be looking for the challenge of turning around a decent but under-performing website.\u00a0 In other words, the buyer is a professional (or novice!) who wants to try to "flip" the website by buying it, making improvements, and selling it for a higher price.\nIn addition, the buyer may own a competing website.\u00a0 It might be best for him to buy the site and redirect some of the traffic to his own site, in order to consolidate his market influence.\nFinally, a buyer may simply wish to diversify his portfolio by adding relatively passive income to his portfolio.\nAgain, keep in mind that although there are plenty of reasons to buy a website, the buyer may not share them with you!\nDo I Need a Website Broker?\nYou do not necessarily need a website broker.\u00a0 However, you should think long and hard before trying to sell your site by yourself.\u00a0 This is especially true if there is a lot at stake, as is the case for websites with higher incomes and valuations.\nThere are several reasons to use a website broker instead of selling your site on your own.\nThey Pay for Themselves\nA good broker can help to highlight the positive aspects of your site, and explain benefits that buyers might not see otherwise.\u00a0 A good broker also has access to more qualified buyers than you do.\u00a0 Moreover, once your broker finds buyers, he can negotiate on your behalf for a higher price.\nExample\nYou are thinking about selling your website yourself, and decide that you could command $20,000 for the site and sell in 6 months.\nInstead, you hire a website broker, who sells the site for $24,000 in 3 months.\u00a0 After taking a 10% commission of $2,400, you end up with $21,600.\u00a0 This is 8% more than you would have gotten on your own.\u00a0 Plus, you closed in 3 months instead of 6, and avoided unpleasant work that you didn't want to do!\nAs you can see, hiring a broker can actually earn you more money than if you sold your site on your own.\nThey Have Access to Buyers\nA good broker has built up a relationship with qualified buyers.\u00a0 This might mean people who have signed up for an email list on his brokerage website, expressing interest in specific web properties.\u00a0 It might also mean repeat customers who regularly buy websites for income.\nThese qualified leads are already interested in buying a website - they are not "cold calls".\u00a0 Furthermore, repeat buyers have already been vetted, and one or more successful transactions have taken place, reducing the risk for you as the seller.\nThey Can Speed Up the Process\nAn experienced broker knows the ins and outs of valuation, marketing, advertising, paperwork, and transfer of property.\u00a0 This means that he can do this work faster than you could on your own.\u00a0 This also means that there is less chance of a mistake that could cost you hundreds, thousands, or your entire website!\nSince a broker is not starting from scratch to find interested buyers, he will likely close a deal much faster than you can on your own.\u00a0 Acting as the go-between for buyer and seller, he can grease the wheels of commerce and help to complete the sale quickly, brokering trust between the parties.\nThey Can Protect You\nA knowledgeable broker can protect you from scams.\u00a0 This protection comes from technical systems, like escrow accounts and legal documents.\u00a0 It also comes from a broker's "gut" feeling or intuition about whether a buyer is trustworthy or not.\nA broker can protect you from wasting your time by listing your website at too high a price.\u00a0 Conversely, he can protect you from losing money by selling yourself and your website short.\nHow does a Website Get Paid?\nA website broker will generally work for commission only.\u00a0 This can be 10% to 15% of the purchase price.\u00a0 You may also have to sign an exclusivity agreement, which means that he is the only broker who can list and sell your site.\nThis restriction is in force for the duration of the contract, often 90 days.\u00a0 After that, you can rehire the broker or go with someone else.\u00a0 You are free to name your own terms, but some brokers will only work with a seller under certain conditions of their own.\nWhat are Some Examples of Website Brokers?\nThere are many website brokers and marketplaces out there, some more reputable than others.\u00a0 These include:\n\nFlippa - this marketplace has some good sites, some bad sites, and some outright scams.\u00a0 Compare to craigslist: anyone can post a listing, and believe me, they do!\u00a0 Your best bet for low\nEmpire Flippers - a reputable website brokerage that produces good blog content in case you want to learn more about buying, selling, monetizing, and improving websites.\nQuiet Light - a brokerage site that deals with 6 & 7 figure website deals.\nDigital Exits - another brokerage site offering 6 & 7 figure website deals.\nFE International - a brokerage site offering website deals from 5 figures and up.\n\nRemember that you can also approach a website owner via email, blog comments, or social media in order to attempt to broker a deal yourself.\nConclusion\nThere are lots of things to consider when buying or selling a website.\u00a0 A website broker can help you through the process, and make sure that you don't leave any research undone.\u00a0 A good broker can pay for himself, saving you both time and money when you sell.\nI hope that this article helped to shed some light on website brokers and selling websites.\u00a0 If you have any questions, please leave them in the comments below.