6 Mistakes Sellers Make When Selling Websites: #4 Try to Sell Brand New Websites
Many website owners develop brand new websites and attempt to sell these new websites to buyers within days or months of launching them. It is very, very difficult to sell a new website to buyers.
If you put yourself in a website buyer’s shoes, why would a buyer purchase a brand new website that has no history and produces no revenues yet?
The value of a website is in its history and its cash-flow. Anyone can spend a few thousand dollars with a website development firm to develop a website. Or develop a website for free with simple tools such as WordPress and Joomla! Nowadays there are also free website builder tools such as Wix that anyone with no website programming experience can use to build a website. Anyone can build a new website that produces no money.
So, again, the question is “Why should anyone by a brand new website that has no history and no revenues?”
A new website seller can make the argument that he has developed a custom website with unique features that cannot be found anywhere else and therefore the website has value. This is, in fact, true. But value lies in the eye of the beholder.
In most cases, as long as the website buyer did not ask for these specific features that were not customized specifically for him, he attributes very little value to the website. Instead of buying the website from the website seller, he can simply go to a website development firm and have a new website customized specifically for him at a comparable price.
For this reason, most brand new websites do not sell.
What are brand new websites?
What do we mean by a brand new website? For the purposes of this article, we would call a website that was developed within the last 6 months a brand new website. These are websites that don’t have up to 1 year of financial records. And, therefore, there is no history for a website buyer to analyse and invest in.
If you are planning on developing a new website in order to sell it, you should be prepared to operate the website for at least 1 year to improve the chances that website buyers will be interested in it.
The Premium Domain Name exception to the rule
There is an exception to this rule: the brand new website built on a premium domain name. In this scenario, the value in the website lies primarily in that domain name. Website buyers are willing to buy new websites built on premium domain names.
Where do you sell brand new websites?
New websites sometimes do sell. But, in these rare scenarios, as a website seller, you will have to sell your new website at a discount to the cost of developing that website. This happens everyday on website-for-sale marketplaces where individual sell new websites to bargain buyers.
Unfortunately, most of the website sellers lose money on these transactions. They receive less cash than they invested in developing the website. And if they developed the website themselves, they receive less cash than the value of their time.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
- Connect with Kris:
