Many asked why I decided to purchase The University Kid, despite claims that the blog was “falling apart”. While others said this was a “great pickup” and an absolute “steal”.
In this blog post I’m going to share my thoughts on how I evaluate websites and what goes into my decision-making process. The majority of you asked for more case studies and success stories to be covered in the future. I guess you can call this our first “case study” – the purchase of The University Kid.
There are 7 things I look for when buying a website:
1. Background Research
Do this first. Always do your homework or else you’ll lose out. There are three main things you want to research:
- On The Owner – I know Jason and I met up with him before so I know he’s legit. But in the case of a stranger, just Google his/her name and see what pops up (you never know what might turn up). Check their ratings on the site you’re buying from (e.g. iTrader at DigitalPoint). If I see any red flags then I’ll pull out immediately.
- On The Website – Do a “Whois” lookup (e.g. whois.net) and check the ownership. Also, make sure you do a thorough research on the history of the website – has it been banned from Google before? A quick scan using the wayback machine at Archive.org might be useful.
- On The Sale – If the sale is listed through a forum, then check that it’s not sold on other forums at cheaper prices. With the case of TUK, the deal was made privately through MSN so this wasn’t a big issue.
2. Income
Not only how much it’s making but also where it’s coming from. It’s got to be something that YOU can take over from the previous owner (e.g. consulting services would be a bad revenue source). The site was making about $500 per month at the time of purchase, all of it was through advertising and paid reviews, so it’s pretty easy to maintain. Let’s just assume that things remain steady (I’m being conservative here), in 12 months time that would be $6,000! A 100% return on investment (ROI) in a year – not bad 
Income Value = $6,000
3. Traffic
First, make sure you check the traffic stats CAREFULLY to make sure the numbers the seller is giving you aren’t inflated – or worse, artificial. Get them to show you their Google Analytics or Awstats and check the referrals (click on those links and check the websites out manually). Any goofball can go out there and buy crap traffic for $5 on DigitalPoint’s marketplace and make it look like genuine traffic if you don’t check carefully. With blogs, a quick look at the number of comments per post will give you a good indicator as to how much TARGETED traffic the blog is bringing in.
At the time of purchase, TUK was averaging around 4,000 unique visitors per month (about 48,000 visits per year). Let’s say we start a new site and generate that traffic through Google Adwords and, for arguments sake, we paid $0.10 per click (again, I’m being very conservative), that’s $4,800 worth of traffic!
Traffic Value = $4,800
4. Subscribers
The blog has around 1,200 RSS subscribers. In the email marketing industry, the general rule of thumb is “$1 per subscriber per month”. Obviously, RSS subscribers aren’t as responsive and valuable as email subscribers. And you got to take into the account of the fact that many are probably going to unsubscribe because of the change in ownership. So this is a tricky one. But let’s just say 500 subscribers stick around and using the “$0.10 per subscriber per month” (chances are RSS subscribers aren’t ten times less valuable as email subscribers), that would be $600 per year.
Subscriber Value = $600
5. Content
Make sure you VERIFY the source and ownership of the content: Is it unique? Is it purchased? Is it ghostwritten? Is it copied off another site? Having been a follower of TUK for a year now, I know the content is original and of high quality. At the time of purchase, the blog was just shy of 400 posts. If we hired a writer at $10 per article (which is dirt cheap for the kind of quality on this blog – but again I’m being conservative with my numbers), it would cost us $4,000.
Content Value = $4,000
6. Areas That Can Be Improved
These are the “potential” values. Find areas that can be renovated or optimized to help increase the value of the site. The best deals tend to come from sites that are getting tons of traffic but aren’t monetized to its full potential. Looking at TUK, three things came into my mind immediately:
- Monetization Model – The blog isn’t heavily monetized at all – which means tons of untapped revenue channels waiting to be explored. Just on the top of my head, I could think of several more monetization models: affiliate marketing, sponsored links, more banner ads, RSS text ads, peel away ads, consulting services, drive sales for my own products etc.
- Email Subscribers – I’m sure you heard of the saying, “The money is in the list”. I can easily put up an opt-in box on the sidebar and start my own newsletter (I use GetResponse) for the blog. I can create an autoresponder series, promote affiliate products and do all sorts of things on the backend. I’ll save that for a future post
- Marketing Channels – The blog isn’t heavily promoted. Marketing channels such as social media (we’re currently tapping into Twitter), buzz marketing, guest blogging can all be explored to help boost the traffic and readership.
Potential Value = $3,000
7. Sale Price
Finally, look at the sale price. I was offered $3k by Jason over MSN (another tip: The best deals are made when done privately). First, let’s add up the numbers above…
- Income Value = $6,000
- Traffic Value = $4,800
- Subscribers Value = $600
- Content Value = $4,000
- Potential Value = $3,000
Total Value = $18,400
What this number tells me is that TUK has the potential to become a $18,400 blog in just 12 months time. This falls right within Jason’s claim: “With the right level of promotion, this could be a $10-20k blog”.
This is why I ultimately decided to purchase it without hesitance, even though many might think the profit/traffic has dipped a lot and wasn’t looking all that impressive. I’ve bought and sold a lot of websites in the past but this definitely had to be one of the better acquisitions I’ve made.
Hope this gave you an insightful look into my decision-making process of purchasing TUK 
Gotta go catch Man Utd play Sunderland. Anybody else watching that game?
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April 11th, 2009 at 2:56 pm
Nice breakdown of the sale Stanley, this is a high quality showcase already. I’ll keep following this blog if the quality keeps on coming.
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Stanley Tang (37 comments) Reply:
April 11th, 2009 at 3:04 pm
Haha thanks
Stay tuned. We’ve got some awesome stuff scheduled to come
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Nate from Debt-free Scholar (3 comments) Reply:
April 11th, 2009 at 8:09 pm
I agree! This is great content!
Thanks,
Nate
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Ben Pei (28 comments) Reply:
April 13th, 2009 at 1:31 pm
Yup I agree with that.. Breakdown is simple and very detailed.
Ben Pei´s last blog post..MIKEY Worm Hits Twitter!
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April 11th, 2009 at 3:04 pm
Nice article you have written
thanks for sharing
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April 11th, 2009 at 4:03 pm
so you’re not actually going to write the blog yourself?
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Stanley Tang (37 comments) Reply:
April 12th, 2009 at 4:57 am
Don’t quite get what you mean…
I am writing it myself
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Jason (703 comments) Reply:
April 13th, 2009 at 11:19 am
Its just that you talked about paying for articles. I hope you can write most them yourself however, since i really liked his style and reading Jason’s (the other one’s) own stuff he wrote. I’m just hoping you could match that.
All the best!
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Stanley Tang (37 comments) Reply:
April 13th, 2009 at 11:46 am
Oh right… I was just saying “hypothetically” that’s how much the content worth (cause there must be a method of putting a value on the articles). Not literally going out and hiring writers. Sorry for the confusion Jason!
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April 11th, 2009 at 5:53 pm
very useful information. thanx a lot…
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April 12th, 2009 at 1:54 pm
As someone who manages a good amount of sites and a “large” domain portfolio, someone who recognizes future potential and decided to invest is A-OK in my book. I was going to remove my e-mail from the RSS feed, but decided to leave it.
Would be very interested in seeing what you have to blog about
. I was never here to learn how to make money, but more for the entertainment… though I think the knowledgeable posts will keep me coming back for sure.
Congrats on the purchase. I’m sure you’ll keep up with the blog (I highly recommend it) and make it worth more than the 10-20K valuation.
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April 12th, 2009 at 3:13 pm
Hey Stanley!
THANKS for revealing your “figures” on this purchase. It comes quite easy with the “analytics” figured out and the potential profits this site will generate. I’m still quite new with this “site-flipping” thing and I’m just excited to see how you will turn this around to a 20K site in the coming months!
I’d be happy to see this progress!
Thanks again Stanley and looking forward to more great posts!
~ rommel ;p
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April 12th, 2009 at 3:29 pm
Very clear and informative post Stanly, thanks. Anyone should be able to follow your evaluation process.
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April 12th, 2009 at 3:38 pm
Insightful indeed, Stanley!
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April 12th, 2009 at 3:52 pm
Wow, this is a great post! You are wise beyond your years, Stanley. By the way, I’ve been subscribed to both this site and StanleyTang.com for a couple months now and really enjoy reading all of your posts.
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April 12th, 2009 at 6:24 pm
Very very nice and simple breakdown, it gives lots of food for thought. Just please don’t inundate us with sale type posts.
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April 12th, 2009 at 6:25 pm
Is CommentLuv gone?
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Josh Lam (10 comments) Reply:
April 13th, 2009 at 3:47 am
CommentLuv is currently enabled.
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Stanley Tang (37 comments) Reply:
April 13th, 2009 at 3:57 am
That should be a mistake… I’m looking into that. Thanks for bringing that up
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Stanley Tang (37 comments) Reply:
April 13th, 2009 at 6:04 am
It’s now fixed
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Dennis Edell (56 comments) Reply:
April 13th, 2009 at 2:51 pm
Thanks.
Dennis Edell´s last blog post..Blog Readers or Twitter Followers – What’s YOUR Preference?
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April 12th, 2009 at 6:46 pm
I like the way this blog is headed..after watching a lot of blog sale….but too early to make a judgement
Good luck stan.
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April 12th, 2009 at 11:49 pm
Multiple streams of monetization is vital for determine the value of the website. Multiple monetization in the area of google adsense, affiliate, review, amazon, ebay and etc…
To Your Success
Bryan Hee
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April 13th, 2009 at 5:30 am
Good luck stanley.Hope that u excell !!
Pradeep´s last blog post..Making Money online Blogs:My Pick
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April 13th, 2009 at 5:42 am
Nice Post..
Mahesh´s last blog post..New RSS Link! Please Update
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April 13th, 2009 at 6:48 am
Nice segue into providing valuable posts to the TUK readers!
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April 13th, 2009 at 9:18 am
Interesting post, way to go
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April 13th, 2009 at 11:42 am
Very cool post about why you guys bought the blog and the break down of what this blog might be worth. Thanks Greg Ellison
Greg Ellison´s last blog post..Happy Easter Everyone
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April 13th, 2009 at 1:30 pm
I love the way you look at the value of a website. Seeing its potential is more important than the current situation.
Ben Pei´s last blog post..MIKEY Worm Hits Twitter!
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April 13th, 2009 at 2:35 pm
That is a fantastic analysis and very illuminating. Yes, you seem to have made a good buy. All the best for taking it to the level of its potential. I shall of course be watching the progress.
Nicole Price´s last blog post..Pamper Yourself… At a Discount
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April 13th, 2009 at 3:06 pm
Great post Stanley, I can already see that I’m going to learn a ton from you. You made no mention of inbound links that this site has. Is that not something that matters to you when making a purchase decision?
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Stanley Tang (37 comments) Reply:
April 13th, 2009 at 3:17 pm
No I don’t really care too much about inbound links. Usually people look at the number of links as a way to determine search engine rankings.
I don’t really care what Google thinks… I write blogs for humans not robots
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Toronto personal injury (9 comments) Reply:
April 14th, 2009 at 1:14 pm
Hey if you want to get good traffic so for this you have to focus google because google is much famouse now a days and mostly user come google for searching his/her needs.
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April 13th, 2009 at 6:37 pm
What a great way to judge a buy…. for a 16 year old you really know your stuff. I am impressed.
Forest´s last blog post..Musically Motivated Monday: Audioslave – Doesn’t Remind Me of Anything
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April 14th, 2009 at 1:14 pm
Nice thinking. This method of calculation really increased my website value.
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April 14th, 2009 at 6:29 pm
Wow! Jason sold this blog for $3,000? If only he took the bigger offers, but that’s just a steal for you, Stanley.
Hopefully you will still have time to work on your school work and SATs
-Mike
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April 14th, 2009 at 11:46 pm
The analysis is well done, it not only gives insight to what to look when purchasing a sight, it also helps when you have a mind of selling your site too. Good work
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April 19th, 2009 at 7:56 am
very nice and honest breakdown of the sale model. Lots of insights there
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April 20th, 2009 at 10:48 am
maybe now that’s just a dream for me, but I’ll try to reach that number of dollar.
kampanye damai pemilu´s last blog post..Pemilu Indonesia 2009 Legislatif Yang Kacau Jangan Sampai Menimbulkan Perpecahan
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April 21st, 2009 at 9:07 pm
A very in-depth article. You bring out some great points in analyzing a website before it is purchased. Customers spend hours and hours researching the latest car purchase – yet, many jump head first into website purchases.
Your thoughts are important to remember and consider.
Smart Boy Designs´s last blog post..Love Your Blog Topic Like Stephen Hawking Loves Science
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April 22nd, 2009 at 10:58 am
Good informative article. I learn new thing for this article. Thanks for information.
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November 6th, 2009 at 1:56 pm
awesome, i never thought that you should know more on subscriber and topic of the website if you want to buy it, i thought, it is PR only
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November 7th, 2009 at 4:07 am
yes, i agree, it is necessary to research the website and also the owner of website that you want buy, because, there are many scammers on the internet.
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November 12th, 2009 at 10:23 am
i have some experience in selling website using flippa and right now, i am thinking of buying also website that is making money.
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February 1st, 2010 at 11:46 am
This article was posted almost a year ago and any information how much TUK now costs. This post is an inspiration and a guide in flipping websites.
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April 27th, 2010 at 8:32 pm
I never knew I would be able to jump high so fast. Can anyone give me anymore tips?
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