Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : When selling customers...

[LanceCoder]

Heya,

If for some reason, you had to sell your customers to another hosting company to try to get out of the business or whatnot, how do you determine how much to sell them for?

I've looked over a few threads and I've seen people selling their customers or companies for anywhere from 5-12 months of their revenue.

How much would you guys suggest? I'm not looking to sell any customers -- I'm just putting together a contingency plan to add to our business plan

Regards,
Matt

[Amdac]

In these forums, 6-12 months. In the real word, 12-24 months. This is assuming you're a reputable and stable business.

[thomas.smith]

Don't get me wrong...I don't want to accuse anybody of something but why should someone want to sell a customer. Ok, there are a few that I'd like to sell...so called "demanding clients"...

[Amdac]

Originally posted by thomas.smith
Don't get me wrong...I don't want to accuse anybody of something but why should someone want to sell a customer. Ok, there are a few that I'd like to sell...so called "demanding clients"...

Clients are sold almost daily in these forums. It happens every time a webhost company shuts down.

[thomas.smith]

Originally posted by Amdac
Clients are sold almost daily in these forums. It happens every time a webhost company shuts down.

Hm...yeah. That makes sense, I guess... But if they sell it for the payments of 6 to 12 months wouldn't it be a lot cheaper to invest that money in an advertising campaign ? When I do an advertising campaign I usually get the money back after 3 to 4 months.

[NetHosted-Andrew]

Originally posted by thomas.smith
Hm...yeah. That makes sense, I guess... But if they sell it for the payments of 6 to 12 months wouldn't it be a lot cheaper to invest that money in an advertising campaign ? When I do an advertising campaign I usually get the money back after 3 to 4 months.

This customer base they buy wont be static, if it's a happy one WOM will be in full swing, it'll be growing etc etc it's worth the investment in the long run.

Andrew

[Amdac]

Buying clients is almost guaranteed revenue that can instantly double the size of your company. At the same time, you know exactly what you're purchasing in terms of account size, type of site, etc. Advertising campaigns can vary in terms in number of signups and package size, and also generate a large number of fraud/spam clients which is virtually eliminated when buying existing clients from another company.

[thomas.smith]

Originally posted by Amdac
Buying clients is almost guaranteed revenue that can instantly double the size of your company. At the same time, you know exactly what you're purchasing in terms of account size, type of site, etc. Advertising campaigns can vary in terms in number of signups and package size, and also generate a large number of fraud/spam clients which is virtually eliminated when buying existing clients from another company.

hm...yes, I see. Thanks for explaining.

[LanceCoder]

Originally posted by thomas.smith
Don't get me wrong...I don't want to accuse anybody of something but why should someone want to sell a customer. Ok, there are a few that I'd like to sell...so called "demanding clients"...

I will have no intentions of selling customers for personal profit, as I would not like that to be done to me. I'm just trying to collect some numbers now, so if I ever have to shut down the business for some unavoidable reason, I will be able to look back at my business plan and determine what to do with customers.

[VN-Ken]

Hello. If I was to sell out to another company, I would sell it for how much you income is in a period of 3-4 months, and take 20% off of that amount. That's just what I would do. Many people have their own methods of pricing.

Good luck!

[IGobyTerry]

Originally posted by TheNetway
Hello. If I was to sell out to another company, I would sell it for how much you income is in a period of 3-4 months, and take 20% off of that amount. That's just what I would do. Many people have their own methods of pricing.

Good luck!

I wish I could find a reputable company that's only selling for 3-4 months income. Most will go for about 8-12 months income. Granted you can find one of those hopeless companies that are selling as a last ditch effort for some extra money for a couple month's income, but by that time most of the clients will either have packed their bags and have either already moved or will move shortly.

[KNL-BSW]

I would recommend figuring out the value of the company based of 12 months revenue plus anything included (i.e. domains, software, etc...).

Then use this as a base price, but always be willing to look at offers.

And, if you care about your customers, look at the companies that are offering to purchase.

Make sure they are going to provide for the customers, not just take them over and leave them high and dry.