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  1. #1

    Web Hosting Business Valuation Model

    How does one go about establishing what a web hosting company is worth? I see post all the time with astronomical asking prices. In the "real world" there has to be some theory behind the madness. For example lets take a hypothetical or maybe a real company, we'll call it "widgetrockethosting". Assuming the values below, how would you valuate the company?

    LENGTH IN BUSINESS: one year
    # OF CLIENTS: 100

    Two owned servers housed in a good NOC with level3 bandwidth
    1- PIII dual 1.26, 2GB RAM, 120 GB Hard Drive
    1- PIII 1.26 Gh, 512 RAM, 120 GB Hard Drive

    Complete site and all back end code included

    Just curious

  2. #2
    Join Date
    Feb 2002
    Some people are saying one years income but I think that is kind of high.

    I would not buy or I shoould say have not bought any customers where the host was in busines less than one year.

    The problem I see (and this is just my 2 cents) is if a host gets lucky and picks up 50-60 customers and is in business 2 months he has not proven himself to his customers yet so their is no loyalty so one little hiccup and all those customers would be gone..

    A lot of people are pre-selling hosting (year in advace) which is great of the customer, if you stay in business, bad for the host since the money get spent before the BW and support gets used.

    We have a very good mix of both but have also been in business for almost 4 years.

    If all you customers are monthly and they are on a good CC billing (not paypal) your equipment sounds good and depending on your DC I would think you could fetch $8-10K

    Edit >>> also depends on your prices plans and how much BW/space you are giving away. 20gigs BW and unlimited server space for $3/month really bring the price down.

    I would pay $5-7K today for 100 customers that have been with another host for at least 6-12 months..

    you also have the equipment to through in and the extra sales so you should be able to sell it even here for that much

    Again this is my 2 cents..

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