🥂🍾🎇Happy 2019, Product Hunters!
Here's a mini side project I just made on the first day of this year, that I thought might be interesting for people here launching their own projects, and possibly thinking of selling them at some point.
🤔 Problem
@andreyazimov just sold his side project MacBook Alarm: https://medium.com/@AndreyAzimov...
And we just had a big discussion about getting your projects acquired on Twitter: https://twitter.com/levelsio/sta....
For many it's unclear what their side projects are worth. Many want to sell, or have people interested in buying but have no idea how to get to a proper price. I definitely didn't.
💡Solution
This calculator helps you figure out a base price to aim towards when negotiating selling your side project. Because not knowing what your product is worth puts you in a bad spot for negotiation!
This is just a start: I now base it on net income (revenue - costs), multipliers by industry (sales price being usually a multiplier of net income), and growth rate multipliers (higher growth increases sales price).
I'll keep adding more possible variable inputs and variations.
If you have feedback or ideas, please let me know and I'll implement them ASAP. 😋
@andreyazimov@levelsio Been following your tweets regarding startup valuation, cool to see you put your thoughts into an actionable product! Good luck with the launch!
Thanks Milan! Your example shows $1,000/year revenue, with $300/year costs, and a net income of $700.
It also shows you've put 10 hours per week into it (as the owner) with an estimated $25/hour rate. That means $13,000/year of your time.
With only $1,000/year revenue, that's a $12,000/year loss.
A new owner will have to do the same work as you, so that means a negative value for now.
I've added this now:
"Your own labor cost/y: $13,000
Net income is reduced by the cost of the time you put in at your hourly rate. "
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Well this is just stellar. Lots to improve, but the core, underlying philosophy is both salient in it's value & prescient in light of a new year, as many of us contemplate our myriad side projects. I see lots of potential here, albeit constrained by only the most common of beta imperfections.
Keep up the great work, Lev.
What about the potential value? What if you have developed technology or systemic concept, that has a great potential value, but do not have paying customers yet? Sometimes B2B sales, pilot projects, legislation can take a lot of time away from actually making the revenue. This is just a thought. Of course, it's not easy to calculate the potential market value.
@edgarascom potential value is hard to estimate, that's why M&A firms get paid so much 😉
Ways to measure potential value:
- traffic/users * price per view/user
- intellectual property * future usage
The potential value of IP is hard to measure because it's not clear if the market wants to pay for it and if it does, how much?
This is super handy 👏🏻
I just updated a piece I wrote last year on selling your side project and added a link to this calculator 👇🏻
https://hackernoon.com/top-5-mar...
@thisdickie Hey Sam. Great article love it. Do you know something about Microns.io?
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@levelsio Made this day? That's more production I'll probably do on all 1st jan's in my life. Hats-off to you.
Wondering: on what do you base the various multipliers?
@levelsio For projects less than a year old, how would you deal with the annual rev growth multiplier? Guess, extrapolate, set low & high bar predictions?
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I am attaching a screenshot here with some actual data for a lyrics website.
It is showing the worth in negative. How is that even possible?
https://imgur.com/ce9CofE
Am sounding a little harsh as many people will try this tool out as it is built by a star maker and then will be disappointed due to the poor numbers.
Pros:None. Looks like just some random calculations.
Cons:Not well thought out rough product.
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