How To: Prove Revenue and Profit Claims

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Listings on Flippa will show the Gross Revenue and Net Profit for established websites and apps.

  

 

In our new listing format, you can even more clearly see how the Seller claims they are making money from their website. 

 

One of the most common questions we get asked is, "How can I prove that the Seller makes as much money as they say they do?" It's an excellent question and the best way to answer it is to have the seller show you themselves.

 

How's it done? Let's find out.

 

Sharing the Seller's Screen

First off, there are a number of products that people use to share what's on their screen. Our Deal Flow team uses Screenleap, and many Flippa users also use TeamViewer. We also have a separate article on about some mainstream technologies for video calling: Due Diligence: Making Video Calls & Screen Sharing 

 

Logging In and the Walkthrough

Once you can see the Seller's screen, they should be able to open a new window in their web browser and login to their payment provider's website like PayPal, Stripe, etc.

Watching the login process is important as it proves that the Seller is not logged into the financials of another website. Sellers can be reassured about their privacy and security as virtually every site hides text in password fields.

The Seller should be able to clearly show the potential the same financial details as posted in the listing and show all revenue and any applicable expenses. If there are discrepancies, those should also be made clear at that time.

 

There are a number of considerations that even well-intentioned sellers sometimes forget to mention in considering their revenue and expenses. Be sure to ask about how these fit into the figures that the Seller have been represented in their listing.

 

Revenue

  • Product Sales (some established websites on Flippa sell physical products)
  • Service Sales (some established websites on Flippa offer their services for sale)
  • Direct Advertising (some established websites sell advertising space directly negotiated with other companies)
  • Advertising Networks (some established websites sell advertising space via advertising networks like Google AdSense)
  • Google AdSense (Flippa offers Sellers the ability to connect their Google AdSense account and it will show as Verified in the listing)
  • Affiliate Networks (some established websites sell advertising space via affiliate networks like Amazon Affiliates)

 

Expenses

  • Domain Registration Fees (annually or otherwise)
  • Web Hosting (monthly or annually)
  • Marketing & Advertising (many websites may have banner ads, re-marketing, pay-per-click or other external marketing expenses)
  • Employees (any employees' salary and benefits costs)
  • Outsourcing (any work that has to be done by an outside party)
  • Subscriptions (external services like email list software or customer support software)
  • Direct Cost of Goods (some established websites on Flippa sell physical products)
  • Shipping & Handling (selling physical products requires postage and/or couriers)
  • Refunds & Chargebacks/Returns (inevitably, some customers will want or need refunds or returns)
  • Payment Processing Fees (a standard for all payment providers like PayPal, Stripe, etc.)

 

 

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