What’s your favorite metric for working out how a site’s tracking? Sales? Revenue? Traffic?
What about revenue per user?
Some see revenue per user as a “softer” metric than some of the others—a good way to hide low traffic figures, perhaps. But when it’s taken in the context of total revenue and traffic figures, and traffic sources, revenue per user can give you real insight into a site’s user profile.
Specifically, revenue per user gives us an indication of how likely a site’s userbase is to spend money. It also indicates the perceived value of the site’s offering to its users.
If you start out with an audience that’s already purchasing, you might find the job of growing a high-value audience easier than if you started with a larger userbase that’s less inclined to pull out the old credit card.
Revenue per user hotspots
You probably won’t be surprised to hear that sites focused on certain niches or fields tend to show better revenue per user figures than others.
But let’s look at how revenue per user increased, on average, for sites in these categories sold last year.
On average, the revenue per user for sites sold on Flippa in the Internet marketing space increased by 625.4%. Business site revenue per user was up more than 195% on average, and social media sites, while a much smaller number were sold, saw revenue per user grow by 267.3% in 2012.
Not bad … if you’re into these topics. But what if you’re not?
These categories, while not as hot as those in our first list, showed very strong revenue per user growth between 2011 and 2012, to the tune of 32.1%, 68.6%, and 29.7% respectively. So if competition is too fierce for you to buy a site in niches from the first list, these might be good alternatives.
It’s not just about niche…
Of course, the likelihood that an audience will buy from a site doesn’t just depend on the niche or topic it covers.
Service sites could be expected to have strong revenue per user stats, seeing as they’re selling a service that, when compared to sites relying on ad revenues, for example, is likely to have a high price.
The increases in revenue per user for forums and social networks might suggest that these site types are maturing in their approach to users and revenue. Perhaps niche targeting of the sites, and the ad or affiliate offers they display, is also allowing sites like these to make more money from the more targeted users they attract.
A hidden gem
As I reviewed Flippa’s data I noticed a particular area where revenue per user is strengthening, and that’s in app site sales.
True, the data is thin: only 5 app sites were sold on Flippa in 2012 (down from 12 in 2011) but the revenue per user for those sites had risen from $0.03 to $0.20, on average. That’s an increase of more than 650%. It’s no wonder the sales multiples for which these sites sold were so high (42, on average, up from 2.75 in 2011).
As I said, the data is thin, so we should take it with a grain of salt. That said, it does suggest that if you’re looking to buy a site whose users are likely to spend money, app sites might be worth thinking about.
So what about Apple’s recent announcement that developers will be allowed to sell apps to each other, without selling their App Store account, and without the new owner needing to resubmit the app for reacceptance into the app store?
I think we’ll likely see things heat up in the app site sales market going forward, as more developers sell apps they’ve built—and the sites that go along with them. It’ll be interesting to see how this plays out on Flippa.
How highly do you value revenue per user as a metric of site success? Do you own a site in any of the niches we’ve mentioned here? How does your revenue per user compare with the Flippa stats above? Let us know in the comments.
Photo Credit: pierofix