need help evaluating the value ($) of an application

7 Feb 2007 - 4:16pm
7 years ago
4 replies
424 reads
diego bauducco
2007

Dear List,

my friend was approached by a company to buy one of his online
applications. His app. is quite successful and it functions with
webservices from other companies (Amazon, Google, Flickr).

Is there a rule of thumb to understand the value (in dollars) of the
application?

how do you determine a price for such a purchase?

Thanks a bunch,

Diego

Comments

7 Feb 2007 - 4:49pm
Kiesel, Jeffrey...
2007

Start searching for stories about other webapps that sold - that would
give you some sites to compare to at least.

-----Original Message-----
From: discuss-bounces at lists.interactiondesigners.com
[mailto:discuss-bounces at lists.interactiondesigners.com] On Behalf Of
diego bauducco
Sent: Wednesday, February 07, 2007 4:17 PM
To: discuss at ixda.org
Subject: [IxDA Discuss] need help evaluating the value ($) of an
application

Dear List,

my friend was approached by a company to buy one of his online
applications. His app. is quite successful and it functions with
webservices from other companies (Amazon, Google, Flickr).

Is there a rule of thumb to understand the value (in dollars) of the
application?

how do you determine a price for such a purchase?

Thanks a bunch,

Diego
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7 Feb 2007 - 5:34pm
Jeff Axup
2006

Interesting question Diego. Value of the application is probably highly
subjective and highly debatable. Thus, a good path might be to estimate the
potential profits that such an application could theoretically bring the
owner in the near future. So figure out a monthly access fee, or a per-copy
purchase fee, or a per/mo advertising revenue and then multiply by the
number of potential customers / businesses in a market. That should get you
a big number. Take 10 or 30% of that, or whatever you can justify. =) Has
some similarities to a business plan.

--
Best Regards,
Jeff
____________________________________________________________________________
Jeff Axup Ph.D. Candidate - University of Queensland, Brisbane,
Australia
Principal Consultant, Mobile Community Design Consulting

Research: Mobile Group Research Methods, Social Networks, Group Usability
E-mail: axup <at> userdesign.com
Blog: http://mobilecommunitydesign.com
Moblog: http://memeaddict.blogspot.com
Academic: http://www.infenv.itee.uq.edu.au
____________________________________________________________________________

On 2/7/07, Kiesel, Jeffrey (User Experience) <Jeffrey_Kiesel at ml.com> wrote:
>
> Start searching for stories about other webapps that sold - that would
> give you some sites to compare to at least.
>
>
> -----Original Message-----
> From: discuss-bounces at lists.interactiondesigners.com
> [mailto:discuss-bounces at lists.interactiondesigners.com] On Behalf Of
> diego bauducco
> Sent: Wednesday, February 07, 2007 4:17 PM
> To: discuss at ixda.org
> Subject: [IxDA Discuss] need help evaluating the value ($) of an
> application
>
>
> Dear List,
>
> my friend was approached by a company to buy one of his online
> applications. His app. is quite successful and it functions with
> webservices from other companies (Amazon, Google, Flickr).
>
> Is there a rule of thumb to understand the value (in dollars) of the
> application?
>
> how do you determine a price for such a purchase?
>
> Thanks a bunch,
>
> Diego
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> List Guidelines ............ http://listguide.ixda.org/
> List Help .................. http://listhelp.ixda.org/
> (Un)Subscription Options ... http://subscription-options.ixda.org/
> Announcements List ......... http://subscribe-announce.ixda.org/
> Questions .................. lists at ixda.org
> Home ....................... http://ixda.org/
> Resource Library ........... http://resources.ixda.org
> --------------------------------------------------------
>
> If you are not an intended recipient of this e-mail, please notify the
> sender, delete it and do not read, act upon, print, disclose, copy, retain
> or redistribute it. Click here for important additional terms relating to
> this e-mail. http://www.ml.com/email_terms/
> --------------------------------------------------------
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> List Guidelines ............ http://listguide.ixda.org/
> List Help .................. http://listhelp.ixda.org/
> (Un)Subscription Options ... http://subscription-options.ixda.org/
> Announcements List ......... http://subscribe-announce.ixda.org/
> Questions .................. lists at ixda.org
> Home ....................... http://ixda.org/
> Resource Library ........... http://resources.ixda.org
>

7 Feb 2007 - 5:43pm
Ari
2006

Good point.

Also understand that some things are now commodities even though they're
fairly expensive and complex to develop - unless they generate a fair amount
of traffic and revenue. For ex: the various YouTube and MySpace clones out
there.

On 2/7/07, Jeff Axup <axup at userdesign.com> wrote:
>
> Interesting question Diego. Value of the application is probably highly
> subjective and highly debatable. Thus, a good path might be to estimate
> the
> potential profits that such an application could theoretically bring the
> owner in the near future. So figure out a monthly access fee, or a
> per-copy
> purchase fee, or a per/mo advertising revenue and then multiply by the
> number of potential customers / businesses in a market. That should get
> you
> a big number. Take 10 or 30% of that, or whatever you can justify. =) Has
> some similarities to a business plan.
>
> --
> Best Regards,
> Jeff
>
> ____________________________________________________________________________
> Jeff Axup Ph.D. Candidate - University of Queensland, Brisbane,
> Australia
> Principal Consultant, Mobile Community Design
> Consulting
>
> Research: Mobile Group Research Methods, Social Networks, Group
> Usability
> E-mail: axup <at> userdesign.com
> Blog: http://mobilecommunitydesign.com
> Moblog: http://memeaddict.blogspot.com
> Academic: http://www.infenv.itee.uq.edu.au
>
> ____________________________________________________________________________
>
>
> On 2/7/07, Kiesel, Jeffrey (User Experience) <Jeffrey_Kiesel at ml.com>
> wrote:
> >
> > Start searching for stories about other webapps that sold - that would
> > give you some sites to compare to at least.
> >
> >
> > -----Original Message-----
> > From: discuss-bounces at lists.interactiondesigners.com
> > [mailto:discuss-bounces at lists.interactiondesigners.com] On Behalf Of
> > diego bauducco
> > Sent: Wednesday, February 07, 2007 4:17 PM
> > To: discuss at ixda.org
> > Subject: [IxDA Discuss] need help evaluating the value ($) of an
> > application
> >
> >
> > Dear List,
> >
> > my friend was approached by a company to buy one of his online
> > applications. His app. is quite successful and it functions with
> > webservices from other companies (Amazon, Google, Flickr).
> >
> > Is there a rule of thumb to understand the value (in dollars) of the
> > application?
> >
> > how do you determine a price for such a purchase?
> >
> > Thanks a bunch,
> >
> > Diego
> > ________________________________________________________________
> > Welcome to the Interaction Design Association (IxDA)!
> > To post to this list ....... discuss at ixda.org
> > List Guidelines ............ http://listguide.ixda.org/
> > List Help .................. http://listhelp.ixda.org/
> > (Un)Subscription Options ... http://subscription-options.ixda.org/
> > Announcements List ......... http://subscribe-announce.ixda.org/
> > Questions .................. lists at ixda.org
> > Home ....................... http://ixda.org/
> > Resource Library ........... http://resources.ixda.org
> > --------------------------------------------------------
> >
> > If you are not an intended recipient of this e-mail, please notify the
> > sender, delete it and do not read, act upon, print, disclose, copy,
> retain
> > or redistribute it. Click here for important additional terms relating
> to
> > this e-mail. http://www.ml.com/email_terms/
> > --------------------------------------------------------
> > ________________________________________________________________
> > Welcome to the Interaction Design Association (IxDA)!
> > To post to this list ....... discuss at ixda.org
> > List Guidelines ............ http://listguide.ixda.org/
> > List Help .................. http://listhelp.ixda.org/
> > (Un)Subscription Options ... http://subscription-options.ixda.org/
> > Announcements List ......... http://subscribe-announce.ixda.org/
> > Questions .................. lists at ixda.org
> > Home ....................... http://ixda.org/
> > Resource Library ........... http://resources.ixda.org
> >
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> List Guidelines ............ http://listguide.ixda.org/
> List Help .................. http://listhelp.ixda.org/
> (Un)Subscription Options ... http://subscription-options.ixda.org/
> Announcements List ......... http://subscribe-announce.ixda.org/
> Questions .................. lists at ixda.org
> Home ....................... http://ixda.org/
> Resource Library ........... http://resources.ixda.org
>

--
----------------------------------------------------------------
http://www.flyingyogi.com

7 Feb 2007 - 6:14pm
Jared M. Spool
2003

On Feb 7, 2007, at 1:16 PM, diego bauducco wrote:

> my friend was approached by a company to buy one of his online
> applications. His app. is quite successful and it functions with
> webservices from other companies (Amazon, Google, Flickr).
>
> Is there a rule of thumb to understand the value (in dollars) of the
> application?

Diego,

This really isn't an IxD topic.

That said, valuations are tricky.

The official answer is the valuation is the highest amount of money a
buyer will pay for it. Of course, you have to figure that out with
little help from the buyer, since they want to get the best deal.

Often valuations are multiple of something, such as six times
revenues or twenty times net earnings. Other times, you base the
valuation on what it would cost to buyer to build it themselves
(factoring in the cost of the delay while it's under development). If
there are comparable applications available, the valuation will be
relative to their value.

Hope that helps. Good luck,

Jared

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