Over the years, I’ve noticed a few things that most sellers will screw up. Usually, it comes down to valuation.

How much is my software worth?

This is both an easy and a hard question. But here’s the truth, if you don’t have one of these 3 things going for you, it’s not going to be worth a lot (some exceptions apply aka: strategic buyers, which are a rare alignment of the stars)

3 things that help your valuation:

1. Revenue, even a few hundred dollars, is a very good signal and will massively help you get a higher asking price
2. Traffic. If you’ve attracted a ton of organic recurring traffic (over 10k monthly visits), you’ll probably fetch a higher price
3. Active users. Even if you’re not making money, and don’t have a lot of traffic, if you have an engaged user base, that’s something.

Now, if you don’t have one of these going for you, you have to value the product on just one thing, how much will it cost to build from scratch.

You’re essentially getting paid for the hours you put in at best, not the traffic, revenue, or active users.

How to price your product?

1. If you have revenue, great, you can choose a multiple on yearly revenue starting from 2x to 20x. The more reliable the stream of revenue, the higher multiple you can charge.
2. If you only have traffic or active users, you have to be conservative with your valuation.
3. If you have nothing going for you except the time invested in the design or codebase, you’ll have to discount the labor cost by 50-75% and charge that. So if you put in 100 hours at $100/hr, it’s worth $3-5k at best.

Reaching a successful sale

Some people see ridiculous valuations and think it’s a good idea. But the truth is that an overpriced valuation will scare away all buyers.

Here's what actually happens to overpriced software (that isn't making money/traffic/etc). They stay listed for a long time, scare away all interest. Get taken down. And eventually, rot away in a GitHub repo for years, and become worthless.

The counterintuitive truth is that if you underprice your listing and set a price that is extremely attractive, a "no-brainer buy", you’ll get several interested buyers driving up the price. And in the end, you’ll get fair market value or higher.

So that’s the trick.

Here’s how to set your price:

1. Figure out what you have going for you, in terms of revenue, traffic, or active users.
2. Figure out your sell price. The price at which you’d absolutely sell.
3. Price it under the sell price to attract interest.

Good luck with your sale!

Selling software when it's "hot" is a great way to reinvest in future projects. Don't let them rot away in your GitHub.

Thanks for reading!