sales-side-project-valuation

What this skill does

# Side Project Valuation & Sale Strategy

Help the user price, sell, buy, or structure a side project acquisition. Covers valuation methodologies (revenue multiples, cost-based, comparable sales), marketplace selection (matching deal size to the right marketplace), due diligence, and deal structuring (cash vs earnout vs seller financing). This skill is tool-agnostic — it references specific marketplaces for where to list but focuses on the underlying strategy.

## Step 1 — Gather context

If `references/learnings.md` exists, read it first for accumulated knowledge.

Ask the user:

1. **What's your role?**
   - A) Seller — I want to sell a project
   - B) Buyer — I want to buy a project
   - C) Both — I'm negotiating a specific deal
   - D) Researching — I want to understand the market

2. **What's the project stage?**
   - A) Pre-revenue (MVP, users but no revenue)
   - B) Early revenue ($1-$500/mo MRR)
   - C) Small but steady ($500-$5K/mo MRR)
   - D) Meaningful ($5K-$50K/mo MRR)
   - E) Profitable SaaS ($50K+/mo MRR)
   - F) Abandoned / no longer maintained

3. **What's your primary question?**
   - A) How do I price this project?
   - B) Which marketplace should I list on?
   - C) What do buyers look for in due diligence?
   - D) How do I structure the deal (cash, earnout, seller financing)?
   - E) How do I run due diligence as a buyer?
   - F) How do I transfer the project post-sale?
   - G) Other — describe it

Skip-ahead rule: if the user's prompt already provides enough context, skip to Step 2.

## Step 2 — Route or answer directly

| Problem domain | Route to |
|---|---|
| SideProjectors-specific listing help | `/sales-sideprojectors {user's question}` |
| Digital product sales (selling an ongoing product, not the project itself) | `/sales-digital-products {user's question}` |
| Product launch directory strategy (getting exposure before selling) | `/sales-launch-directory {user's question}` |
| Audience growth for the project | `/sales-audience-growth {user's question}` |
| Newsletter-as-asset valuation | `/sales-newsletter {user's question}` |

Otherwise, answer directly below.

## Step 3 — Marketplace reference

For marketplace-specific guidance (fees, buyer quality, deal size fit, escrow, typical timeline), read `references/platforms.md`. Answer using only the relevant section — don't dump the full reference.

You no longer need the platform reference — focus on the user's specific situation.

## Step 4 — Actionable guidance

### Valuation methods (pick what fits the stage)

**Pre-revenue projects** — buyers heavily discount no-revenue projects:
- Base: development time × hourly rate × 10-20%
- Example: 200 hours × $75/hr × 15% = $2,250
- Add premium for: working product with live users, clean code, transferable domain, unique tech
- Realistic range: $100-$5,000 for most pre-revenue side projects

**Revenue-generating projects** — multiples of annual revenue (ARR):

| Profile | Typical multiple (ARR) |
|---|---|
| Side project, flat revenue, no growth | 1.0-1.5x |
| Side project, stable, small growth | 1.5-2.5x |
| Small micro-SaaS, clear growth | 2.5-4x |
| Profitable SaaS, 20%+ growth, low churn | 4-6x |
| Private lower-middle market SaaS (broker-sold) | 4-7x (median ~4.5x in 2026) |

**Premium drivers** (push toward top of range):
- Net Revenue Retention (NRR) >110%
- Rule of 40 (growth % + profit margin %) >40
- Low customer concentration (no customer >10% of revenue)
- Recurring revenue >70% of total
- Clean, documented code and stack
- Transferable integrations (no personal API keys, accounts)

**Discount drivers** (push toward bottom):
- Customer concentration >30% from one customer
- High churn (>5% monthly)
- Founder-dependent (personal brand, relationships)
- Platform-dependent (Shopify app, ChatGPT plugin)
- Messy code, no docs, no tests
- Tax, legal, or IP uncertainty

### What buyers look for

**Financials** (verified, not self-reported):
- 12-24 months of revenue history (Stripe / payment processor statements)
- MRR / ARR trend line
- Churn rate and NRR
- Cost structure (hosting, APIs, support time)
- Profit margin after true costs

**Product and code**:
- Working product with a live URL
- Clean codebase, documented setup
- Tech stack that's transferable (avoid obscure dependencies)
- No personal accounts baked in (API keys, domains in founder's name)

**Customers and market**:
- Customer list with acquisition channels
- Analytics (Google Analytics, Plausible, Mixpanel access)
- Support tickets and customer sentiment
- Competitive positioning

**Legal and transfer**:
- Clean IP ownership (no unlicensed code or assets)
- Transferable domain, trademarks, accounts
- No open disputes, complaints, or refund chargebacks
- Privacy policy / terms compliance (GDPR, CCPA if applicable)

### Deal structuring

| Structure | Seller gets | Buyer gets | Best for |
|---|---|---|---|
| All cash | Full price at close | No deferred payments | Small deals, low-risk, clean transfer |
| Cash + earnout | Base + upside if targets hit (3-24 months) | Downside protection if revenue drops | Growth-stage or uncertain retention |
| Cash + seller note | Down payment + monthly over 3-7 years with interest | Lower upfront capital | Mid-size deals where buyer needs financing |
| Equity rollover | Cash + stake in new owner's business | Aligned incentives, founder transition | Larger deals, strategic acquirers |

**Typical structure for side projects under $50K**: 100% cash at close via escrow. Earnouts make sense above $50K or when the project's future revenue is uncertain.

**Escrow** — never skip it for deals over $500. Use Escrow.com, Tranferslot, or marketplace-built-in escrow (Acquire.com, Flippa). Side project deals without escrow are the #1 source of scams.

### Matching deal size to marketplace

| Price range | Best marketplace fit |
|---|---|
| Under $1,000 | 1Kprojects, SideProjectors, Little Exits, Indiemaker |
| $1,000-$5,000 | SideProjectors, Microns, Little Exits, Indiemaker |
| $5,000-$50,000 | Microns, Acquire.com, Indiemaker, Flippa, TrustMRR (if verified-revenue provider) |
| $50,000-$500,000 | Acquire.com, Flippa, Empire Flippers, TrustMRR (lump-sum only) |
| $500,000+ | Empire Flippers, FE International, broker-assisted |
| $200K–$20M net profit (ecom/DTC/FBA/newsletter) | Ecomswap (boutique ecom-specialist advisory), Quiet Light, Empire Flippers |

Read `references/platforms.md` for per-marketplace detail (fees, buyer verification, escrow, typical timeline).

### Listing checklist (seller side)

1. **Clean up financials** — export 12-24 months of Stripe/payment data, normalize revenue
2. **Document the business** — what it does, who uses it, how they find it, cost to run
3. **Screenshots and demo** — product in action, dashboard, key features
4. **Metrics page** — MRR trend, user growth, churn, traffic sources
5. **Transfer plan** — domain, hosting, Stripe, API keys, analytics, social accounts
6. **Asking price with rationale** — show the multiple and comparables
7. **Cross-list** — don't rely on one marketplace; list on 2-3 that fit your size

### Due diligence checklist (buyer side)

1. **Verify revenue** — screenshare Stripe/PayPal/payment provider dashboard (don't trust screenshots alone)
2. **Verify traffic** — Google Analytics access, not just screenshots
3. **Review code** — get read-only GitHub/repo access before close
4. **Check customer concentration** — how much revenue from top 5 customers?
5. **Churn deep-dive** — last 6 months of cancellations, reasons
6. **Technical audit** — hosting costs, API dependencies, security, scalability
7. **Legal check** — IP ownership, open-source license compliance, ToS/privacy
8. **Transfer rehearsal** — dry-run the handover before paying
9. **Escrow the payment** — Escrow.com or marketplace-native
10. **Post-sale support** — negotiate 30-90 days of seller availability

If you discover a gotcha, pricing benchmark, or negotiation tactic not covered in `references/learnings.md`, append it t