Question 1

How is a SaaS company valued?

Accepted Answer

SaaS valuations typically use revenue multiples. Early-stage SaaS sells at 2-5x ARR, while high-growth SaaS with strong margins can command 5-10x ARR.

Question 2

What factors affect SaaS valuation?

Accepted Answer

Key factors include growth rate, profit margins, customer concentration, churn rate, and competitive defensibility.

Question 3

When should I value my SaaS?

Accepted Answer

Value your SaaS regularly to track progress and before any major event like fundraising, selling, or taking on partners.

Question 4

What metrics should I track for my SaaS?

Accepted Answer

The essential SaaS metrics are MRR, churn rate, CAC, LTV, and burn rate. Together they tell you if your business is growing sustainably.

Question 5

How do I know if my SaaS is healthy?

Accepted Answer

A healthy SaaS has LTV-to-CAC ratio above 3:1, monthly churn below 5%, and positive net MRR growth.

Question 6

What is the Rule of 40 for SaaS?

Accepted Answer

The Rule of 40 states that a SaaS company's growth rate plus profit margin should exceed 40%. For example, 30% growth plus 15% margin equals 45%, which passes.

SaaS Valuation Calculator: Estimate What Your Business Is Worth