How to Value a SaaS Business: Valuation Methods, Multiples & Free Calculator

SaaS valuation methods

The most common method for micro SaaS is a revenue multiple: Valuation = Annual Revenue (or ARR) x Multiple. Typical multiples range from 2-5x ARR for bootstrapped SaaS, depending on growth rate, churn, and profitability.

For smaller products, Seller's Discretionary Earnings (SDE) multiples are common: Valuation = Annual SDE x Multiple (typically 2-4x). SDE includes profit plus owner salary and discretionary expenses.

• 2-3x ARR: stable but slow-growing products
• 3-5x ARR: growing products with low churn
• 5-8x ARR: fast-growing products with strong retention
• SDE multiple: 2-4x for lifestyle businesses and micro-acquisitions

What affects your multiple

Higher multiples come from: high growth rate (30%+ YoY), low churn (under 3% monthly), diversified revenue (no single customer dominance), clean code and documentation, and profitable unit economics.

Use TrustMRR to see what comparable products have sold for and at what multiples. This gives you real market data instead of theoretical ranges.

Using the BigIdeasDB Valuation Calculator

Navigate to Free Tools > SaaS Valuation Calculator. Input your MRR, growth rate, churn, and expenses. The calculator estimates your valuation range based on revenue multiples and SDE methods.

Cross-reference with TrustMRR data to see how your valuation compares to actual market transactions for similar products.

FAQ