SaaS Valuation Calculator
What a SaaS business is worth, reported as a range rather than a figure — with the drivers behind the multiple shown separately, and a warning when your ARR is small enough that buyers will price on earnings instead.
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Valuation is ARR times a multiple, which is true and useless — the multiple is the whole answer, and it runs from about 1× to 15× across companies that are all accurately "SaaS". This reports it as a range, shows what moved it, and says which method a buyer at your size would actually use.
Recurring only. Services revenue is valued far lower.
Year on year.
Expansion less churn. 100% is flat.
Seller discretionary earnings or EBITDA.
What moved the multiple
| Driver | Your figure | Effect on multiple |
|---|---|---|
| Base, private SaaS | — | 4.00× |
| Growth | 40% | +1.60× |
| Net revenue retention | 105% | +1.12× |
| Multiple | 6.72× |
Both methods, side by side
| Method | Basis | Range |
|---|---|---|
| Revenue multiple | $2,000,000 ARR | $9,408,000 – $17,472,000 |
| Earnings multiple | $500,000 a year | $1,400,000 – $2,600,000 |
These weightings are a heuristic, not a market quote — a base multiple adjusted for growth and retention, then widened by 30% either way. Real prices depend on things no calculator can see: who the buyer is, whether there are two of them, concentration in your customer base, how much the business depends on you personally, and the quality of your books. Treat this as the range to argue inside, not a number to put in an email.
The multiple follows growth and retention, and both follow the product. If you are building largely on your own, Tekk turns what you want into specs your coding agent can actually execute.
The calculation
valuation = ARR × multiple
True, and almost entirely unhelpful. The multiple is the whole answer, and across businesses that are all accurately "SaaS" it ranges from roughly 1× to 15×.
So the useful question is never "what do SaaS companies sell for". It is what moves the multiple, and by how much.
Worked example
$2m ARR, growing 40%, 105% net revenue retention, 25% margin.
| Driver | Figure | Effect on multiple |
|---|---|---|
| Base, private SaaS | — | 4.00× |
| Growth | 40% | +1.60× |
| Net revenue retention | 105% | +1.12× |
| Multiple | 6.72× |
| Mid-point | $13,440,000 |
| Likely range | $9,408,000 – $17,472,000 |
| Rule of 40 | 65 |
That range spans $8m on a $2m-ARR business — four times revenue, and wider than most founders' entire expected outcome. It is not imprecision for its own sake. It is a fair statement of how much depends on who turns up.
The multiple is not a property of being SaaS
Two companies, both $2m ARR, both software, both subscription:
| Company A | Company B | |
|---|---|---|
| Growth | 20% | 80% |
| Net revenue retention | 90% | 130% |
| Multiple | 2.4× | 15× |
| Valuation | $4.8m | $30m |
More than six times apart on identical revenue. Every industry benchmark that quotes "SaaS trades at 5× ARR" is averaging across that spread, which makes it a fact about a dataset rather than a fact about your company.
Retention is doing more work here than founders expect. Net revenue retention above 100% means the business grows without signing anyone new — a compounding asset rather than a treadmill — and it moves the multiple between 4× and 8× more often than growth does.
Below $1m ARR, the revenue multiple does not apply
This is the correction that no calculator on this subject makes, and it costs people real money in first conversations.
At small scale the buyers are different people. Individuals and small funds buying a business to operate pay a multiple of what it actually earns — typically 3–5× seller discretionary earnings. Revenue multiples come from strategic and private-equity buyers, who are shopping further up.
At $400k ARR on a 25% margin:
| Method | Basis | Range |
|---|---|---|
| Revenue multiple | $400,000 ARR | $1.9m – $3.5m |
| Earnings multiple | $100,000 a year | $280,000 – $520,000 |
A factor of roughly seven, and the lower number is the one a buyer will open with. Anchoring on the revenue figure at that size is the most common and most expensive mistake a first-time seller makes.
What this cannot see
The weightings here are a heuristic — a base multiple adjusted for growth and retention, widened 30% either way. Real prices turn on things no model has access to:
- Who the buyer is, and whether there are two of them. Competitive tension moves price more than any metric on this page.
- Customer concentration. One customer at 30% of revenue is priced as the risk of losing them.
- Founder dependency. If you are the only person who can close a deal or deploy the product, the buyer is purchasing a job.
- Whether the books survive diligence. Blended service revenue reported as ARR gets corrected, always at a worse moment than if it had been separated from the start.
The first three are fixable with a year of deliberate work, and none of them appear in any multiple calculation.
How it works
- 1
Enter four numbers
ARR, growth, net revenue retention and profit margin. Recurring revenue only — services and one-off work are valued far lower, and mixing them in is the fastest way to a number that falls apart in diligence.
- 2
Read the range, never the mid-point
This saas valuation calculator reports a band because the honest output is a band. On a $2m business the range spans about $8m, which is wider than most founders' entire expected outcome and is a fair reflection of how much depends on who the buyer turns out to be.
- 3
Check which method applies to you
Below roughly $1m ARR, buyers pay a multiple of earnings rather than revenue, and the two answers differ by a lot. The tool says which one it thinks applies and shows both regardless.
Frequently asked questions
- How is a SaaS business valued?
- Usually as a multiple of annual recurring revenue for larger companies, or a multiple of seller discretionary earnings for smaller ones. The formula is trivial — ARR times a multiple — and the entire difficulty is that the multiple ranges from about 1× to 15× across businesses that are all accurately described as SaaS.
- What multiple does SaaS sell for?
- There is no single answer, which is the honest response to the most common question. The multiple is a function of growth and retention rather than a property of the category: a business growing 20% with 90% net revenue retention and one growing 80% with 130% are separated by more than five times on the same revenue.
- What drives the multiple most?
- Growth first, retention close behind, and they compound. Net revenue retention above 100% means the business grows without new customers, which is the single most attractive property a buyer can find. This saas valuation calculator shows each driver's contribution separately so you can see which one is carrying the number.
- Why does my small SaaS get valued on profit instead of revenue?
- Because the buyers are different people. Below roughly $1m ARR the acquirers are individuals and small funds buying a business to run, and they pay 3–5× what it actually earns. Revenue multiples come from strategic and private-equity buyers who appear higher up. A founder at $400k ARR anchoring on 5× revenue is wrong by a wide margin.
- What is net revenue retention and why does it matter so much?
- Expansion revenue from existing customers less churn and downgrades, as a percentage. Above 100% the business grows even if you never sign another customer, which changes what a buyer is purchasing — a compounding asset rather than a treadmill. It is the difference between a 4× and an 8× multiple more often than growth is.
- Should I use ARR or total revenue?
- Recurring revenue only. Services, implementation fees and one-off work are typically valued at around 1× or excluded outright, because they do not recur and do not scale. Reporting blended revenue inflates the headline and gets corrected in diligence, usually at a worse moment than if you had been precise from the start.
- How accurate is a saas business valuation calculator?
- Directionally useful and precisely wrong. Any saas business valuation calculator, including this one, is applying weightings to four inputs and cannot see the things that move real prices — who the buyer is, whether there are two of them, customer concentration, how much the business depends on you personally, and whether your books survive scrutiny. Treat the output as the range to argue inside.
- Does the Rule of 40 affect valuation?
- It is the standard sanity check and correlates well with multiples in public comparables. It captures the trade-off between growth and profitability in one number, which is why buyers reach for it, though it treats the two as interchangeable when they are not equally easy to move.
- What lowers a SaaS valuation most?
- Customer concentration, founder dependency and churn, roughly in that order. A business where one customer is 30% of revenue, or where the founder is the only person who can close a deal, is priced for the risk of losing either. Both are fixable with a year of deliberate work and neither shows up in any multiple calculation.
- How long does a SaaS sale take?
- Three to nine months from listing to close for a small business, longer for anything requiring institutional diligence. The number most founders underestimate is the preparation before that: clean financials, documented processes and a working product the buyer can run without you.
- Is a saas valuation calculator useful before a funding round?
- Less than you would hope. A saas business valuation calculator models an acquisition, where the buyer is purchasing cash flows. A funding round is priced on the next round's expectations rather than today's revenue, which is why early-stage valuations often look absurd against any multiple. Use a dilution model for that question instead.
- Do you store the numbers I enter?
- No. The calculation runs entirely in your browser. Nothing is sent to a server, nothing is logged, and there is no account — worth knowing before you type your real ARR into a web page.
- Why is this free, and what is Tekk?
- Tekk is a spec-driven development platform for people building software with AI coding agents. This calculator costs us nothing to run, and the multiple follows growth and retention, which both follow the product. No signup, no run limit, no upsell inside the tool.
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