Insights / Interactive guide
How to value a SaaS or software company: interactive valuation calculator
Highlights
- There's no magic formula. Under $100m in revenue, companies with similar numbers sell for very different multiples, because buyers price more than the financials.
- What matters is understanding the drivers, so you know what to work on before you sell, and when to sell.
- Use the tool below to see what moves a business up or down its range. Then look past the headline multiple: how much of the price is guaranteed matters as much. Try the calculator ↓
What drives your valuation
Every buyer runs their own numbers, but three things drive the valuation.
1 · Track record
What you've built
Growth, profitability, revenue retention, and how defensible your product is.
2 · Growth potential
The room you have left
How much more you can grow if you keep doing what you do today.
3 · External factors
Market and buyer
Market conditions, and why this particular buyer wants you, now.
SaaS valuation calculator: where could your business sit?
Unlike a typical valuation calculator, this one won't give you a single number, because at this size there isn't one. Pick your size, then move the sliders: the range is wide at every size, and these are the levers that move a business within it.
What moves you in the range
Based on market research and our own deal data. This tool shows how different factors move a business within the range; it doesn't give you a multiple or a valuation.
What moves you in the range
Revenue retention: the first thing buyers ask about
After revenue, it's usually the first question we get from buyers, and many founders don't track it. It shows the quality of your growth and of your customer base.
Business A
Existing customers alone grow revenue 20% a year. A buyer who adds sales capacity sees a high-quality business.
Business B
Growth will keep costing money, and market fit may not be there yet.
What buyers look for
Most buyers like to see gross revenue retention around 90% or above, though some are comfortable lower, closer to 80%. For net revenue retention, as close to 100% as possible. They're less strict on net, because upselling and cross-selling are levers they often bring themselves.
Growth: sustainable, not at any cost
Don't chase growth for its own sake. Slow growth isn't always penalised: a business that has grown purely from inbound, without a sales team, offers growth a buyer can switch on. What it needs is strong fundamentals underneath.
Profitability: buyers want to see it
Ideally, you show a profit when you sell. Break-even or a small loss can still work if you have a clear path to profitability and can explain what drives the losses today. It varies case by case, and losses weigh most when retention is also weak.
Customer concentration: a risk the buyer will price
A few large customers don't always lower the price, but they raise the buyer's risk. That usually shows up in the deal structure, below.
Growth potential: the room you have left
Growing from $5m to $10m in revenue gives a bigger base to value, but if it takes you close to a ceiling, for example a home market you've nearly saturated, the multiple can come down. A buyer pays for the next two years, not just the last two.
Watch out
Growth potential is the one founders underestimate. Buyers pay for the room you have left to grow, not only for how big you are today.
External factors: market and buyer
Market conditions are what they are, but a down market rarely hits everyone equally: buyers start valuing things differently, so stay on top of what they're looking for now. And a lot has to line up for one buyer to be ready to make an offer at a given moment: a strategic gap to fill, a market to enter, capital to deploy this year. The way to find that buyer is the widest possible coverage, so you don't miss the one for whom everything aligns.
This is why we built our process and technology around reaching as many relevant buyers as possible. See how our process works →Watch out
Founders often overestimate the value of their IP. Software is increasingly easy to replicate, so buyers value your performance and how embedded your product is in your customers' work more than the code itself.
Look past the headline: how the price is paid
Watch out
Founders often fixate on the multiple. It's usually better to focus on how much cash you'll actually receive. You'll hear impressive headline numbers, but what sits underneath them varies a lot, and many founders underestimate this when they sign the LOI.
The headline price is rarely paid in one go. Part of it is guaranteed, part of it depends on what happens after the sale, and that part may never arrive.
So compare offers on what you're sure to receive, not only on the multiple. Take two offers for the same business, with $10m in annual recurring revenue: one at a valuation multiple of 8x ARR, the other at 5x ARR.
Offer A
$80m headline price
$32m cash upfront
$48m earn-out
Offer B
$50m headline price
$45m cash upfront
$5m earn-out
Offer A sounds 60% bigger.
Offer B puts $13m more in your pocket on day one.
Earn-outs in practice
Across US private deals, sellers have received about 21 cents for every dollar of maximum earn-out. The conditional part is real money only if it pays out.
Source: SRS Acquiom, 2026 earnouts study
This is also where risk shows up. With high customer concentration, weak retention or losses, a buyer may keep the headline price but move more of it into an earn-out or deferred payments. Negotiating the structure can be worth more than a couple of points on the multiple.
More on this in our guide to deal structure, and in Signing an LOI? Here's what you need to know.
Questions founders ask
How much is my SaaS company worth?
There's no magic formula that gives you a single number, and the smaller the business, the truer that is. It depends on many factors, including your revenue retention, profitability, growth, how much room you have left to grow, and the buyer. Use our interactive valuation calculator above to see how each of them moves a business within its range, and talk to us for an honest view of your own numbers.
Is a SaaS company valued on revenue or profit?
The standard is still a multiple of revenue, usually annual recurring revenue. In practice it comes to the same thing: a buyer using a revenue multiple factors your profitability into the multiple, and a buyer using a profit multiple factors in your revenue and growth. Either way, we recommend focusing less on the multiple and more on the amount you want to receive, then optimising for that.
What is a typical valuation multiple for a SaaS company?
There isn't one that holds for every business. Under $100m in revenue, companies of the same size can sell for several times the multiple of others, depending on retention, profitability, growth and the buyer. That's why we focus on the drivers rather than a single number.
What is the Rule of 40 in SaaS?
The Rule of 40 says that a healthy SaaS company's revenue growth rate and profit margin should add up to 40% or more. Growing 30% a year with a 10% margin passes, and so does growing 10% with a 30% margin. You'll come across it a lot if you research the space, and it's a good rule of thumb to keep in mind. But it's not what we would focus on if you're preparing for M&A. A company growing 100% a year passes easily, even with poor retention or no profit at all, and a business like that may struggle to find a buyer at all. Other metrics matter far more to buyers, and those are the ones to optimise for. We're happy to walk you through them.
Should I grow faster before selling?
More growth is always welcome, but not at the cost of higher churn or heavy losses. What matters as much is a clear path to keep growing. If you have identified a growth lever, it can be worth pursuing before you sell. Sometimes it's better to prepare it as a plan the buyer can put into action, so the potential is priced in. We advise on this case by case, based on your circumstances.
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Last updated October 2026