What Is My SaaS Company Worth?

TLDR: SaaS companies typically sell for 3.5x to 5.0x EBITDA, with SDE-based valuations ranging from 2.7x to 3.5x. With a median asking price of $500,000 and median SDE of ~$247,000 across 142 active listings, what you actually receive depends heavily on churn, revenue quality, and how dependent the business is on you personally.

Understanding SDE: Where Most Sellers Start

If you've talked to a broker or done any initial research on selling your SaaS business, you've probably encountered the term Seller's Discretionary Earnings, or SDE. It's the most common starting point for understanding what a business generates for its owner—and for good reason. It's intuitive.

SDE starts with your net profit and adds back:

• Your own salary and benefits (since a new owner would replace them with their own)
• One-time or non-recurring expenses (legal fees, a one-off equipment purchase, etc.)
• Personal expenses run through the business
• Depreciation and amortization
• Interest payments

The result is a number that represents the total economic benefit a single working owner could extract from the business in a given year. For smaller SaaS companies—especially those where you're still deeply involved in operations, sales, or product—SDE is a natural lens for understanding what the business is really earning.

It's also the metric most commonly used by business brokers and reflected in marketplace listings. When you see a SaaS business listed at "$500,000 asking price" with "$246,857 in cash flow," that cash flow figure is almost always SDE.

Regalis Capital note: SDE is a useful starting point, but it's calculated differently by different brokers. Before you rely on any SDE-based valuation, make sure you understand exactly what's been added back—and whether those add-backs will hold up to buyer scrutiny.

Understanding EBITDA: What Serious Buyers and Lenders Actually Use

Once you move beyond the listing stage and into conversations with institutional buyers, private equity groups, or lenders evaluating your deal, the conversation shifts to EBITDA—Earnings Before Interest, Taxes, Depreciation, and Amortization.

EBITDA is a stricter, more standardized measure of operating performance. Unlike SDE, it does not add back an owner's salary. It assumes a professional management team is running the business. That distinction matters enormously for SaaS companies, where buyers are typically evaluating whether the business can operate and grow without you.

Here's the relationship between the two:

For a SaaS business generating $246,857 in SDE with an owner drawing, say, $80,000 in salary, the EBITDA might be closer to $166,857. Those two numbers, multiplied by their respective ranges, can produce very different valuations—which is why understanding both matters before you go to market.

SDE is the bridge that helps you understand your business's earning power on your own terms. EBITDA is what buyers use to price it.

SaaS EBITDA Valuation Range

Direct Answer: SaaS businesses generally sell for 3.5x to 5.0x EBITDA in the current market. Where your business lands within—or potentially outside—that range depends on revenue quality, churn, growth trajectory, and owner dependency.

Important: These multiples apply to verified, normalized EBITDA—not unaudited estimates. Buyers and their lenders will scrutinize every add-back. Overstating EBITDA during marketing typically leads to price reductions at due diligence, not higher offers.

SaaS SDE Valuation Range

For smaller SaaS businesses where SDE is the more relevant metric—typically those under $1M in annual earnings where the owner is still central to operations—the current market range is 2.7x to 3.5x SDE.

Regalis Capital note: The gap between SDE and EBITDA multiples reflects a real structural difference—not a judgment on your business. As your SaaS company matures, grows a management layer, and reduces owner dependency, it naturally migrates from being valued on SDE toward being valued on EBITDA. That transition is often where significant value is created.

What Drives Value Up or Down in SaaS Businesses

SaaS valuations are more sensitive to qualitative factors than almost any other industry. Here's what moves the needle:

Value Drivers (Push Multiples Higher)

• Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR): Predictable, contracted revenue is the single largest driver of SaaS valuation premiums. Buyers pay significantly more for revenue they can count on.
• Low Churn: Monthly gross churn below 2–3% signals a sticky product. High churn signals product-market fit problems, and buyers price that risk in immediately.
• Net Revenue Retention (NRR) above 100%: If your existing customers are expanding their spend year over year, that's one of the most compelling signals a SaaS business can show.
• Owner-Independent Operations: A business that runs without you—with documented processes, a capable team, and customer relationships not tied to your personal relationships—commands meaningfully higher multiples.
• Scalable Infrastructure: Modern, maintainable code, clean integrations, and documented architecture reduce technical risk for buyers and their advisors.
• Clean Financials: Accrual-basis accounting, clear revenue recognition, and three years of consistent books make due diligence faster and reduce the risk of post-LOI price renegotiation.

Value Detractors (Push Multiples Lower)

• High customer concentration (one customer representing more than 15–20% of revenue)
• Significant technical debt or legacy architecture
• One-time or services revenue mixed in with subscription revenue
• Unverifiable add-backs or inconsistent reporting
• Key-person dependency in code, sales, or customer relationships
• Contracts that allow customers to cancel without penalty

How Buyers Evaluate SaaS Businesses

Understanding the buyer's lens helps you prepare—and price—more realistically.

Sophisticated SaaS buyers evaluate businesses across three primary dimensions:

1. Revenue Quality Buyers will dissect your revenue by type (MRR vs. one-time), customer cohort (how long do customers stay?), and expansion behavior (are customers growing their spend?). They're building a forecast, and they need to trust the inputs.

2. Technical Infrastructure Buyers—or their technical diligence teams—will review your codebase, infrastructure, and security posture. Significant technical debt, outdated dependencies, or poor documentation can trigger price reductions or kill deals entirely.

3. Transferability This is the question every SaaS buyer is actually asking: Can I run this without you? They'll evaluate customer relationships, vendor agreements, team capabilities, and documentation. If the answer is "not easily," that uncertainty gets priced into the multiple.

Disclaimer

These ranges are based on publicly available market data and are not a formal appraisal. Actual valuations depend on financial performance, market conditions, deal structure, and buyer competition. This content is informational only and does not constitute financial or legal advice.

Frequently Asked Questions

Why are SaaS multiples so different from other industries? SaaS businesses generate recurring, predictable revenue—which buyers value more than one-time or project-based income. That predictability reduces risk, and buyers pay a premium for it. The flip side: buyers also scrutinize churn and revenue quality more aggressively than in other industries.

My broker gave me a much higher valuation. Why does your range look different? Valuation ranges vary depending on who's doing the math and what assumptions they're making. Brokers sometimes use optimistic add-backs or apply upper-range multiples to attract listings. Our ranges reflect what buyers are actually paying in the current market, not best-case scenarios.

Does it matter if my revenue is mostly annual contracts vs. monthly? Yes, significantly. Annual contracts with low cancellation rates are valued more highly than month-to-month subscriptions, even at the same MRR, because they reduce near-term churn risk. Multi-year contracts with favorable terms can push valuations toward the top of the range.

How does owner salary affect my valuation? If you're using SDE, your salary is added back—it doesn't reduce your valuation. Under EBITDA-based valuations, your salary is replaced with a "market rate" management cost. If you've been paying yourself well above market rate, some of the difference may still be treated as an add-back during normalization.

Should I try to grow ARR before selling, or sell now? That depends on your growth trajectory and personal situation. If you're growing at 20%+ YoY and have low churn, waiting 12–18 months can significantly increase your valuation. If growth has plateaued or you're facing burnout, the cost of waiting may outweigh the upside. This is worth modeling with an advisor before you decide.

Get an Accurate Assessment of What Your SaaS Business Is Worth

Ranges are a starting point. What your business is actually worth depends on your specific financials, your customer base, your team, and the buyers currently in the market for a company like yours. We work with SaaS founders to build accurate, defensible valuations—and to find buyers who understand the business you've built.

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Also useful: - Sell a SaaS Company: Complete Guide → - Seller Valuation Calculator →