Quick Valuation

Revenue Multiple Calculator

Calculate your SaaS valuation using revenue multiples. The fastest way to estimate company value based on ARR or MRR.

What is Revenue Multiple Valuation?

Revenue multiple is the simplest and most commonly used SaaS valuation method. It values your company as a multiple of annual recurring revenue (ARR). Formula: Valuation = ARR × Multiple.

For example, if your SaaS generates $2M ARR and trades at a 6x multiple, your valuation is $12M. This method is used by VCs for quick valuations and by acquirers in M&A discussions.

💡 Quick Example: $500K ARR × 8x multiple = $4M valuation

SaaS Revenue Multiple Benchmarks

By Growth Rate

150%+ YoY Growth12-15x

100-150% Growth8-12x

50-100% Growth5-8x

25-50% Growth3-5x

Under 25% Growth2-3x

By Company Stage

Public SaaS7-10x

Late Stage (Series C+)6-9x

Growth Stage (Series B)5-8x

Series A4-7x

Seed/Pre-Seed3-6x

Note: These are general benchmarks. Actual multiples vary based on margins, NRR, churn, market position, and macroeconomic conditions.

How to Calculate Revenue Multiple

Step 1: Calculate ARR

Start with your Monthly Recurring Revenue (MRR) and multiply by 12:

ARR = MRR × 12

Example: $50,000 MRR × 12 = $600,000 ARR

Step 2: Determine Your Multiple

Choose multiple based on growth rate, profitability, and market conditions:

• Fast growth (over 100% YoY) + positive unit economics = 8-12x
• Moderate growth (50-100%) + good margins = 5-8x
• Slower growth (under 50%) + established business = 3-5x
• Apply Rule of 40 bonus: +1-2x if score above 40

Step 3: Calculate Valuation

Multiply ARR by your chosen multiple:

Valuation = ARR × Multiple

Example: $600,000 ARR × 7x = $4,200,000 valuation

What Affects Your Revenue Multiple?

Growth Rate

#1 driver. 100%+ YoY growth can double your multiple. Track MoM and YoY growth consistently.

Gross Margin

Target 75%+ for SaaS. Higher margins = higher multiples. Shows scalability and efficiency.

Rule of 40

Growth% + Margin% ≥ 40. Companies above 40 command premium multiples (+20-30%).

Net Retention

Over 120% NRR adds 1-2x to multiple. Shows expansion potential and customer satisfaction.

Market Size

Larger TAM = higher multiples. $1B+ markets can add 20-30% premium to valuation.

Competition

Market position matters. Category leaders command 2-3x premium vs followers.

✓ Advantages

→Quick & Simple: Calculate valuation in seconds
→Industry Standard: Used by all VCs and acquirers
→Easy to Compare: Benchmark against competitors
→Works for Any Stage: From $100K to $100M ARR

⚠ Limitations

→Oversimplified: Ignores profitability and cash flow
→Market Dependent: Multiples fluctuate with economy
→Misses Nuance: Doesn't capture unique advantages
→Needs Context: Must consider growth and margins

Frequently Asked Questions

What is a revenue multiple for SaaS?

Revenue multiple is your company valuation divided by annual recurring revenue (ARR). Formula: Valuation = ARR × Multiple. For example, if your SaaS has $1M ARR and trades at 5x multiple, valuation is $5M. It's the quickest way VCs and acquirers estimate SaaS value.

What's a typical revenue multiple for SaaS companies?

Typical SaaS multiples: High-growth (>100% YoY): 10-15x ARR, Moderate growth (40-70%): 5-8x ARR, Slower growth (<30%): 2-4x ARR. Public SaaS companies average 7-10x revenue. Private companies typically see 4-8x depending on stage, metrics, and market conditions.

Should I use ARR or MRR for valuation multiples?

Use ARR (Annual Recurring Revenue) for valuation discussions with investors and acquirers - it's the industry standard. ARR = MRR × 12. MRR is useful for tracking monthly growth, but multiples are always quoted on ARR. Example: $100K MRR = $1.2M ARR at 5x = $6M valuation.

How do growth rates affect revenue multiples?

Growth rate is the #1 driver of multiples. Fast growth commands premium multiples: 150%+ growth: 12-15x, 100% growth: 8-12x, 50% growth: 5-8x, 25% growth: 3-5x. Why? Higher growth = faster path to profitability and larger exit. Combine with Rule of 40 (growth% + margin%) for complete picture.

When should I use revenue multiple valuation?

Use revenue multiple when: 1) You have recurring revenue (MRR/ARR), 2) Need quick valuation estimate, 3) Comparing to similar companies, 4) Early fundraising discussions. Best for companies with $100K+ ARR. Combine with other methods (DCF, VC Method) for comprehensive valuation.

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