SaaS Valuation Calculator
Calculate SaaS company value using recurring revenue multiples and growth metrics.
How the SaaS Valuation Calculator works
Value software companies using annual recurring revenue, growth rate, customer retention, and profit margins.
SaaS companies are valued differently than traditional businesses, using recurring revenue and growth-adjusted multiples.
How it works
Tutorial
Software subscription businesses are valued differently than traditional companies because recurring revenue is predictable and scalable. Investors pay multiples of your annual revenue based on growth rate, customer retention, and profitability. Understanding these metrics helps you value your SaaS company accurately.
Use the calculator above for instant valuation, or follow the steps below to calculate it yourself.
The Formula
| Component | Formula |
|---|---|
| Annual Recurring Revenue | Monthly Recurring Revenue × 12 |
| Rule of 40 Score | Revenue Growth Rate + Profit Margin |
| Base Valuation | ARR × Revenue Multiple |
| Adjusted Valuation | Base × Growth Premium × Efficiency Modifier |
Step-by-Step Calculation
Let’s value a SaaS company using standard methods.
Step 1: Calculate Annual Recurring Revenue
Start with monthly recurring revenue:
| Metric | Amount |
|---|---|
| Monthly Recurring Revenue | $150,000 |
| Multiply by 12 | × 12 |
| Annual Recurring Revenue | $1,800,000 |
Calculation:$150,000 × 12 =$1,800,000
Step 2: Calculate Your Rule of 40 Score
Measure efficiency by adding growth rate and profit margin:
| Component | Value |
|---|---|
| Revenue Growth Rate | 45% |
| Profit Margin | -8% |
| Rule of 40 Score | 37% |
Calculation:45% + (-8%) =37%
Step 3: Determine Revenue Multiple
Apply market multiple based on company performance:
| Factor | Multiple Impact |
|---|---|
| Base SaaS Multiple | 5.0x |
| High Growth (over 40%) | +2.0x |
| Churn Above 5% | -0.5x |
| Strong Market Position | +0.5x |
| Applied Multiple | 7.0x |
Calculation:5.0 + 2.0 – 0.5 + 0.5 =7.0x
Step 4: Calculate Base Valuation
Multiply ARR by the revenue multiple:
| Component | Value |
|---|---|
| Annual Recurring Revenue | $1,800,000 |
| Revenue Multiple | × 7.0 |
| Base Valuation | $12,600,000 |
Calculation:$1,800,000 × 7.0 =$12,600,000
Step 5: Apply Quality Adjustments
Adjust for customer quality and unit economics:
| Adjustment Factor | Impact | Multiplier |
|---|---|---|
| Net Revenue Retention (115%) | Strong | 1.10 |
| CAC Payback (8 months) | Excellent | 1.05 |
| Customer Concentration | Moderate risk | 0.95 |
| Combined Adjustment | 1.09 |
Calculation:1.10 × 1.05 × 0.95 =1.09(rounded from 1.09725)
Step 6: Calculate Final Valuation
Apply adjustments to base valuation:
| Step | Calculation | Result |
|---|---|---|
| Apply adjustment factor | $12,600,000 × 1.09 | $13,734,000 |
| Round to reasonable value | $13.7M |
Calculation:$12,600,000 × 1.09 =$13,734,000
Final Answer:The SaaS company valuation is approximately$13.7 million
What This Means
A $13.7M valuation on $1.8M recurring revenue represents 7.6x revenue, which reflects strong 45% growth, good customer retention at 115%, and healthy unit economics. Growth slowdowns or increased customer losses would quickly reduce this multiple.
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