SaaS Valuation Calculator
SaaS businesses have unique economics. Value companies using SaaS-specific metrics and multiples.
How the SaaS Valuation Calculator works
Value SaaS companies with ARR multiples, Rule of 40, and growth-adjusted methods. Consider churn, CAC, and LTV in valuation.
SaaS valuation requires specialized knowledge. This calculator applies software-specific metrics accurately.
How it works
Tutorial
Software-as-a-Service businesses have fundamentally different economics than traditional companies, demanding specialized valuation methods. Revenue multiples dominate SaaS valuations because recurring revenue is predictable, scalable, and valuable. Understanding metrics like ARR, growth rate, churn, and the Rule of 40 is essential for accurate SaaS company valuation.
You have two options: use the calculator above by entering your SaaS metrics to get instant valuation, or follow this manual guide to understand how SaaS companies are properly valued.
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 industry-standard methods.
Step 1: Calculate Annual Recurring Revenue
Start with your monthly recurring revenue metrics:
| 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
Determine operational efficiency:
| Component | Value |
|---|---|
| YoY Revenue Growth Rate | 45% |
| Operating Profit Margin | -8% |
| Rule of 40 Score | 37% |
Calculation: 45% + (-8%) = 37%
Step 3: Determine Base Revenue Multiple
Apply market-appropriate multiple based on company stage and metrics:
| Factor | Multiple Impact |
|---|---|
| Base SaaS Multiple (2024) | 5.0x |
| Growth Premium (>40%) | +2.0x |
| Churn Penalty (>5%) | -0.5x |
| Market Position Bonus | +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 determined 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 concentration, CAC payback, and net retention:
| 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
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 precision | $13.7M |
Final Answer: The SaaS company valuation is approximately $13.7 million
What This Means
A $13.7M valuation on $1.8M ARR represents a 7.6x revenue multiple, reflecting strong growth, good efficiency metrics, and positive unit economics. This valuation assumes continued execution—growth slowdowns or churn increases would quickly reduce the multiple and overall value.
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