By Night Watcher · Figures sourced and checked on 29 September 2026. Examples are fictional.
A multiple means little until you know its denominator
A valuation multiple divides what a company is worth by one financial measure. For subscription software that measure is usually revenue, because many SaaS companies spend their profit on growth and their earnings understate what the business produces. The arithmetic never changes: value equals the measure times the multiple. What changes is the measure, and a published multiple is only usable once you know which measure it was built on.
Four measures appear in SaaS valuation data. ARR, or annualized run-rate revenue, is current recurring revenue expressed as a yearly figure. Trailing revenue is what the company recognized over the past twelve months. Forward, or NTM, revenue is a forecast for the next twelve months. SDE (seller's discretionary earnings) and EBITDA are profit measures used for smaller businesses: SDE adds back the owner's pay and discretionary spending, while EBITDA assumes someone is paid to run the business. A growing company's ARR is usually higher than its trailing revenue, so the same price gives a lower ARR multiple than trailing-revenue multiple.
The top of the fraction varies as well. Enterprise value is equity value plus debt minus cash, and most public comparisons use it. The SaaS Capital Index uses market capitalization with no adjustment for cash or debt. Small-business marketplaces usually quote the sale price. Before comparing two published multiples, write down both halves of each.
What public SaaS indexes reported in 2026
SaaS Capital publishes the SaaS Capital Index (SCI), the median multiple across 63 US-listed B2B SaaS companies, calculated as market capitalization divided by annualized current run-rate revenue. Its chart put the median at 4.6× on 31 August 2026. SaaS Capital's January 2025 valuation post gave the same median as 7.0× at the start of 2025, and its April 2026 post described the first-quarter 2026 level as a decade-plus low, which it linked to concern that AI posed an existential risk to the SaaS model.
Jamin Ball's Clouded Judgement newsletter of 25 September 2026 reported a median enterprise value to next-twelve-months revenue multiple of 4.2× for the cloud software companies it tracks, with a median of 39.7× for the five most highly valued. Grouped by forecast growth, the medians were 18.0× for companies projected to grow more than 22%, 6.7× for 15% to 22%, and 3.3× for under 15%.
Aventis Advisors, an M&A adviser, reported a median EV/revenue multiple of 4.6× in August 2026 for pure-play SaaS companies listed on NASDAQ or NYSE with a market capitalization of $1 billion or more, using S&P Capital IQ data. It put the June 2026 low at 3.2×. The page does not say whether its revenue figure is trailing or forward. These three medians sit close together, yet each uses a different company list, numerator or revenue measure, so none can be swapped for another.
What private SaaS deal data shows
Aventis also analyzed private SaaS acquisitions recorded by Mergermarket. Across 543 transactions from 2015 to 2026 with a disclosed revenue multiple, it reported a median of 4.5× EV/revenue, a first quartile of 2.4× and a third quartile of 8.1×, with a median deal size of $80 million. By year, it reported medians of 3.7× in 2023, 2.9× in 2024 and 3.8× in 2025, and 3.1× for the small sample of deals closed in the first quarter of 2026. With a median deal of $80 million, this sample describes companies far larger than most bootstrapped products.
SaaS Capital's January 2025 post combined its index, then at 7.0×, with growth and retention data from its survey of private B2B SaaS companies to produce predicted multiples of 4.8× for bootstrapped companies and 5.3× for equity-backed ones. Those are outputs of a model rather than observed sale prices, and the index they were built on has since fallen to 4.6×. The SaaS Capital blog pages checked on 29 September 2026 did not include an updated prediction.
FE International, which advises on SaaS sales, published ranges by ARR band on 25 August 2026, drawn from its own advisory work across more than 1,500 transactions. It put businesses under $1 million ARR at 2.5× to 4× SDE, which it equates to 2× to 3× ARR; businesses with $5 million to $10 million ARR at 3.5× to 5.5× ARR; and businesses above $20 million ARR at 5× to 7× ARR. These are a broker's summary ranges without a published sample count per band, and FE says individual outcomes depend on the business's own drivers.
Why public, private and micro-SaaS multiples differ
A public shareholder can sell in seconds. A private company is sold whole, after months of diligence, to a smaller group of buyers. The companies in public indexes also have far more revenue, audited accounts and management teams that do not depend on one founder. Buyers of private companies price in the lack of liquidity, the smaller scale and the work of verifying the numbers. Aventis reported the size effect in its deal data: the median revenue multiple for deals of $50 million to $100 million was almost twice the median for deals of $20 million to $50 million.
At the smallest end, many sales are priced on profit. FE International's table puts businesses under $1 million ARR on an SDE basis, bought mostly by individuals, search funds and small acquirers. Acquire.com's multiples report, published in February 2026 and updated on 1 September 2026, covers its own marketplace, and says the data reflects businesses typically valued below $10 million. It reported a median profit multiple of 3.9× for confirmed SaaS sales in both 2024 and 2025. The page does not define which profit measure it uses, so treat it as a price-to-profit figure and keep it apart from ARR multiples.
Applying a public median to a product with a few hundred thousand dollars of ARR mixes two different markets. Start with the data set closest to your size and your likely buyer, and record its denominator, date and sample next to the number.
What moves a multiple up or down
Growth is the clearest driver in public data. In the Clouded Judgement figures above, the median for the fastest-growing group was more than five times the median for the slowest. Retention comes next: SaaS Capital's private valuation model uses two company inputs alongside the index, ARR growth and net revenue retention (NRR). McKinsey's November 2025 analysis of more than 100 B2B SaaS companies found that the top quartile by valuation, with a median EV/revenue multiple of 24× measured between the first quarter of 2019 and the fourth quarter of 2024, had NRR of 113%, against 98% for the bottom quartile at a median of 5×. That is an association across companies. It does not tell you how much a given NRR gain adds to your own multiple.
Gross margin decides whether revenue is treated as software revenue. FE International writes that buyers treat a business above roughly 75% gross margin as software, and that below 70% they start asking which part of the revenue is really services. Churn is checked early because fast new sales can hide it. Customer concentration and owner dependence work as risk discounts: FE's top-quartile ranges assume low concentration, and it argues that for bootstrapped sellers under $5 million ARR, documented processes and a team that can run the product without the founder move the multiple further than extra growth.
Size and timing sit outside the product. FE's ranges rise with each ARR band and the Aventis deal-size comparison above points the same way, and the SCI fell from 7.0× to 4.6× between January 2025 and August 2026 without any single company changing. For context on the population behind private estimates, SaaS Capital's 2026 survey reported median growth of 15%, NRR of 103% and gross revenue retention of 91% for bootstrapped companies with $3 million to $20 million in ARR.
Worked example: applying a range to ARR
Take a fictional B2B scheduling product with 400 customers paying $100 a month. MRR is $40,000, so ARR is $480,000. It grows 25% a year, has net revenue retention of 97%, runs an 82% gross margin, has no customer above 3% of revenue, and the founder still handles every sale. Its owner tests multiples of 2×, 3× and 4×. These are assumptions for the arithmetic, not an estimate of what this business would fetch.
The SaaS valuation calculator multiplies ARR by each: $960,000 at 2×, $1,440,000 at 3× and $1,920,000 at 4×. It then reruns the numbers at 20% lower and 20% higher ARR. At $384,000 of ARR the base case is $1,152,000; at $576,000 it is $1,728,000. The full spread, from the low multiple on lower ARR ($768,000) to the high multiple on higher ARR ($2,304,000), is three-fold, which shows how much the answer depends on two assumptions.
A buyer would then look at the details. NRR below 100% and a founder who owns every sale are both reasons to use the lower end, while the margin and low concentration support the higher end. A buyer at this size may also price on SDE, so the owner should run that version too; the website worth calculator applies multiples to monthly profit. Any result is enterprise value: subtract debt, add cash and account for earn-outs, deferred payments and fees to see what the owner would receive.
Pre-revenue startups need a different method
A revenue multiple needs revenue. Before a startup has paying customers there is nothing to multiply, and a few months of early revenue is too volatile to annualize with confidence. Early-stage valuations are usually negotiated between founders and investors rather than calculated from a formula.
Several methods give that negotiation a starting point. Comparable rounds look at what similar companies at the same stage recently raised at. The Berkus method assigns value to milestones such as a working prototype and a capable team. The scorecard method adjusts a typical pre-money valuation for the region by comparing team, market and product. Risk factor summation moves a base value up or down for a list of risks. The venture capital method works backwards from a hoped-for exit value and the return an investor requires. For a SAFE, the valuation cap is a negotiated term rather than a measurement.
The Night Watcher SaaS valuation calculator performs none of these methods. It applies your chosen multiples to ARR, so it is useful once a product has recurring revenue and you want to see how far the answer moves with the multiple.
Mistakes that distort a multiple-based estimate
Mixing measures is the most common error: applying a forward-revenue public multiple to trailing revenue, an ARR multiple to revenue that includes one-time fees, or an EBITDA multiple to SDE. Suppose a fictional business has $300,000 of SDE and replacing the owner would cost $100,000 a year. EBITDA is then about $200,000, and an EBITDA multiple applied to SDE overstates the value by half.
Using the wrong figure is next. The SCI moved from 7.0× to 4.6× between January 2025 and August 2026, so an undated multiple can be badly out of date. A funding round prices a minority stake with investor protections attached, which makes it a poor guide to a sale price. Averages are pulled up by a few highly valued companies: in the same Clouded Judgement issue, the top five had a median of 39.7× against 4.2× for the whole group. Prefer medians, and check which companies were counted.
Finally, check the input. ARR should exclude setup fees, services and customers who have already given notice; the ARR guide covers what to include. FE International notes that buyers apply a risk discount to numbers they cannot verify quickly, so make sure your ARR can be rebuilt from the billing system before you apply any multiple to it.
Your worksheet
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SaaS valuation multiple worksheet Snapshot date: ARR, with the method and exclusions used: Trailing twelve-month revenue: SDE or EBITDA, if profitable: Annual growth rate: Net revenue retention: Gross revenue retention or customer churn: Gross margin on software revenue only: Largest customer's share of ARR: Owner tasks a buyer would need to replace: Published figure behind the low multiple (publisher, date, measure, sample): Published figure behind the high multiple (publisher, date, measure, sample): How this business differs from that sample: Low, base and high multiples chosen: Scenario values from the calculator: Debt, cash and deal terms outside the multiple: What evidence would change the range:Download the text worksheet
Sources
Figures and prices come from these pages, checked on 29 September 2026. Prices and published multiples change; check them again before relying on them.
- SaaS Capital Index
- SaaS Capital: private SaaS company valuations
- SaaS Capital: four early-2026 SaaS trends
- SaaS Capital: benchmarks for bootstrapped SaaS companies
- Clouded Judgement, 25 September 2026
- Aventis Advisors: SaaS valuation multiples
- FE International: SaaS valuation multiples
- Acquire.com acquisition multiples report
- McKinsey: the net revenue retention advantage
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