Enter SaaS Metrics
How It Works
Input your monthly recurring revenue and growth metrics.
Churn, growth, and unit economics adjust the multiple.
See your estimated valuation with ARR multiple and key SaaS metrics.
Our model applies the same ARR multiples used by SaaS acquirers, investors, and M&A advisors.
Typical ARR Multiple Range
How SaaS Valuation Works
SaaS businesses are valued differently from content sites. Recurring revenue commands premium multiples when churn is low and growth is strong.
ARR Multiples
SaaS valuations are based on Annual Recurring Revenue (MRR x 12). Typical multiples range from 4x-8x ARR for B2B SaaS with $100K-$1M ARR. Smaller SaaS under $50K ARR typically command 2.5x-4x ARR. Multiples adjust based on growth, churn, and market positioning.
Churn Impact
Monthly churn is the most critical risk factor. A 2% monthly churn rate (22% annual) can cut valuation by 30% compared to a 1% monthly churn SaaS. We apply a churn penalty multiplier that directly reduces the effective ARR multiple based on your churn rate.
Growth Premium
Monthly growth rate directly adds to valuation. SaaS businesses growing 5-10% month-over-month command 1.5-2x the multiple of flat-growth SaaS. Growth demonstrates product-market fit and signals future revenue expansion, the strongest driver of SaaS valuation premiums.
LTV/CAC Ratio
The LTV/CAC ratio measures unit economics health. A ratio above 3:1 is considered healthy, above 5:1 is excellent. SaaS with poor unit economics (below 2:1) receives a valuation discount because it costs too much to acquire customers relative to their lifetime value.
SaaS Valuation FAQ
What is a good ARR multiple for a SaaS business?
For B2B SaaS with $100K-$500K ARR, expect 4x-6x ARR. For $500K-$1M ARR, 5x-7x. For $1M+ ARR with strong growth, 6x-10x. These multiples depend heavily on growth rate, churn, and market conditions. Post-2022 market correction, multiples have compressed 20-30% from 2021 peaks but remain strong for high-growth SaaS with low churn.
How does churn rate affect SaaS valuation?
Churn is the single most destructive force in SaaS valuation. A 5% monthly churn means losing 46% of customers annually — your MRR is constantly eroding. Buyers apply a significant discount for high-churn SaaS. Improving monthly churn from 5% to 2% can literally double your valuation. Annual churn under 10% (1% monthly) is considered excellent.
Why does growth rate matter so much for SaaS multiples?
Growth rate signals product-market fit and future revenue potential. A SaaS growing 10% month-over-month will double in under 8 months, while flat-growth SaaS has no expansion story. Buyers pay for future cash flows, so faster growth justifies higher multiples. A growing SaaS at $20K MRR is often valued higher than a stagnant SaaS at $40K MRR.
What is a healthy LTV/CAC ratio?
An LTV/CAC ratio above 3:1 is considered healthy for SaaS. Above 5:1 is excellent and commands valuation premiums. Below 2:1 suggests the business model needs fixing — customer acquisition costs are too high relative to lifetime value. Our calculator factors LTV/CAC into the valuation multiple as a direct reflection of unit economics quality.
How do I value a bootstrapped SaaS compared to VC-funded?
Bootstrapped SaaS businesses are often valued more conservatively (20-30% lower multiples) because they typically have less aggressive growth trajectories. However, bootstrapped SaaS often has better unit economics, higher profitability, and lower risk of failure. Many acquirers actually prefer bootstrapped SaaS for these reasons. Use the growth rate field to reflect your actual trajectory.