When I wrote the book, Snowflake had net dollar retention of 158 percent and reached a valuation of $92 billion with its IPO.
Four years later, the market has changed completely. The median public SaaS company in the SaaS Capital Index traded at 4.2 times run-rate revenue at 30 September 2026, down from 16.9x at the August 2021 peak. In June 2026 it touched 3.1x, the lowest reading since 2011.
So if someone quotes you a multiple from 2021, ignore it. This estimator starts from current data and shows you, line by line, how growth, retention, margin and risk move the number.
How to use the valuation estimator
- Enter clean ARR: recurring revenue only, excluding GST, setup fees and consulting.
- Enter growth, net revenue retention, gross margin and EBITDA margin.
- Enter your largest customer's share of ARR and how much of the business depends on the founder.
- Use your own adjustment for things a formula can't see: switching costs, brand, compliance, or a buyer who needs exactly what you've built.
- Add cash and debt to see the rough equity value.
How the maths works
Starting multiple = Public median for your growth band × about 72% (private) Adjusted multiple = Starting multiple + Adjustments Enterprise value = ARR × Adjusted multiple (range ±0.4x) Equity value ≈ Enterprise value + Cash − Debt
The growth bands come from our analysis of the September 2026 SaaS Capital Index: 2.3x for growth under 10%, 4.4x at 10–20% and 5.5x at 20–30%. The private discount comes from SaaS Capital's 2025 model, which predicted private multiples at roughly 70–75% of the public figure.
The adjustments are my rule-of-thumb heuristics, not market data. They follow the factors in how to value a SaaS business: NRR above 110% pushes the multiple up, below 100% pulls it down; low gross margin, a Rule of 40 score under 20, small scale, a client paying over 10% of revenue and founder dependence all cost you. There's no formula for the size of each adjustment. That's judgment, and it's what you'll negotiate.
A worked example
The estimator opens with the example from our valuation guide: $3.2 million ARR growing 20%, NRR 105%, gross margin 78%, a 10% EBITDA margin, and no client above 7%.
- Growth band 20–30%: public median 5.5x, private starting point about 4.0x
- NRR slightly above the bootstrapped median: +0.2x
- Gross margin a little below classic SaaS: −0.2x
- Small scale: −0.3x
- Adjusted multiple: 3.7x, so about $11.8 million, with a range of $10.6 million to $13.1 million
The cross-check: $11.8 million ÷ $320,000 EBITDA is about 37x EBITDA. A strategic buyer might pay that. A profit-focused buyer would anchor much lower, which tells you who to sell to.
How to read the result
Treat the range as a conversation starter, not a price. Public medians move every month, a single strategic buyer can pay far more than any benchmark, and small founder-run businesses under about $1 million ARR are usually valued on profit instead. AI-native companies that raised at 20x to 30x revenue did so in venture rounds, not sales, so don't benchmark against them.
And remember the multiple gives you enterprise value. What lands in your account depends on cash, debt, working capital and how a buyer treats prepaid annual plans.
What to do next
- Read SaaS valuation multiples in 2026 for the full data behind the starting point.
- Australian founder? Read valuing an Australian SaaS business and selling a subscription business in Australia.
- Lift the inputs that matter most: net revenue retention and the Rule of 40.
Frequently asked questions
How accurate is this SaaS valuation calculator?
It's indicative, not a valuation. The starting point uses real 2026 market medians, but the adjustments are rule-of-thumb heuristics, and real deals depend on the buyer, the terms and the market on the day. Use it to understand which levers move your value and to sanity-check offers. For a sale, tax planning or a shareholder dispute, get a professional valuation.
Why are private SaaS companies valued lower than public ones?
Private companies are usually smaller and riskier, and their shares can't be sold on an exchange tomorrow, so buyers pay less for the same revenue. SaaS Capital's 2025 model predicted private multiples at about 70–75% of the public median. A private company with strong growth and retention can still beat the public median, especially with a strategic buyer.
Should I use ARR or revenue for the multiple?
Use clean ARR for a subscription business: contracted recurring revenue, annualized, excluding one-off fees and GST. The SaaS Capital Index measures multiples against run-rate revenue, which is close to ARR for most SaaS companies. Always check which base a quoted multiple uses, because trailing, run-rate and forward revenue give very different numbers for the same price.
What increases the value of a subscription business the most?
Growth and retention. In the September 2026 index data, going from single-digit growth to 20% roughly doubled the median multiple, and NRR above 110% supports a premium. After that, reduce risk: spread revenue so no client is over 10%, build a team that can sell and deliver without you, and clean up contracts and cancellation terms.
Do I pay capital gains tax when I sell my business in Australia?
Usually, yes, though concessions can reduce it significantly. The small business CGT concessions, the 50% discount for assets held over 12 months, and the way your business is structured all affect what you pay. The rules are complex and depend on your circumstances, so talk to a registered tax agent well before you sell, not after you've signed.
Built on The Subscription Playbook
This tool turns frameworks from Robert Coorey's book into something you can use in minutes. Robert is the author of The Subscription Playbook and a Director at BPAG Accountants. More about Robert.