My first business was a marketing agency. It made good money, in bursts. One month we'd land three clients and celebrate. The next month we'd land none and panic.
When I sold it, I learned the other half of the lesson. Buyers don't pay much for a business that has to win all its revenue again every month.
That's the case I make in Chapter 1 of the book. This calculator lets you test it on your own numbers, including the part most people skip: what the switch does to cash in the first year.
How to use the calculator
- Describe today: how many customers buy each month, the average sale, how often a customer buys in a year, your gross margin and your annual overheads.
- Describe the subscription: the share of buyers who'd subscribe each month, the monthly price, churn, the subscription's gross margin and any launch cost.
- Set the valuation assumptions. They're illustrative and editable: a profit multiple for one-off profit and a buyer's required return for recurring revenue.
- Switch the chart between monthly revenue and cumulative cash.
How the maths works
The tool works out your customer base from purchase frequency, then signs up a share of each month's buyers who aren't subscribers yet. Subscribers stop buying one-off and pay monthly instead.
Customer base = Customers buying per month × 12 ÷ purchases per year Subscribers next month = Subscribers × (1 − churn) + buyers not yet subscribed × sign-up rate One-off revenue = Buyers × (1 − subscribers ÷ base) × average sale
For the illustrative valuation, one-off profit is valued on a profit multiple, as buyers of small businesses usually do. Recurring revenue gets a revenue multiple from the formula in our guide to recurring revenue multiples:
Value of $1 of ARR ≈ Gross margin ÷ (annual churn + buyer's required return) Value with subscription = (one-off profit after overheads × profit multiple) + ARR × that multiple
Overheads are assumed to stay the same and are charged against the one-off part, so the subscription's gross profit is treated as extra profit.
A worked example
The pre-fill is a service business: 120 customers a month spending $90, three times a year, at a 45% margin, with $40,000 of overheads. That's $10,800 a month and about $18,300 of net profit a year. At 2.5x profit, the illustrative value is $45,800.
Now add a $29-a-month plan that 15% of buyers take up, with 3% monthly churn. By month 24 there are about 217 subscribers paying $6,288 a month, and monthly revenue is $12,209. The launch cost is paid back in month 11.
The recurring revenue is valued at about 0.99x ARR (45% ÷ (30.6% + 15%)), and the illustrative value rises to about $54,400.
Now try 2% churn. Watch the multiple and the value climb. That's the whole book in one slider.
How to read the result
Look at three things.
The cash dip. A subscription often earns less from each customer in the first months than the one-off sale it replaces. If you can't carry that dip, launch slowly or start with an annual prepaid option.
Revenue per customer. If a subscriber pays less a year than your typical one-off customer, you need more visits, more customers or a better offer to come out ahead.
The valuation. It's a heuristic, not an appraisal. The book notes that acquirers typically offer two to seven times net profit for one-off businesses, usually at the low end. Recurring revenue with low churn earns more, because next year's revenue is already mostly there.
What to do next
- Set the subscription price properly with the Subscription Price Calculator.
- Read why recurring revenue is the ultimate business model, and the risks of the subscription model.
- Plan the cash flow of the switch with subscriptions and cash flow: the accountant's view.
- Thinking of selling one day? Start with selling a subscription business in Australia.
- Talk it through with a BPAG adviser in a free Subscription Profit Review: whether a subscription suits your business, how recurring revenue could cover your fixed costs, and how it could lift the value of your business.
Frequently asked questions
Is a subscription always more profitable than one-off sales?
No. A subscription wins when customers stay long enough, and pay enough each year, to beat what they'd have spent buying one-off. If the plan is cheaper than a customer's normal spend and churn is high, you can end up with less revenue. That's why the calculator compares annual spend per customer and shows the cash dip.
Why are subscription businesses valued higher?
Because next year's revenue is largely already there. A buyer isn't betting everything on winning new sales, so they apply less risk to future income. Low churn and high margins together produce the highest multiples. High churn destroys value even when margins are good, which is why the multiple in this tool falls as churn rises.
What multiple should I use for my business?
There's no single answer, which is why the multiples are editable. For one-off businesses, the book notes buyers typically offer two to seven times net profit, usually at the low end. For public B2B SaaS, the SaaS Capital Index median was 4.2 times run-rate revenue at 30 September 2026. Small non-software businesses are usually valued on profit.
How long does it take for a subscription to pay off?
It depends on your launch cost, sign-up rate and how the plan's price compares with one-off spending. In the example, cumulative cash overtakes the one-off model in month 11. If yours shows 'not in 24 months', test a higher price, a lower churn rate or a smaller launch budget before committing.
Does switching to subscriptions change my tax or GST?
It can change timing. Annual prepaid plans bring cash in before you've delivered the service, and how you report GST depends on your accounting method. The way you recognize revenue may change too. Talk to your accountant before you launch. BPAG Accountants can help with this.
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.