Understanding SaaS Valuation
SaaS valuation is both an art and a science. While public market comparables provide objective benchmarks, the final number depends heavily on growth trajectory, revenue quality, and market conditions. This calculator uses 2024-2025 market data from sources like the SaaS Capital Index and Bessemer Cloud Index to estimate where your company might trade in today's environment. Unlike the frothy 2021 market where 20x+ revenue multiples were common, the "new normal" sees median public SaaS trading at 5-7x ARR, with private companies typically at a 20-40% discount. However, exceptional growth and retention can still command premium multiples, while struggling companies may trade below 3x. The key insight is that valuation is not a single numberāit's a range that reflects the market's uncertainty about your future cash flows.
How to Use This Tool
Enter Your ARR
Input your current Annual Recurring Revenue. This is the foundation of all SaaS valuationsāthe total yearly subscription revenue you can count on.
Set Growth Rate
Adjust your year-over-year ARR growth percentage. Growth is the primary driver of multiplesācompanies growing >40% YoY command 7-10x, while sub-20% growth may see only 3-5x.
Adjust Quality Metrics
Fine-tune NRR (Net Revenue Retention) and Gross Margin. NRR above 120% signals elite expansion revenue. Gross margins above 80% indicate efficient delivery.
Select Market Conditions
Choose your sector and market sentiment. B2B commands premiums due to stickiness. Bear markets can cut valuations by 40% from normal conditions.
Understanding Your Inputs
Annual Recurring Revenue (ARR)
The total subscription revenue you expect to collect over the next 12 months. This is the most important inputāeverything else is a multiplier on this base.
YoY Growth Rate
How fast your ARR is growing compared to last year. The market rewards growth exponentially: 100% growth might get 15x, while 20% growth gets 5x.
Net Revenue Retention (NRR)
Measures expansion revenue minus churn from existing customers. NRR above 100% means you grow even without new sales. Elite companies hit 120-150%.
Gross Margin
Revenue minus cost of goods sold (hosting, support, etc). Pure SaaS typically runs 70-85%. Lower margins suggest service-heavy models.
Reading Your Results
Valuation Range
We provide Low/Mid/High estimates because valuations are inherently uncertain. The range reflects different buyer perspectives and market conditions.
Implied Multiple
The ARR multiple your company would trade at. Compare to public benchmarks: median public SaaS trades at ~6x in 2024-2025.
Rule of 40
Growth rate + profit margin should exceed 40. Companies passing this hurdle command 1.5-2x higher multiples than those below.
Adjustment Breakdown
See exactly how each factor (NRR, sector, sentiment) affects your multiple. This transparency helps you understand what levers to pull.
Pro TipFocus on NRR First
The single fastest way to increase your valuation multiple is to improve Net Revenue Retention. Moving from 100% to 120% NRR can add 2x to your multipleāthat's potentially doubling your valuation without acquiring a single new customer. Invest in expansion revenue, reduce churn, and watch your implied multiple soar.