Get an indicative valuation range for a SaaS business based on ARR, growth rate, EBITDA margin, and churn. Understand what drives multiples in the current market.
Enter the trailing 12-month ARR growth rate.
Enter as a percentage. Negative values are accepted for pre-profitability businesses.
Logo churn or revenue churn. Lower is better.
SaaS businesses are typically valued as a multiple of ARR (Annual Recurring Revenue) or, for profitable businesses, as a multiple of EBITDA. The multiple applied depends on a combination of quantitative and qualitative factors.
The Rule of 40 is a widely used benchmark in SaaS: the sum of your ARR growth rate and EBITDA margin should exceed 40% for a business to be considered healthy. A business growing at 60% with a -10% EBITDA margin scores 50 and is considered strong. A business growing at 10% with a 20% margin also scores 30, which is below the threshold.
Rule of 40 = ARR Growth Rate (%) + EBITDA Margin (%)
Scores above 40 generally support premium multiples. Scores below 20 compress multiples significantly regardless of other factors.
| Factor | Multiple Impact | What Buyers Look For |
|---|---|---|
| ARR Growth Rate | High impact | 30%+ YoY growth commands premium multiples |
| Net Revenue Retention | High impact | NRR above 110% is a strong positive signal |
| Gross Margin | High impact | 70%+ gross margin is standard for software |
| Churn Rate | High impact | Logo churn below 5% annually is considered low |
| EBITDA Margin | Medium-high | Profitability increasingly valued post-2022 |
| ARR Scale | Medium | Larger ARR base typically commands higher multiples |
| Revenue Quality | Medium | Enterprise contracts, multi-year deals, high NRR |
| Market Position | Medium | Defensible niche, switching costs, brand |
| Customer Concentration | Risk factor | No single customer above 10 to 15% of ARR |
SaaS multiples compressed significantly from their 2021 peaks. The median public SaaS company traded at 5 to 8x ARR in 2025, down from 15 to 20x in 2021. Private market multiples have followed a similar trajectory, with high-quality businesses at scale commanding 6 to 10x ARR and smaller or slower-growing businesses trading at 2 to 5x.
Profitability has become a more significant factor since 2022. Buyers now apply greater scrutiny to burn rate and path to profitability, particularly for pre-profitability businesses.
Example scenario: A SaaS business with $2M ARR, 40% YoY growth, 15% EBITDA margin, and 8% annual churn. Rule of 40 score = 55. Revenue quality is strong. In the current market, this profile would likely support a base case valuation of approximately 5 to 7x ARR, or $10M to $14M. A premium buyer or strategic acquirer might pay 8 to 10x for the right fit.
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Acquiry. (2026). SaaS valuation calculator. Acquiry Knowledge Hub. https://www.acquiry.com/knowledge/saas-valuation-calculator/
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