March 27, 2019

$7k SaaS Business Value

If I wanted to list a SaaS for sale that was making $7k per month with zero advertising... how much do you think I could list it for? #askingforafriend

  1. 4

    The general rule of thumb that ive seen is 2-3x annual net profit.

  2. 3

    @levelsio has it 12x on Nomadlist.

    You can search "Acq. Price at 12x" on https://nomadlist.com/open

    1. 2

      Probably because that's what he'd consider selling for but it doesn't indicate the norm when it comes to open market for buying a business.

      It's usually 3x annual net profit for high street businesses with a bit of history, down to 1x net profit for newer online businesses that have basically zero barrier to entry. So it all depends.

      You might also hear people say 20-25x monthly profits, in which case the OP could easily find a buyer in the $150k range I'd say, but if he was patient he could make a lot more with the right brokers.

    2. 1

      That is incredibly unrealistic. He just doesn't want to sell.

  3. 2

    For smaller businesses, you generally calculate Sellers Discretionary Earnings (SDE) per year and then usually it goes for 2-3 times that. When you say 7K, is that revenue or SDE ? Lets say if that is SDE, then you are generally looking at roughly 20K. Sometimes you can get a bit more depending on how important it is to the buyer.

    I see that someone has posted about nomadlist below that supposedly has 12x valuation. That is very very high and sure there may be some buyers out there who see that much value BUT in reality, no real business broker will suggest selling at 12X unless you are talking about companies that are mid sized and do at least 5 million plus in profits per year (give or take). For smaller businesses doing less than a million in revenue, you should not expect more than 3x the SDE. But again, there is no one rule in business and you can always negotiate.

  4. 2

    Lots of variables:

    • How long have you been trading?

    • What does growth look like?

    • What market is the product in?

    • Expenses

    • Required time commitment weekly

    1. 1

      It's actually my socialshark business. Been running for over a year. Growth is the same last 6 months with zero advertising. Required commitment weekly is just to be on the "live chat" and cancel trials for the tire kickers.

      I'm almost thinking about doing a big ad spend over the next couple of months and grow the monthly revenue to $15 to $20k then sell.

      We have a programmer who would come along with it... we pay him hourly whenever there needs to be an update. I'd say we pay him about $750 a month because we're always adding little features.

      Example add-ons we just recently did was:

      • Showing all your new followers in a list

      • Hashtag research generator

      • ability to buy likes, views, and auto likes (just in case people wanted it)

      • Mute new followings

      It's a badass business and not easy to develop the software. We put a ton into it originally. We just have another product based business that we're focused on right now.