What a SaaS is worth

A SaaS can be sold

A SaaS is an asset. Buyers (individuals, small companies, investors) sometimes acquire small SaaS businesses that have customers and revenue. Even if you never plan to sell, knowing what creates value helps you build a better business.

Nothing guarantees that a SaaS will find a buyer, or at what price.

What value is based on

Revenue

This is the foundation. Buyers look mainly at recurring revenue (what subscribers pay every month or year) and profit. They often apply a multiple to that revenue or profit.

Those multiples vary enormously depending on the market, size, industry, and timing. Be wary of numbers passed around as rules of thumb.

Growth

A SaaS with steadily rising revenue is generally worth more than a flat one. A shrinking one is worth less.

Churn

When customers stay a long time, future revenue is more predictable. High churn lowers value, because a buyer has to keep replacing lost customers.

Owner dependency

If everything runs through you (support, sales, code only you understand), the buyer takes on risk. A SaaS with documented, automated processes is easier to take over.

Other factors

• a diverse customer base (not one big customer carrying everything);
• clear, documented acquisition channels;
• clean code and a simple tech stack;
• tidy books and a clean legal situation.