secure moneyMATH

Business Valuation Calculator

Estimate what your digital business is worth using Seller's Discretionary Earnings (SDE) multiples

Solo or small-team consulting, freelance professional services

Total income before any expenses are deducted

Revenue minus operating expenses, before taxes are paid

Include salary, benefits, retirement contributions

One-time expenses, personal expenses through business

Adjustment Factors (optional — refine your estimate)

⚠️ This calculator provides estimates for educational purposes only. It is not financial, tax, or legal advice. Your actual results may vary.

How Business Valuation Works

Small digital businesses (under ~$5M revenue) are typically valued using Seller's Discretionary Earnings (SDE) multiplied by an industry-specific multiple. SDE represents the total financial benefit the owner takes from the business.

The formula is: Business Value = SDE × Industry Multiple

Multiples vary by business type because different models have different levels of predictability, transferability, and risk. SaaS businesses command the highest multiples (3.0x–6.0x) due to recurring revenue, while consulting firms trade lowest (1.5x–2.5x) due to owner dependency.

In Q1 2026, the median small business sold for $350,000 at a 2.7x SDE multiple (BizBuySell). This calculator uses current market data from Flippa, Regalis Capital, FE International, and other marketplace sources.

Frequently Asked Questions

How can I increase my business's valuation?
Start 12 months before you plan to sell. Clean your financials (monthly accrual close), separate personal and business expenses, document SOPs for everything only you do, build a second revenue channel, and convert project-based revenue to retainers or subscriptions. The difference between 3.0x and 4.5x SDE on $800K is $1.2M in exit value — same business, same year, just better positioning.
How does owner dependency affect business valuation?
Ask yourself: if you took 3 months off, what would happen to revenue? If the answer is "it would collapse," you have an owner-dependency problem. The fix: document your processes, delegate client relationships to team members, automate operations, and build systems that work without you. Businesses where the owner works under 10 hours per week get a meaningful multiple premium because buyers see lower transition risk.
Should I use revenue or profit to value my business?
The median small business sold in Q1 2026 had $713K in revenue but only $165K in cash flow — the price was tied to cash flow at 2.7x, not revenue. A high-revenue, low-margin business can be worth less than a smaller business with strong cash flow. Revenue multiples apply mainly to SaaS businesses growing quickly, because recurring contracts make future revenue predictable even when current earnings are low.
What is SDE and how do I calculate it?
The formula is: SDE = Net Profit + Owner Salary + Owner Benefits + One-Time Expenses + Depreciation. For example, a business with $95K net profit, $120K owner salary, $12K health insurance, $6K retirement, and $8K one-time costs has an SDE of $241K. SDE is the standard metric for valuing owner-operated businesses under ~$5M revenue because buyers at this level will operate the business themselves.
What is the difference between SDE and EBITDA?
The practical difference: if your SDE is $500K including a $150K owner salary, your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is only $350K. An SDE multiple of 3x and an EBITDA multiple of 4.3x would give you the same valuation ($1.5M). Never compare SDE multiples to EBITDA multiples directly — they measure different things. Below ~$5M revenue, buyers are individual operators who use SDE. Above that, buyers are private equity firms who use EBITDA and assume they'll hire a manager.
What multiple is my business type worth?
Multiples reflect how predictable and transferable the revenue is. SaaS gets the highest multiples because recurring subscription revenue is predictable and doesn't depend on the owner. Consulting gets the lowest because value walks out the door with the founder — clients hire the person, not the firm. Within each range, your specific multiple depends on growth rate, recurring revenue percentage, owner dependency, business age, and customer concentration.
Why do SaaS businesses get higher multiples?
SaaS commands 3.0x–6.0x SDE (vs 1.5x–2.5x for consulting) because: 1) Revenue recurs automatically without re-selling, 2) Customer relationships are with the product, not the founder, 3) Gross margins are 70-90%, 4) Low marginal cost per new customer, 5) Retention data gives buyers confidence in future revenue. A SaaS with <5% monthly churn and >100% net revenue retention has nearly guaranteed future earnings — and buyers pay a premium for certainty.

What Is SDE?

Seller's Discretionary Earnings is the standard valuation metric for owner-operated businesses. It measures the total cash the owner takes from the business:

  • Net profit (pre-tax)
  • + Owner's salary and benefits
  • + One-time or non-recurring expenses
  • + Personal expenses run through the business
  • + Depreciation and amortization

SDE differs from EBITDA because it adds back the owner's compensation. Use SDE for owner-operated businesses under ~$5M revenue. Use EBITDA for larger, manager-run businesses where a buyer would hire a replacement.

Related Resources

Access free SCORE mentoring on business valuation

SCORE, the SBA-backed nonprofit with 10,000+ volunteer business mentors, offers free guidance on when and how to get a business valuation, including workshops on exit planning and valuation methods.

Explore SDE and EBITDA multiples by industry from Regalis Capital

Regalis Capital's comprehensive guide to small business valuation multiples, including SDE vs EBITDA distinctions, per-industry multiples, and the SBA lending relationship to appraisals. Updated June 2026.

Read SBA guidance on closing or selling your business

The U.S. Small Business Administration guide covering how to accurately value your business when preparing to sell, including valuing intangible assets like brand presence, intellectual property, and customer relationships.

Review BizBuySell quarterly transaction data on small business sales

BizBuySell publishes quarterly reports on closed small business transactions including median sale price, median cash flow, and SDE multiples. Q1 2026 showed a median sale price of $350,000 at 2.7x SDE.

Review SBA guide on buying an existing business

The SBA guide for prospective buyers covering due diligence, valuation considerations, and what to evaluate when purchasing an existing business or franchise.

See Flippa marketplace data on digital business valuation multiples

Flippa publishes transaction-based valuation multiples for SaaS, e-commerce, content sites, apps, and marketplaces. Their 2024-2025 data shows SaaS at 6.13x (top quartile), e-commerce at 3.98x, and content sites at 2.85x profit.