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Recurring Revenue

Recurring revenue is the most valuable revenue type for business valuation because it is predictable and transferable. A subscription that auto-renews is recurring. A retainer agreement is recurring. A customer who buys every month by choice (but could stop anytime without canceling) is repeat revenue — valuable but not truly recurring. Businesses with 70%+ recurring revenue command significantly higher multiples (typically +0.5x to +1.5x) because buyers can forecast future earnings with confidence.

Example

A SaaS product charging $99/month with 500 subscribers has $59,400 in annual recurring revenue (ARR). This is more valuable per dollar than $59,400 in one-time project fees.

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Business Valuation for Digital Businesses

A small digital business is typically worth its Seller's Discretionary Earnings (SDE) multiplied by an industry-specific multiple. In 2026, multiples range from 1.5x for consulting firms to 6.0x for SaaS businesses, depending on business type, growth, recurring revenue, and owner dependency.