Calculate an estimated valuation for your SaaS company based on annual recurring revenue and growth rate.
Enter your annual recurring revenue (ARR) and your company's growth rate to get an estimated valuation.
Enter your Annual Recurring Revenue (ARR) and your company's growth rate. The calculator will instantly provide an estimated valuation using industry-standard formulas.
Get your SaaS valuation completely free with no requirement to provide contact details or enter a credit card.
Our calculator uses David Cumming's formula and other industry-standard valuation methods that investors and business analysts use daily.
Enter your Annual Recurring Revenue (ARR)
The total predictable revenue from your SaaS subscriptions
Enter your growth rate
Your year-over-year growth rate as a percentage
Get your valuation
Instantly see your estimated company valuation
Learn about the key metrics and formulas used to value SaaS companies.
Apply a multiple to your Annual Recurring Revenue based on growth rate, profitability, and industry benchmarks.
Higher growth rates significantly increase valuation multiples. Investors pay premium prices for rapidly growing SaaS companies.
The Rule of 40 helps evaluate whether your company balances growth and profitability effectively.
ARR is the total amount of recurring revenue your SaaS company generates in a year from active subscriptions.
Alternative valuation method that applies a multiple to net profit rather than revenue.
Compare your company to similar publicly traded SaaS companies using metrics like Price-to-Earnings ratio.
There are multiple methods by which you can calculate a valuation for your SaaS business. Our calculator uses David Cumming's formula for SaaS valuation:
SaaS valuation = 2 x ARR + ARR x (1 + 2.5 x Growth Rate)
This method involves applying a multiple to the company's recurring revenue, such as Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR). The multiple is often based on industry benchmarks or the company's growth, profitability, and other factors.
Alternative methods include Net Profit Multiple (applying a multiple to net profit after expenses) and Market Multiples (comparing to similar publicly traded companies or recent transactions using metrics like Price-to-Earnings ratio).
The Rule of 40 is a metric commonly used to evaluate the balance between a SaaS company's growth and profitability. The rule is expressed as the sum of the company's growth rate and profitability margin, and the goal is for this sum to be equal to or greater than 40%.
Rule of 40 = Revenue Growth Rate + Profit Margin
A score of 40 or above indicates a healthy balance between growth and profitability.
The Rule of 72 is a formula used to estimate the number of years it takes for an investment to double in value, given a fixed annual rate of return.
Years to Double = 72 / Annual Return Rate (ARR)
For example, if your investment has an annual return rate of 8%, it would take approximately 9 years for your investment to double (72 ÷ 8 = 9).
Return on Investment is a metric that allows you to quantify the success of a campaign, product or strategy as a percentage.
Return on Investment = (Net Profit / Investment Cost) × 100
This calculation helps SaaS companies measure the profitability of their investments and determine which strategies or campaigns provide the best returns.
The SaaS valuation calculator requires your Annual Recurring Revenue (ARR) and your company's growth rate. Based on these two key metrics, the calculator will estimate your company's valuation using industry-standard formulas. No contact information is required.
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