Acquisitions 9 min readUpdated Jun 2, 2026
How to Value a SaaS Business in 2026
The valuation method used by real buyers on live deal terminals — SDE multiple, NRR adjustment, churn discount and model-risk factor.
TL;DR
Value = SDE × base-multiple × NRR-modifier × churn-modifier × model-risk-modifier. For most sub-$1M AI SaaS the answer lands between 2.2x and 5.5x SDE.
The formula
Base multiple depends on category. NRR above 100% adds up to 30%. Churn above 8%/mo cuts up to 40%. Wrapper-only tech cuts up to 45%.
Sanity checks
Compare against 3–5 recent comparable closes on your terminal of choice. A single outlier close is not a market signal.
Frequently asked questions
Should I include the founder's salary in SDE?
Yes — SDE adds back the owner's total comp, which is why buyers use it for owner-operated businesses.
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