Definition · also called revenue multiple, SDE multiple, ARR multiple, valuation multiple
An exit multiple expresses a sale price as a multiple of a financial metric. A business with $100K ARR that sells for $300K sold at a 3× ARR multiple.
Small businesses are usually priced on profit (SDE, seller's discretionary earnings: profit before the owner's own salary) and larger SaaS companies on revenue or ARR. Always ask which one a quoted multiple refers to; a 3× profit multiple and a 3× revenue multiple are very different prices.
Exit multiple formula
Exit multiple = sale price ÷ metric (ARR, annual revenue or annual profit/SDE)
- ARR multiple: price ÷ (MRR × 12).
- SDE multiple: price ÷ (annual profit + owner's salary and personal perks run through the business).
- Earn-outs and stock make headline prices look bigger than the cash at closing.
What moves the multiple
- Growth. A business growing 50% a year is worth much more per dollar than a flat one.
- Churn and retention. Low churn and high NRR mean revenue the buyer can count on.
- Owner dependence. If the founder is the brand, the support desk and the only developer, buyers discount for it.
- Size. Very small deals sell for lower multiples than million-dollar ARR businesses.
- Platform risk and concentration. Dependence on one API, app store or customer lowers the price.
- Clean books and documentation shorten due diligence and reduce the discount for uncertainty.
Exit multiple in practice: how indie makers use it
Disclosed indie sales from the directory, with the revenue at the time of sale:
Sold Black Magic for $128K at about $14K MRR (~$168K ARR) in 2023, and Xnapper for $150K ($100K upfront plus $50K via revenue share) at about $4K a month in 2024. (sources: news.tonydinh.com, news.tonydinh.com)
Sold Talknotes for $200K in cash at about $7.5K MRR in 2024 on Acquire.com. (source: jeannen.com)
Sold Unicorn Platform at about $16K MRR for a reported $800K, half cash and half equity, in 2022. (source: theygotacquired.com)
Sold TinyPilot, a hardware business with about $1M in annual revenue and ~$208K of earnings at listing, for $598K in 2024: a multiple of profit, not revenue. (source: mtlynch.io)
Sold Baremetrics to Xenon Partners for $4M in cash in 2020, after a $5M deal collapsed in due diligence the year before. (source: baremetrics.com)
Every disclosed deal, with the story behind it, is on indie exits.
From our data: disclosed indie exits with revenue at sale
Median: 2.7× ARR across 4 deals
| Product | Year | Price | Revenue at sale | ARR multiple |
|---|---|---|---|---|
| Black Magic | 2023 | $128K | ~$14K MRR (~$168K ARR) | 0.8× |
| Talknotes | 2024 | $200K | ~$7.5K MRR | 2.2× |
| Xnapper | 2024 | $150K | ~$4K/month | 3.1× |
| Feather | 2024 | $250K | ~$6K MRR (as reported) | 3.5× |
Price ÷ annualized recurring revenue at the time of sale, for every exit in our data with both a disclosed price and a monthly or annual revenue figure. Earn-outs and stock are counted at headline value. Estimate your own with the SaaS valuation calculator.
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Frequently asked questions
What is a typical exit multiple for a small SaaS?
It varies widely with growth, churn and size. Disclosed indie deals in our data range from under 1× to several times ARR; very small businesses are often priced as a multiple of annual profit instead.
What is an SDE multiple?
Sale price divided by seller's discretionary earnings: annual profit plus the owner's salary and personal expenses run through the business. It is the standard metric for small owner-operated businesses.
How do I increase my SaaS valuation multiple?
Grow revenue, reduce churn, document processes, reduce dependence on yourself and on a single platform, and keep clean financial records ready for due diligence.
Related terms
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Maker examples are paraphrased from the cited sources and from each maker's IndieMakerList profile; revenue is self-reported unless marked verified. Spotted an error? Tell us.