SaaS Valuation Template

Start with the Company Inputs sheet. Enter your current ARR, trailing twelve-month revenue, gross margin, ARR growth rate, and net revenue retention. If you have EBITDA or operating income data, enter that too — it affects both the multiple selection and the DCF. The inputs sheet takes about 10 minutes to fill out if you have your financials handy. Everything else in the template pulls from here, so it's worth getting these numbers right before moving on.

Next, work through the ARR Multiple Approach sheet. Review the multiple selection matrix and find the row that matches your growth rate and gross margin tier. The template will highlight a suggested multiple range based on your Rule of 40 score, but you can override this with your own assumption. Adjust the low, mid, and high multiple inputs to bracket your valuation range. Then move to the DCF sheet and enter your five-year revenue growth assumptions and margin profile — for early-stage companies, it's fine to project negative EBITDA for the first few years.

Finish on the Valuation Summary sheet, which combines all methods into a single view. The weighted average output is your headline number — useful for conversations with acquirers, investors, or partners. The sensitivity table on the summary sheet is particularly useful for negotiations: it shows exactly how much each 0.5x change in ARR multiple moves the valuation, which helps you understand the range of outcomes before you walk into a term sheet discussion. Most founders who use this template come back to it quarterly to track how their valuation estimate evolves as ARR grows.

SaaS companies are valued differently from most businesses because the financials that matter most aren't on the income statement — they're in the subscription metrics. ARR growth rate, net revenue retention, gross margin, and the Rule of 40 score collectively drive the ARR multiple that buyers and investors apply. A SaaS company growing at 50% with 120% NRR and 75% gross margins might command 10x ARR or more. The same company at 15% growth with 85% NRR and 65% margins might see 2–3x. Understanding which inputs move the needle is the whole point of a valuation model.

The Rule of 40 — growth rate plus EBITDA margin — has become the most widely cited benchmark for SaaS health. Companies scoring 40 or above are generally rewarded with premium multiples in both public markets and private M&A. But the rule has nuance: a company at 80% growth and -40% EBITDA scores the same as a company at 20% growth and +20% EBITDA, and buyers treat these very differently. The template captures this by showing your Rule of 40 score alongside your gross margin and NRR, so you can see the full picture of what's driving (or limiting) your multiple.

For smaller SaaS companies under $5M ARR, ARR multiples are compressed compared to mid-market and growth-stage deals — typically 2–5x for bootstrapped businesses, even with strong metrics. At $10–50M ARR, PE-backed deals have pushed multiples up for companies with clean MRR, low churn, and proven unit economics. Strategic acquirers pay more when there's genuine product or market fit overlap. Knowing where you sit on this spectrum — and what you'd need to demonstrate to move up a multiple tier — is the core question this template helps you answer.