Annualised profit
Definition
Annualised profit is a business's average monthly profit over a stated window, multiplied by twelve. Indiemaker shows a multiple on annualised profit once six unbroken months are declared, and switches to trailing annual profit at twelve. Under six months, no multiple is shown, because a shorter record can't carry a fair annual rate.
Annualised profit is the average monthly profit over a stated window, multiplied by twelve. It describes a rate, not a year of trading.
How Indiemaker shows the multiple
Every multiple on an Indiemaker listing is annual: the asking price divided by a year of profit. The label says which kind of year.
| Unbroken months declared | What the listing shows |
|---|---|
| Under 6 | No multiple is shown |
| 6 to 11 | Multiple on annualised profit: the last six months' average, times twelve |
| 12 or more | Multiple on trailing annual profit: the last twelve months |
Profit is worked out from the monthly revenue and costs the seller declares. Beneath the multiple sits a second line: roughly how many months it would take to earn the price back at the current rate. Both show only to signed-in members.
Why the months have to be unbroken
A window only counts if every month in it has a declared figure and it ends with the last completed month. A month that earned nothing is declared as zero and counts. A missing month breaks the run, so a seller can't lift the multiple by leaving out the bad months.
Where it bites
Annualised profit projects a recent rate forward, and it flatters a business that has just had a good half-year. Treat a six-month annualised multiple as less settled than a trailing one, and read the monthly rows underneath. It is also the seller's declared profit, before any add-backs a buyer might accept in diligence, so it can differ from SDE.
Worked example
A micro-SaaS asks $110,000 with eight unbroken months declared. The last six average $3,050 of profit a month, so annualised profit is $36,600. The listing shows 3.0x annualised profit, about 36 months to earn back. In four months, with twelve on record, the same row will read trailing annual profit instead.
Why it matters when you exit
List with six unbroken months declared, or fill the gaps first. Without them your listing shows no multiple, and the multiple is the number buyers compare on.
Related: profit-multiple, trailing-twelve-months, sde, transferability
See what a business at this level is listed at.
Everything on sale between $50,000 and $150,000, on the same fields.