Revenue multiple
Definition
A revenue multiple prices a business as a multiple of trailing twelve-month revenue rather than profit. It is uncommon below $150,000, where a buyer is acquiring an income and wants the profit line. Expect it only where margins are predictable or profit is temporarily distorted.
A revenue multiple values a business as a multiple of its trailing twelve-month revenue, ignoring what the business costs to run.
What it means at this size
Revenue multiples belong to venture-backed software, where growth is funded and losses are deliberate. At a $50,000–$150,000 close, the buyer is a working operator paying their own money for an income stream, and revenue tells them nothing about what that income will be. Almost every deal in this band is priced on trailing annual profit.
The exception is a business with costs so standard that revenue and profit move together, or one where a genuine one-off has flattened the profit line for a quarter. Even then the revenue multiple is a cross-check, not the method.
Where it bites
Sellers reach for revenue multiples when the profit figure disappoints, and buyers read the switch instantly. Quoting "2× revenue" on a business with 30% margins is quoting 6.7× profit, which nothing in this market supports. The conversation then moves from price to whether the seller understands their own numbers.
Worked example
A micro-SaaS bills $60,000 across the trailing twelve months and produces $40,000 of SDE after hosting, support and processing costs. On the market convention of 3× trailing annual profit, it is worth around $120,000. Expressed as revenue, that happens to be 2×.
The same 2× applied to a lower-margin business billing $60,000 with $18,000 of SDE would also ask $120,000, which is 6.7× profit. The first is a normal deal. The second gets no second meeting. The revenue multiple is an output you can calculate afterwards, never an input you price from.
Why it matters when you exit
Knowing your implied revenue multiple is useful for sanity-checking an asking price against similar businesses. Leading with it is not. Price on trailing annual profit, show the revenue alongside it so the margin is obvious, and let a buyer do their own arithmetic. They will do it anyway.
Related: profit-multiple, trailing-twelve-months, sde, revenue-multiple-or-profit-multiple
See what a business at this level is listed at.
Everything on sale between $50,000 and $150,000, on the same fields.