Micro-SaaS Valuation: Selling Under $1M ARR
Learn how buyers evaluate small SaaS assets, which risks to neutralize, and what documentation accelerates closing.
Trust & methodology
Author: Michael Chen
Last updated: 2026-01-12
Last reviewed: 2026-01-12
Methodology: Benchmarks are cross-checked across market reports, transaction comps, and founder-level operating data.
Disclosure: This content is general information, not financial advice.
On this page
- What you'll learn
- Why it matters
- The metric or formula
- Benchmarks & ranges
- Common mistakes
- How to improve it
- Examples
- Checklist
- FAQs
- Summary
- Sources & further reading
- Internal links
- Next steps
- Related resources
- Run the calculator
Jump to the section you need, or keep scrolling for the full playbook.
What you'll learn
How micro-SaaS deals are priced, what scares buyers at this scale, and concrete steps to raise your multiple before listing.
Quick definition (TL;DR)
Risk & resilienceMicro-SaaS valuations focus on stability and ease of ownership. Buyers emphasize churn, concentration, support load, and transferability more than hypergrowth.
Why it matters
Small numbers move quickly; tiny tweaks to churn or margin materially shift your sale price.
Documentation quality can double perceived professionalism at this scale and reduce retrading.
A clear handoff plan minimizes fear of founder dependency, a common discount driver.
The metric or formula
Typical structures blend ARR or SDE multiples. Healthy micro-SaaS assets sell for 2.5x–4x ARR or 3x–6x SDE depending on margin and churn.
Benchmarks & ranges
Sub-$500k ARR with 10%+ monthly churn: 1.5x–2.5x ARR until churn is fixed.
$500k–$1M ARR with churn below 5% monthly and 75%+ gross margin: 3x–4x ARR.
Highly automated micro-SaaS with diversified acquisition channels can attract 4x–6x SDE.
Common mistakes
Relying on a single acquisition channel (often paid search) with no diversification plan.
Underestimating the time required to transition codebases, keys, and vendor contracts.
Leaving customer communication for after LOI instead of warming them up early.
How to improve it
Automate onboarding, billing, and support responses to prove low operational drag.
Document the stack, deployment, and rollback steps so a buyer can operate from day one.
Introduce annual plans and light expansion paths to stabilize retention and lift LTV.
Create a 90-day transition schedule with office hours to reduce perceived founder risk.
Examples
Proof points you can reuse
Solo founder analytics tool (~$400k ARR)
A single founder relies on Google Ads for 70% of signups. After adding an affiliate program, publishing SOPs, and moving to Stripe Billing with annual prepay, churn drops to 4% monthly and gross margin climbs. The listing multiple improves from 2x to 3.2x ARR, adding ~$480k to expected proceeds.
Niche productivity app (~$900k ARR)
A two-person team serving designers has healthy retention but messy infrastructure. They invest two weeks in infrastructure as code, monitoring, and a documented release cadence. Buyers now view the asset as “plug-and-play,” accepting a 3.8x ARR offer instead of the 3x range seen initially.
Checklist (copy/paste)
Inventory all third-party dependencies and confirm transferability.
Create SOPs for deploys, customer support, billing, and refunds.
Prepare a customer communication plan for post-sale continuity.
Clean up churn analytics and publish a 6-month retention trend.
List risks honestly and pair each with a mitigation step and owner.
FAQs
Do I need audited financials at this size?
No, but clean bookkeeping, bank statements, and merchant summaries build confidence. Provide clear ARR definitions.
How long should I commit to transition support?
Most micro-SaaS deals expect 30–90 days. A structured plan with optional paid extensions reassures buyers and can improve price.
Should I sell via broker or marketplace?
Marketplaces move faster for smaller deals; brokers can maximize price if you have multiple interested buyers and want help with diligence.
How do I handle customer data and privacy?
Document data flows, retention policies, and consent mechanisms. Provide export scripts and anonymized datasets where possible.
What about founder-branded products?
Create neutral branding and support addresses before sale. Transfer domains and social handles as part of the asset package.
Can I negotiate earn-outs at this scale?
Yes, but keep them simple. Tie to clear metrics like ARR milestones or churn thresholds and cap the duration to avoid distraction.
Summary
Micro-SaaS valuation hinges on stability and transferability. Buyers pay more when revenue is predictable, operations are automated, and the founder is not a single point of failure.
The best way to lift your multiple is to reduce operational risk. Document the business, diversify acquisition, and show that churn and support are under control.
Sources & further reading
Continue exploring
Next steps to act on this guide
RecommendedTranslate the insights into a valuation narrative by running the calculator, then use the tools and category playbooks to tighten your metrics before you talk to buyers or investors.
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