What Inputs Matter Most
Great calculators don’t just multiply ARR. They weight the drivers buyers care about:
- ARR or MRR trend, including seasonality.
- Logo churn vs. revenue churn for the last 12 months.
- Customer concentration, contract terms, and billing cadence.
- Gross margin and support load to estimate SDE.
How Calculators Work
- Establish a baseline ARR or SDE multiple from comparable deals.
- Apply premiums for retention, growth, and diversified channels.
- Apply discounts for concentration, heavy services, or key-person risk.
Common Mistakes
- Using booked ARR instead of collected revenue.
- Ignoring churn spikes hidden by new sales.
- Assuming marketplace revenue is fully recurring.
- Not adjusting SDE for one-time founder expenses.
How to Sanity-Check Results
- Compare the implied multiple to recent brokered deals.
- Stress test churn and CAC payback to see sensitivity.
- Benchmark gross margin and support ratios against peers.
- Ask “who will buy this?” and match the profile (PE, strategic, individual).
Turn Calculator Outputs Into a Deal Narrative
A number isn’t enough. Pair the estimate with proof so buyers trust it.
- Share the assumptions (churn, growth, margin) used in the calculator.
- Show your plan to hit or beat those inputs over the next 12 months.
- Include customer stories that back up retention and expansion.
- Offer optional seller support to de-risk the transition.