How the estimate works
The model starts with annual recurring revenue and a growth-based multiple. It then applies modest, visible adjustments for gross margin, churn, operating history, customer concentration, and business category. The range is deliberately wider than the base case because private-company transactions are negotiated, not mechanically priced.
Use recurring revenue—not every payment
If your business includes services, lifetime deals, annual prepayments, or one-time purchases, do not treat all trailing revenue as MRR. Normalize only contracted, recurring subscription value before using an ARR multiple.