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# Calculate the value of your SaaS

• \$ 0 \$10,000,000
• 0 % 500 %

## \$

### How to use this calculator

This calculator helps you estimate the value of your SaaS. It's based on the idea that the valuation depends on two key numbers:
• Annual Recurring Revenue (ARR)
• Growth Rate
The calculation is based on David Cumming's formula as seen on: http://davidcummings.org/2013/08/25/quantifying-the-saas-valuation-growth-rate-multiplier/.

The formula is:
Valuation = 2 x ARR + ARR x (1+ 2.5 x Growth Rate)

In real life valuation is based on a number of other factors, but this formula and calculator gives you some ideas on how you can valuate your SaaS.

### Growth Rate

Your growth rate is the rate at which your company increases the ARR on an annual basis. Example:
If your ARR was \$100.000 at the end of 2014 and \$150.000 at the end of 2015 your growth rate will be 50%.

The formula is:
ARR[-1] : ARR one year ago
ARR[now] : ARR now

Growth Rate = (ARR[now] - ARR[-1])/ARR[-1]

In our example that is:
Growth Rate = (\$150.000 - \$100.000)/\$100.000 = 0.5 = 50%

### Annual Recurring Revenue (ARR)

In a typical SaaS a large part of the income is recurring revenue. In your company you might call it Hosting or License. To find your ARR you must take the look at what your clients pay on an annual basis for your recurring services.

Typically you will not include startup fees and project payments into this number.