SaaS Valuation (ARR Multiple) 2026
Estimate your SaaS company's valuation based on ARR, year-on-year growth rate, gross margin and net dollar retention. The calculator applies a revenue multiple heuristic based on growth and efficiency metrics, giving founders a realistic valuation range for fundraising, secondary sales or strategic M&A conversations.
Key Inputs
- Current ARR (£)
- YoY ARR growth rate %
- Gross margin % (revenue minus COGS)
- Net Dollar Retention % (NDR / NRR)
What You'll Get
- Estimated revenue multiple (based on growth and NDR heuristic)
- Indicative valuation range (low / mid / high)
- Rule of 40 score (growth rate + EBITDA margin)
- Benchmark commentary (bootstrapped vs VC-backed range)
Important Notes & Benchmarks
UK and European SaaS valuation multiples in 2025: bootstrapped profitable SaaS typically 2–4× ARR; VC-backed growth-stage 5–12× ARR; high-growth (>60% YoY) with strong NDR can reach 15–20× in favourable market conditions. Multiples compressed significantly from their 2021 peaks. Rule of 40 score (growth % + profitability %) is the primary benchmark for mature SaaS. Rough multiple heuristic: multiple ≈ (growth_rate / 10) + (NDR / 100).
Frequently Asked Questions
What ARR multiple do SaaS companies sell for in the UK?
Typically 3–8× ARR for bootstrapped profitable businesses and 8–15× for high-growth VC-backed companies in 2025. Multiples compressed from 2021 peaks of 30–50×. Key drivers of premium multiples: growth above 40% YoY, NDR above 110%, gross margins above 75%, and a Rule of 40 score above 40. Strategic acquirers may pay above-market multiples for IP, customer base or team.
What is NDR (Net Dollar Retention)?
Net Dollar Retention (also called NRR — Net Revenue Retention) measures the percentage of recurring revenue retained from existing customers after accounting for expansion, contraction and churn. NDR > 100% means existing customers generate more revenue than last year — the installed base grows without new logo acquisition. Median NDR for public SaaS companies is around 110–120%. Best-in-class (Snowflake, Datadog) exceeds 130%.
What growth rate qualifies a SaaS company for premium multiples?
Generally 40%+ YoY ARR growth is the threshold for premium multiple consideration. The Rule of 40 (growth % + profitability %) is the most common benchmark — a score of 40+ is considered healthy, 60+ is top quartile. Companies with high growth but poor unit economics (negative Rule of 40) have seen significant multiple compression since 2022. Investors in 2025 weight profitability more heavily than in prior years.
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