Valuation method
ARR multiple
For businesses with subscriptions or contractual revenue.
What it is
The ARR multiple method values businesses based on their Annual Recurring Revenue. ARR is multiplied by an EV/ARR multiple that reflects the quality and predictability of that revenue. Recurring revenue is more predictable than one-time sales, which often supports a stronger valuation.
When to use it
The preferred method for SaaS businesses, maintenance contracts, memberships, and subscription models. Suitable when the majority of revenue is contractually fixed and periodically recurring. For advisors, this is the natural choice when buyers and investors anchor on MRR or ARR and on predictability, not on one-off revenue.
How Upswitch applies this method
Upswitch helps position recurring revenue in the right market context. That gives you a valuation that better matches subscription and contract models without forcing you to build complex comparisons yourself.
Data and benchmarks
Sector multiples and transaction benchmarks are calibrated against the Upswitch Index, our continuously updated European SME reference dataset (per-country filter).
Explore the Upswitch SME Index→Sectors where this method is the headline
Live Upswitch Index data per sector. Click through to the multiples band that applies to your case.
B2B SaaS
Recurring revenue economics; ARR-multiple is the canonical headline above $1M ARR.
See multiples on Index →
Subscription media
Subscription-driven media houses behave like SaaS. Same economics, same headline metric.
See multiples on Index →
Recurring B2B services
Long-term retainer-led services with > 70% recurring revenue qualify for ARR pricing.
See multiples on Index →
Subscription e-commerce
DTC subscription brands trade at ARR-multiples that traditional retail multiples miss.
See multiples on Index →
In your professional report
Each method appears as a dedicated section in your branded PDF, with a full audit trail for every normalisation and adjustment.
| Section | Included |
|---|---|
| ARR multiple | Value and method summary |
| Audit trail | Per adjustment, fully traceable |
How it compares
| Method | Best for | Data needed |
|---|---|---|
| Revenue multiple | Total revenue (incl. one-off) | Revenue + growth |
| DCF | Long-term intrinsic value | Cash flow projections |
| EBITDA multiple | Profitable, stable SMEs | Normalized EBITDA |
| Startup valuation | Pre-revenue / seed SaaS | Milestones + sector |
Related comparisons
ARR multiple vs. revenue multiple
For software, subscriptions, and growth businesses. The core question is how much revenue is truly recurring.
See comparison→
Startup valuation vs. ARR multiple
First MRR landed but still too early for a true SaaS multiple? Two approaches, one clear choice depending on your scale and runway.
See comparison→
Frequently asked questions
On the Free plan you can run up to three valuations per year using the methods enabled for your workspace. Starter unlocks all ten valuation methods, unlimited valuations, downloadable branded reports without watermark, and live European SME multiples from the Upswitch Index.
Apply ARR multiple to your sector
Real-world examples of ARR multiple in action. Sector-specific multiples, normalisations and worked examples on the Upswitch Index.
AI / Machine Learning
ICT, software and media
Blockchain Services
ICT, software and media
Cloud Services
ICT, software and media
Content Creation
ICT, software and media
Cybersecurity
ICT, software and media
Data Analytics
ICT, software and media
Deeptech — AI / R&D Labs
ICT, software and media
Digital Products
ICT, software and media
Game Development
ICT, software and media