SDE / multiple valuation calculator
Compute what your business earns for its owner, then see what the market typically pays — based on current multiples by business type.
Owner compensation is added back to arrive at SDE — the standard earnings figure used in online business acquisitions. Valuation ranges reflect typical broker and marketplace transaction data for small-to-mid businesses.
SDE valuation calculator inputs and results
How this calculator works
Seller's Discretionary Earnings is computed by subtracting all operating expenses — excluding owner compensation — from revenue. Owner salary, draw, and benefits are excluded because they're discretionary: different owners pay themselves differently, and a buyer would set their own compensation level. SDE represents what the business generates before the owner takes their cut, making it the standard comparable earnings figure in online business transactions.
Valuation multiples are applied as a range — low, mid, and high — based on typical transaction data for each business type. The multiple a specific business commands depends on growth trajectory, revenue diversification, owner-dependency, traffic concentration, and how well-documented the operations are. A declining single-channel business typically sells at or below the low multiple; a growing, well-documented business with diverse revenue can command the high end.
Once you have an SDE figure, use the acquisition payback & IRR calculator to model the return at any asking price.
About this tool
This tool computes Seller's Discretionary Earnings (SDE) for an online business and applies typical market multiples by business type to produce a low, mid, and high valuation estimate. Inputs: annual revenue, annual operating expenses (excluding owner salary), owner annual compensation, and business type. Output: operating profit, SDE, monthly SDE, and a three-scenario valuation range.
Frequently asked questions
What is Seller's Discretionary Earnings (SDE)?
SDE is the total financial benefit a full-time owner-operator derives from a business in a year. It equals revenue minus all operating expenses except owner compensation — because owners pay themselves differently, SDE normalises that to a single comparable figure. Buyers use it to ask: what would this business generate before I paid myself?
Why are multiples different by business type?
Multiples reflect how predictable, scalable, and transferable the earnings are. SaaS businesses command the highest multiples because contracted recurring revenue is very predictable and the product doesn't depend on the seller's relationships. Content sites earn strong multiples when traffic is diversified and well documented. Ecommerce and mobile multiples are lower because of inventory risk, platform dependency, and thinner margins. These ranges reflect typical broker and marketplace transaction data for small-to-mid online businesses.
What goes in "operating expenses (excluding owner salary)"?
All costs the business incurs except owner compensation — hosting, contractors, advertising, cost of goods, software, and other overhead. Owner salary, draw, and personal benefits go in the separate owner compensation field, since those get added back when computing SDE.
Should I use the low, mid, or high multiple?
Low applies to businesses with concentrated risk — a single traffic source, few customers, short history, or no documented processes. Mid suits a stable growing business with clean financials. High is warranted for fast-growing businesses with diversified revenue, strong defensibility, and operations that can transfer without the current owner.