I'm trying to compute a future value for my SaaS company for my financial projections. Can anyone help me find what to use as an earnings multiple?

"Based on the success we are able to achieve" suggests, to me, you are looking at a price that will be tagged to an earn out provision. In other words, the price of the deal will be contingent on you achieving specific revenue targets in the future. If I'm reading this wrong, please correct me because it's an important piece of information. Early stage startup typically suggests a focus on revenue growth with minimal focus on earnings. The most valuable acquisitions will be those that have growth in the top quartile of the industry along with an EBITDA that is also in the top quartile. Companies with these will have the highest multiples. Revenue multiples are also a function of the industry and the general character of the market. Currently, the IPO markets are doing pretty well and the overall M&A market appears to be pretty solid making multiples equally solid. In terms of industry, the media publishing industry has moderate to slow growth depending on the segment. I'm assuming there is a social or online component to your startup which would suggest that it would be part of the new growth side of the market. Generally speaking, market growth averages are at about 8% for larger companies suggesting that new entrants should be able to sustain low to mid double digit growth over a longer horizon. "Growth rates", i.e. percentages, can be meaningless for very small companies. For instance, a company that grows from $25,000 to $250,000 in a year has a massive growth rate..... but the value may be very low due to lack of track record and overall profitability. As such, it can be very hard to estimate multiples. That said, if I were putting forth a hypothetical, it would be something like the following: Assuming: The company has over $1M in revenue and is growing at an average of 12 - 15% per year. Assuming: The company is profitable, but barely, say something in the 10% EBITDA range. Assuming: The company is a service company with few assets but is not subject to significant brain drain (key people leaving would result in devaluing the company). If any of the above are wrong, it can change things significantly. Revenue multiples might be in the 0.7 - 1.15x revenue on forward looking and .9 - 1.25 on a trailing level. EBITDA Multiples could be in the 8 - 10 times on a forward looking and 10 - 12 times on a trailing level. Take it with a grain of salt because there are a lot of factors you don't mention and more information is important to make a meaningful diagnosis.

In my experience, and based on the way I coach my clients, creating a pricing model without first creating a business model is an indication of a poor strategy. That said, here are my thoughts based on the information you've provided: 1. You are incorrect about your assumption of "the less the fee, the greater the potential # of clients". What you will very likely discover in practice is that there is a "sweet spot" in pricing such that any price above or below you'll see a drop off in members. In other words - any price LESS THAN or GREATER THAN your "sweet spot" price will result in FEWER members. This is one of those "non-intuitive" components you'll run into as an entrepreneur. 2. If you choose to price based on "competition" you are all but announcing that you are a commodity. Once again I'd suggest that this is a poor strategy. Instead consider your USP (or if you haven't yet done so...create one). Once you are properly differentiated YOU control and set pricing based on the VALUE you provide to the marketplace that they can't get anywhere else (i.e. Ferrari and Harley Davidson and Starbucks, etc). 3. Even with a solid strategy, a strong USP, a great product and a well-thought-out business model - you will likely still need to do some market testing (i.e. A/B testing) to find that "sweet spot" price I mentioned earlier. (I have yet to personally see anyone hit the mark right out of the gate.) 4. The last piece of info you provided - regarding monthly vs discounted annual membership pricing - would be a part of your OFFER. This is NOT the same as a pricing strategy - which should ideally be developed FIRST (at least conceptually). This is not to say you couldn't launch with the offer, but I'd suggest you figure out pricing FIRST and then develop offers based upon your deep understanding of your market. For assistance with any / all of the components I mentioned - give me a call. And be prepared that (in my opinion) whomever you decide to enlist this is going to take several calls to work out unless you have much of the groundwork already figured out. I apologize for this assumption - but I'm basing it on the information you provided and with hopes that this response will be helpful to others. I wish you great success!

Here is a link to a basic model - http://monetizepros.com/tools/template-library/subscription-revenue-model-spreadsheet/ Depending on the purpose of the model you could get much much more elaborate or simpler. This base model will help you to understand size of the prize. But if you want to develop an end to end profitability model (Revenue, Gross Margin, Selling & General Administrative Costs, Taxes) I would suggest working with financial analyst. You biggest drivers (inputs) on a SaaS model will be CAC (Customer Acquisition Cost, Average Selling Price / Monthly Plan Cost, Customer Churn(How many people cancel their plans month to month), & Cost to serve If you can nail down them with solid backup data on your assumption that will make thing a lot simpler. Let me know if you need any help. I spent 7 years at a Fortune 100 company as a Sr. Financial Analyst.

There is no valuation until you sell something. An idea or a company is only worth what its sales are. Once you have your initials sales, sales strategy and forecasting length (ie 9 months from first customer lead to close) then you have a formula for valuation. Valuation for start-ups is generally 3.5 x last years sales model should be the growth factor. When you are looking for investors, you will want to have atleast 9-18 months of SALES, not just pipeline and they will be looking at 5x revenue for a 3-5 year payback.

After shepherding 300 equity crowdfunding raises through our platform I'd say all of them have a higher valuation. Reason is it is the entrepreneur that is calling the shots. It is the entrepreneurs offer on their terms on an equity crowdfunding platform. Once you get outside investors involved shaping the deal the valuation will most certainly go down. Agreed it may then be more realistic as everyone believes their company is more valuable than it is. My advice? Treat early investors fairly. Money is the lubricant to get your idea into reality. Give them a fair share of the business and they will reinvest when need be.