Micro-SaaS Valuation: How to Price Companies Under $1M ARR

The playbook for valuing a unicorn (Uber, Slack) does not apply to a Micro-SaaS with $20k Monthly Recurring Revenue (MRR). If you try to apply "10x Revenue" multiples to a bootstrapped plugin or a niche Chrome extension, you will either laugh or cry—because the math breaks.

Micro-SaaS is a unique asset class. It is liquid, fast-moving, and priced more like real estate or small businesses than like venture-backed tech.

What you’ll learn

In this guide, we break down:

The SDE vs. Revenue shift: Why "Seller Discretionary Earnings" matters more than top-line revenue.
The Multiples: What are Micro-SaaS businesses actually selling for on Acquire.com and Flippa?
Key Risks: The "Key Man Risk" that kills deals.
Growth vs. Stability: Which one buyers pay for in the sub-$1M range.
How to boost your multiple before listing.

TL;DR

Micro-SaaS businesses (Under $1M ARR) typically trade at 3x to 5x Profit (SDE), not Revenue. If you are growing extremely fast (>100% YoY), you might get 2x-4x ARR. The biggest value drag is owner dependency—if the business stops when you sleep, it's a job, not an asset.

Revenue vs. SDE: The valuation methodology flip

For big SaaS, we use Revenue Multiples (e.g., 8x ARR) because the goal is long-term dominance and profitability is secondary.

For Micro-SaaS, the buyer is often an individual, a small PE fund, or a competitor looking for cash flow. They care about: "How long until I earn my money back?"

Therefore, we use SDE (Seller Discretionary Earnings).

Calculating SDE

Start with Net Income (Profit) and add back:

Owner's salary (if you pay yourself).
Personal expenses run through the business (car, phone).
One-time expenses (legal fees for setup).

Formula: Valuation = SDE × Multiple

The Multiples: What is the Market Paying?

Based on data from marketplaces like Acquire.com, Flippa, and private brokerages in 2024-2025:

Note: The shift to ARR multiples only happens if growth is explosive.

The "Four Horsemen" of Micro-SaaS Deal Killers

Why do some profitable tools fail to sell?

1. Key Man Risk (The "Bus Factor")

If you wrote every line of code, handle every support ticket, and own the personal relationships with the top 5 clients, the business is worth $0 without you.

Fix: Document everything. Outsource level 1 support. Create SOPs (Standard Operating Procedures).

2. Platform Dependency

Is your entire business a Twitter API wrapper? Or a Shopify app? If the platform changes its rules (like Elon Musk shutting down APIs or Shopify increasing fees), you die.

Discount: Platform-dependent apps trade at a 30-50% discount compared to platform-agnostic SaaS.

3. High Churn (>10% Monthly)

In Micro-SaaS, high churn suggests you have a leaky bucket. Buyers hate buying leaky buckets because they have to work hard just to stand still.

Target: Get monthly churn below 5% for B2B, or below 8% for B2C.

4. Technical Debt

"Spaghetti code" that no one else can understand. A buyer will do a code audit. If they see a mess, they will walk or lower the offer to cover the cost of a rewrite.

Examples

To illustrate the difference, let’s look at two Micro-SaaS sales.

Example A: The "Passive Income" Plugin

Product: A WordPress plugin for SEO.
Financials: $50k Revenue, $45k Profit (90% margin). Stable, flat growth.
Ops: Maintenance mode. 1 hour/week.
Valuation: Sold for $180k (4x SDE).
Buyer: A portfolio holdco looking for cash flow.

Example B: The "High Touch" Agency Tool

Product: Lead gen tool for vast agencies.
Financials: $200k Revenue, $50k Profit. 50% growth.
Ops: Founder spends 60 hours/week doing manual onboarding.
Valuation: Offers at $150k (3x SDE).
Reason: The low multiple is because the buyer essentially has to "buy a job." The founder is the business.

Checklist: Maximizing Your Micro-Exit

preparing to list on a marketplace? Run this drill:

[ ] Transferability: Can the AWS/Stripe accounts be transferred? Or are they mixed with your personal life?
[ ] Clean Financials: Do you have P&L statements (even simple Excel ones) that match your bank deposits?
[ ] Code Documentation: Is there a README file explaining how to deploy the app?
[ ] IP Assignment: Did you hire a freelancer 2 years ago? Did they sign an IP assignment agreement? If not, they technically own their code.
[ ] Support Logs: Show that support volume is manageable (e.g., "Only 3 tickets per week").

FAQ

Q: Where should I sell my Micro-SaaS? A: Acquire.com is the leader for SaaS. Flippa is good for smaller content sites or starter tools. QuietLight or FE International are brokerages for larger ($500k+) deals.

Q: Should I use a broker? A: Under $200k valuation, probably not. The fees (10-15%) eat your profit. Above $500k, a broker can help find serious buyers and navigate diligence.

Q: Can I sell a pre-revenue product? A: Rarely. Unless you have amazing tech (IP), buyers want cash flow. A pre-revenue project usually sells for the "cost of code" ($1k-$5k), which is often less than the time you put in.

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Related Resources

Rule of 40 - Does it apply to Micro-SaaS? ( Spoiler: Not really).
AI Valuation Bubble - AI tools in the micro space are risky.
Exit Strategy - Planning your exit timeline.

Micro-SaaS Valuation Guide: Under $1M ARR