How app valuations actually work
If you've ever wondered "how much is my app worth," you're not alone. Most indie founders first encounter valuation when a buyer sends a LOI or when you're comparing exit paths between holding, selling, or raising. For subscription apps under roughly £50k MRR, the market rarely uses discounted cash flow models. Instead, buyers anchor on annual recurring revenue (MRR × 12) and apply a revenue multiple that reflects risk and upside.
A healthy bootstrapped SaaS with steady growth might trade at 2.5×–4× ARR. That range isn't arbitrary — it encodes how confident a buyer is that revenue will persist after the acquisition. An app doing £8,000 MRR (£96,000 ARR) at a 3× multiple implies roughly £288,000. The same MRR at 2× because of high churn or platform dependency might only fetch £192,000. The calculator above lets you stress-test that range before you ever enter a process.
What ARR multiples mean in practice
Multiples compress and expand based on a handful of drivers buyers can verify quickly. Growth rate is the most visible: double-digit month-over-month growth suggests the asset is still compounding, which pushes buyers toward the top of the range. Churn works in the opposite direction — high monthly churn means today's MRR overstates tomorrow's cash flow, so multiples slide down.
Platform matters too. Paddle and direct billing often feel "cleaner" to acquirers than App Store or Google Play revenue, where policy changes, commission, and review risk add diligence time. That doesn't mean store apps can't command strong multiples, but you should expect more questions about net revenue, refunds, and geographic mix. Documenting these clearly in a tearsheet saves weeks in due diligence.
What moves multiples up or down
Buyers pay up for assets that are transferable: clean code, documented ops, no single customer above 5–10% of revenue, and marketing that isn't entirely founder-dependent. Multiples expand when net revenue retention is strong, refunds are low, and support load is predictable. They compress when growth is decelerating, traffic is concentrated in one channel, or the product requires ongoing founder creativity to maintain.
Acquirers also discount for technical and legal risk: unclear IP ownership, missing privacy policies, or a codebase that can't be handed to a new team. None of that shows up in MRR alone, which is why serious sellers pair a headline multiple with a metrics narrative — growth, churn, ARPU, subscriber counts, and platform mix — so buyers can map their own multiple quickly.
What acquirers look at in the first 48 hours
In early conversations, buyers triage on five numbers: MRR trend, churn, growth consistency, ARPU stability, and active subscriber count. They're building a mental LTV model and checking whether your app fits their portfolio thesis. Holdcos and PE-style operators want assets that slot into existing distribution; strategic buyers care about overlap with their user base. Individual acquirers optimize for time-to-maintain and upside from features already on the roadmap.
Presenting a coherent tearsheet — TTM revenue, valuation band, health indicators, and platform context — signals that you run the business professionally. That alone can shift a conversation from "we'll start at 2×" to a competitive process closer to 3.5× or 4×. Even if you're not selling today, running your portfolio acquisition-ready means you can move when opportunity appears instead of scrambling for metrics under NDA.
From calculator to full tearsheet
This calculator gives you a defensible range using the same 2.5×–4× ARR logic Portco uses in live portfolio tearsheets. When you need something shareable with investors or buyers — PDF export, health grades, and branded formatting — generate a full acquisition tearsheet in minutes. Connect your live Paddle, App Store, or Play data in Portco for auto-updated numbers, or use the free manual tearsheet if you're exploring a single app.