4 ms·

Still irrationally expensive. You need 4 years to break even and then you may make another 20k in 4 years. 8 years full of risk to make a profit of 20k while th

Still irrationally expensive. You need 4 years to break even and then you may make another 20k in 4 years. 8 years full of risk to make a profit of 20k while the platform is going to be 16 years old? Not worth it.

yomkippur 4y ago
but this is the exact multiple most SaaS are using, what makes mine different? I don't get it. At least mine is making net profit, most SaaS trading on stock exchanges with the same multiples are losing money and unlikely to remain at current market caps if not already.
- vasco 4y ago
  I hope you realize valuation of public companies has nothing to do with a random one person side project that's been up for a few years.
  - csa 4y ago
    > I hope you realize valuation of public companies has nothing to do with a random one person side project that's been up for a few years Four years of seller discretionary income is not an unusual sale price for small solo projects that have traction. Iirc, Patio11’s bingo card creator sold for something around this multiple. That said, it’s unclear if this project has as much traction as others that sell for this multiple. If there are only a few clients, especially if they are friends of the current owner, then the business is fragile.
    - yomkippur 4y ago
      but customers who have been with you for 8 years is the anti-thesis of fragility. for instance, you could have a thousand customers but with low LTV (they cancel after a month or one off). which is more fragile here?
      - csa 4y ago
        You make a reductio ad absurdum argument and then treat it like it’s a completely reasonable comparison. It’s not. You seem interested in getting some answers, so I will give you my two cents worth… > but customers who have been with you for 8 years is the anti-thesis of fragility. Sure. How many of your customers have been around 8 years? How did you acquire them? > for instance, you could have a thousand customers but with low LTV (they cancel after a month or one off). Since this is basically 100% MtM churn, this is not a viable SaaS business. > which is more fragile here? If you take the 1000 customer SaaS and make it a more reasonable 10% or even 20% churn, then your business is more fragile for sure. We have no idea what might cause people to churn in your business because the n is so low. With 1000 customers, we can probably find some reasons (possibly before even buying) for the churn and halve it, thereby doubling LTV. So questions I would have for you if I were serious about purchasing: 1. What’s the TAM? 2. What’s your moat? 3. How did you acquire your customers (esp. the 8 year ones)? If it’s a personal relationship, that is very bad, since they may leave when you aren’t the owner. 4. How many of your customers are new (1 year or less)? 5. What marketing have you tried? 6. What is the language of communication with these customers? 7. Where are your customers located (country)? So after a quick glance with only the information you have given so far, I would probably be willing to pay $5k for a business like this and give it to an intern to develop. At $10k, I would be tempted to have one of my programmers make a copycat and just compete. As such, we could probably meet in the middle at $7-8k. This is probably a bad deal for you. More information could increase or decrease this price. Note that my biggest concern would be that all of the customers could instantly jump ship after you leave, because they were only customers because of you. This may seem odd to you, but I’ve seen entire business that make ridiculous amounts of money for the owner(s) exist purely because of personal connections. How do I know that this is not the case for you business? Since you have so few paying customers, I can’t even be sure that an answer you give me is true. My totally unsolicited advice to you is to find a young and competent SaaS sales person and offer them 50% rev share (maybe with a 2 year cap). This allows you to grow your business with relatively little grunt work, and you get to keep the cash cow. Selling cash cows is almost always bad unless the money completely lacks significance, and then you should look more for a competent owner to hand it off to rather than optimizing sale price. I will be happy to answer more questions if you have them. Best of luck!
  - csa 4y ago
    After looking closer at the business, it looks like they have 13 or fewer paying clients. That’s quite fragile unless they have been long term clients, and this type of system has high transfer costs.
- ZephyrBlu 4y ago
  SaaS multiples are predicated on a lot of metrics. Growth, revenue retention, CAC and LTV, etc. If you had good metrics you would be making a lot more than $400/mo because you'd be growing like crazy. The fact it only makes $400/mo after 8yrs is a negative signal, not a positive one.
  - motoxpro 4y ago
    This. The fact that it only grew to 400/mrr after 8 years means that the word of mouth is not very good, which is a signal that the product is not very good. You shouldnt HAVE to spend money on marketing to grow the product* if you have initial customers like you do. *up to a certain point.
    - yomkippur 4y ago
      what if it was 40,000?
      - ZephyrBlu 4y ago
        If you're calculating a multiple MRR alone is pretty useless, no matter how high it is.

yomkippur 4y ago

but this is the exact multiple most SaaS are using, what makes mine different? I don't get it. At least mine is making net profit, most SaaS trading on stock exchanges with the same multiples are losing money and unlikely to remain at current market caps if not already.

vasco 4y ago
I hope you realize valuation of public companies has nothing to do with a random one person side project that's been up for a few years.
- csa 4y ago
  > I hope you realize valuation of public companies has nothing to do with a random one person side project that's been up for a few years Four years of seller discretionary income is not an unusual sale price for small solo projects that have traction. Iirc, Patio11’s bingo card creator sold for something around this multiple. That said, it’s unclear if this project has as much traction as others that sell for this multiple. If there are only a few clients, especially if they are friends of the current owner, then the business is fragile.
  - yomkippur 4y ago
    but customers who have been with you for 8 years is the anti-thesis of fragility. for instance, you could have a thousand customers but with low LTV (they cancel after a month or one off). which is more fragile here?
    - csa 4y ago
      You make a reductio ad absurdum argument and then treat it like it’s a completely reasonable comparison. It’s not. You seem interested in getting some answers, so I will give you my two cents worth… > but customers who have been with you for 8 years is the anti-thesis of fragility. Sure. How many of your customers have been around 8 years? How did you acquire them? > for instance, you could have a thousand customers but with low LTV (they cancel after a month or one off). Since this is basically 100% MtM churn, this is not a viable SaaS business. > which is more fragile here? If you take the 1000 customer SaaS and make it a more reasonable 10% or even 20% churn, then your business is more fragile for sure. We have no idea what might cause people to churn in your business because the n is so low. With 1000 customers, we can probably find some reasons (possibly before even buying) for the churn and halve it, thereby doubling LTV. So questions I would have for you if I were serious about purchasing: 1. What’s the TAM? 2. What’s your moat? 3. How did you acquire your customers (esp. the 8 year ones)? If it’s a personal relationship, that is very bad, since they may leave when you aren’t the owner. 4. How many of your customers are new (1 year or less)? 5. What marketing have you tried? 6. What is the language of communication with these customers? 7. Where are your customers located (country)? So after a quick glance with only the information you have given so far, I would probably be willing to pay $5k for a business like this and give it to an intern to develop. At $10k, I would be tempted to have one of my programmers make a copycat and just compete. As such, we could probably meet in the middle at $7-8k. This is probably a bad deal for you. More information could increase or decrease this price. Note that my biggest concern would be that all of the customers could instantly jump ship after you leave, because they were only customers because of you. This may seem odd to you, but I’ve seen entire business that make ridiculous amounts of money for the owner(s) exist purely because of personal connections. How do I know that this is not the case for you business? Since you have so few paying customers, I can’t even be sure that an answer you give me is true. My totally unsolicited advice to you is to find a young and competent SaaS sales person and offer them 50% rev share (maybe with a 2 year cap). This allows you to grow your business with relatively little grunt work, and you get to keep the cash cow. Selling cash cows is almost always bad unless the money completely lacks significance, and then you should look more for a competent owner to hand it off to rather than optimizing sale price. I will be happy to answer more questions if you have them. Best of luck!
- csa 4y ago
  After looking closer at the business, it looks like they have 13 or fewer paying clients. That’s quite fragile unless they have been long term clients, and this type of system has high transfer costs.
ZephyrBlu 4y ago
SaaS multiples are predicated on a lot of metrics. Growth, revenue retention, CAC and LTV, etc. If you had good metrics you would be making a lot more than $400/mo because you'd be growing like crazy. The fact it only makes $400/mo after 8yrs is a negative signal, not a positive one.
- motoxpro 4y ago
  This. The fact that it only grew to 400/mrr after 8 years means that the word of mouth is not very good, which is a signal that the product is not very good. You shouldnt HAVE to spend money on marketing to grow the product* if you have initial customers like you do. *up to a certain point.
  - yomkippur 4y ago
    what if it was 40,000?
    - ZephyrBlu 4y ago
      If you're calculating a multiple MRR alone is pretty useless, no matter how high it is.