Business Valuation Calculator (Simple)

x
Typical: 0.5–3x for SMEs
x
Typical: 5–12x for private businesses
Finance Updated 16 Jun 2026

Estimate a business's worth using two simple market methods: a revenue multiple and a P/E (earnings) multiple. Enter annual revenue, net profit, and the multiples to get an averaged valuation plus your net profit margin.

Formula

Valuation (Revenue) = Annual Revenue × Revenue Multiple Valuation (P/E) = Net Profit × P/E Multiple Average Valuation = (Revenue Valuation + P/E Valuation) / 2 Net Profit Margin = Net Profit / Revenue × 100
  • The revenue method values the business at a multiple of annual sales — useful for growing companies with thin profits.
  • The P/E method values it at a multiple of net profit (earnings) — the more common approach for profitable firms.
  • This calculator averages the two for a balanced ballpark figure.
  • Multiples vary hugely by industry, growth, and risk; research comparable businesses for realistic numbers.
  • Net profit margin (profit ÷ revenue) shows how efficiently the business turns sales into profit.

Revenue 500k, profit 100k, 2× and 8×

Inputs
  • Annual Revenue: 500000
  • Annual Net Profit: 100000
  • Revenue Multiple (x): 2 x
  • P/E Multiple (x): 8 x

Revenue method = 500,000 × 2 = 1,000,000. P/E method = 100,000 × 8 = 800,000. The average valuation is 900,000, on a 20% net margin.

Frequently asked questions

Which valuation method is better?
The P/E (earnings) method suits profitable businesses; the revenue method suits fast-growing ones with low profit. Averaging both gives a balanced view.
What multiple should I use?
It depends on the sector. SMEs often see revenue multiples of 0.5–3× and P/E multiples of 5–12×. Look at comparable sales for guidance.
Is this a formal valuation?
No. It's a quick estimate. A formal valuation also weighs assets, cash flow (DCF), and market conditions.
What is net profit margin?
It's net profit divided by revenue, shown as a percentage — a measure of how much of each sale becomes profit.
Why average the two methods?
Each method has blind spots. Averaging smooths out their extremes for a more reasonable middle estimate.