How Much Is My Ecommerce Business Worth?
Almost every ecommerce valuation comes down to one line of arithmetic: annual profit multiplied by a multiple. The profit figure is usually the easy part. The multiple is where six figures are won or lost, and it is decided by things most sellers never think to prepare.
If you are trying to work out what your store is worth before you talk to anyone, this page gives you the same framework a buyer uses. No sign-up needed to read it.
The formula, and why the multiple is the whole game
Value equals annual profit times a multiple. Two businesses earning £300,000 a year can be worth £600,000 and £1.2m respectively, and the difference is never the profit line. It is durability. A buyer paying a multiple of earnings is really buying the probability that those earnings continue without the founder in the chair.
So the useful question is not "what multiple do stores like mine get." It is "what makes a buyer confident this keeps earning after I leave."
Which profit figure a buyer actually uses
Three different numbers get called profit and they are not interchangeable. Getting this wrong is the most common reason a seller's expectation and a buyer's offer are miles apart before anyone has been unreasonable.
| Measure | What it means | When it is used |
|---|---|---|
| Net profit | What is left after every cost, including your own salary if you pay yourself one. | The cleanest figure, and what most direct buyers work from. |
| SDE Seller's discretionary earnings | Net profit plus the owner's salary, plus genuinely one-off or personal costs run through the business. | Smaller owner-operated businesses, where the owner's pay is really profit by another name. |
| EBITDA | Earnings before interest, tax, depreciation and amortisation, with a market-rate manager's salary deducted. | Larger businesses and institutional buyers, who assume they will pay someone to run it. |
The add-back trap
Sellers often inflate SDE with a long list of add-backs: the car, the phone, a family member on payroll, a conference in Lisbon. Some are legitimate. But every add-back you cannot evidence with a document invites a buyer to discount the whole schedule, and a buyer who stops trusting one number starts re-testing all of them. Add back what you can prove and leave the rest.
Typical multiple ranges by size
Bigger, more durable earnings attract a higher multiple, for two structural reasons. The pool of buyers who can write the cheque widens, and the business is usually less dependent on one person. These are typical ranges for a direct sale rather than a competitive auction.
| Annual net profit | Typical direct-sale multiple | Why |
|---|---|---|
| Under £120k | Around 2.0x to 2.5x | Small buyer pool, usually one person doing everything, high key-person risk. |
| £120k to £250k | Around 2.2x to 2.8x | Attracts individual acquirers and small holdcos. Processes start to exist. |
| £250k to £600k | Around 2.5x to 3.2x | Small teams, real systems, and enough scale to survive a founder exit. |
| £600k to £900k | Around 2.8x to 3.5x | Institutional and search-fund interest begins here. |
| Over £900k | Around 3.0x to 4.0x+ | Wide buyer pool, financeable, management usually in place. |
Treat these as a starting point, not a quote. A subscription business with 45% repeat purchase at the bottom of that table can beat a one-off-purchase business at the top of it.
The seven factors that move the multiple
1. Traffic concentration
The single biggest lever. A business where 90% of revenue comes from one Meta ad account carries a risk a buyer cannot control, because one policy review ends the revenue. Diversified traffic across paid, organic, email and marketplace can be worth a full point of multiple more than the same profit from one source.
2. Revenue trend
Growing gets a premium, flat gets the base, declining gets discounted hard and sometimes gets no offer at all. Six months of decline with no explanation is the most common deal-killer there is. If there is a reason, document it before you go to market.
3. Repeat purchase rate
Recurring or repeat revenue is worth more than one-off sales because it is a forecast rather than a hope. Consumables and subscriptions price meaningfully above single-purchase categories.
4. Founder dependency
If you are the face, the buyer, the copywriter, the media buyer and the customer service, then the business does not really transfer, your job does. Documented processes and anyone else who knows how it runs both raise the number.
5. Supplier position
One supplier with no contract is a single point of failure. Multiple sources, or a written agreement, or an exclusive that transfers with the business, all reduce the risk being priced in.
6. Margin profile
Thin margins mean small cost shocks become existential. A 15% net margin business is a different asset from a 35% one at the same revenue, and it prices accordingly.
7. Financial hygiene
This one is free and almost nobody does it. Clean books, a P&L that reconciles to the bank, separated personal spend, and platform data that matches the accounts. Messy financials do not just slow diligence, they make a buyer widen their risk discount because they cannot tell what else is untidy.
Want a number for your own business?
The confidential valuation tool gives a direct-sale range in about sixty seconds. Nothing is stored unless you choose to submit it.
Get a confidential valuation →Broker sale versus direct sale
A brokered process can produce a higher headline price, when competition materialises. The word doing the work there is when. Competition is not a feature of a listing, it is a feature of a business that several funded buyers want at the same time. Where that happens the auction earns its fee. Where it does not, the seller pays 8% to 15% for a process, waits months, and can land under a direct offer they could have taken in week six. The honest comparison is not headline against headline, it is what actually lands in your account and when.
| Brokered sale | Direct sale | |
|---|---|---|
| Headline price | Often higher on paper, if competition actually materialises | The number is the number, and it is what lands |
| Commission | Typically 8% to 15% at this size | None |
| Timeline | Commonly 3 to 6 months, sometimes longer | Typically 4 to 8 weeks |
| Confidentiality | Listed, seen by many buyers | One counterparty, NDA first |
| Risk of no sale | Real. Many listings never complete | Lower, but only one buyer to satisfy |
A useful test: work out the brokered net after commission and after the extra months of holding risk, then compare that to a direct offer today. Sometimes the broker still wins. Often it does not, and it is worth doing the arithmetic before assuming either way. There is a fuller breakdown on selling without a broker.
Four things that quietly cost sellers money
- Selling on trailing twelve months during a dip. A buyer values the last twelve months. Selling three months into a slump prices the slump.
- Waiting for one more good quarter. Understandable, but every extra quarter is another quarter of platform risk, supplier risk and burnout risk. Several sellers price a business twice and the second number is lower.
- Not separating personal spend. Legitimate owner costs that were never documented become unprovable add-backs, and unprovable add-backs get ignored.
- Ignoring the transition. A seller who will not do a handover is worth less than one who will, because the buyer prices the knowledge that walks out of the door.
If you only do one thing before selling
Clean up the last twelve months of financials so they reconcile to the bank and to the platform. It costs nothing, takes a weekend with an accountant, and it is the highest return per hour of anything on this page. Every buyer prices uncertainty, and messy books are pure uncertainty.
Common questions
Annual net profit multiplied by a multiple. For a direct sale, multiples typically run from around 2.0x for a business under £120,000 of annual profit up to 3.0x to 4.0x for one earning over £900,000. The multiple is set by traffic concentration, revenue trend, repeat purchase rate, founder dependency, supplier position, margin profile and how clean the financials are.
Typically 2.0x to 4.0x annual net profit in a direct sale, rising with size and durability. Subscription and consumable businesses price at the higher end because revenue is more predictable. Single-channel businesses dependent on one ad account price at the lower end because the risk cannot be controlled by the buyer.
Net profit is what remains after every cost including your salary. SDE adds back the owner's salary and genuine one-off or personal expenses, and is used for owner-operated businesses. EBITDA deducts a market-rate manager's salary and is used by institutional buyers who will hire someone to run it. Using the wrong one is the most common reason seller and buyer expectations diverge.
Often a higher headline price, because competition between bidders creates tension. But commission at this size is typically 8% to 15%, the process usually takes 3 to 6 months rather than 4 to 8 weeks, and many listings never complete. Compare the net proceeds after commission and after the extra months of holding risk, not the headline numbers.
Declining revenue without a clear explanation, and traffic concentrated in a single channel. After those, founder dependency where the owner is the brand, a single supplier with no contract, and financials that do not reconcile to the bank. Each one adds to the risk discount a buyer applies.
A direct sale to a single decision maker typically runs 4 to 8 weeks from first conversation to completion. A brokered process more commonly runs 3 to 6 months because of listing preparation, marketing the business, multiple buyer conversations and a longer diligence phase.