Service business valuation calculator

Put in last year's sales, costs and what you take out as the owner. See your SDE and EBITDA, the multiples small businesses have sold for, and a value range. An estimate to plan with, never an offer.

SDE + EBITDABoth earnings numbers buyers use

PublishedMultiples from the IBBA Market Pulse survey

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Likely value range

$540,000 to $837,000

Around $726,300 on your factors, at 2.69× SDE

$270,000SDE

$185,000EBITDA

15.4%EBITDA margin

An estimate from published medians, not an appraisal or an offer. Equipment, inventory, the lease and the deal terms all move the final price.

How we got this

Gross profit$1,200,000 − $640,000 = $560,000 (46.7%)
Net profit on the books$560,000 − $430,000 overhead = $130,000
SDE (seller's discretionary earnings)$130,000 + $110,000 owner pay + $30,000 add-backs = $270,000What one working owner takes out of the business in a year. Buyers of smaller businesses price on this.
EBITDA$270,000 − $85,000 for a manager = $185,000What is left once someone is paid to do the owner's job. Larger buyers price on this.
Size band$500K to $1M, priced on SDE (IBBA median 2.8× in Q2 2026)The band is the first where SDE × its median lands inside it. Multiples rise with size, so value can jump between bands.
The range2.0× to 3.1× SDELowest and highest IBBA medians for SDE deals from Q2 2023 to Q2 2026.
Your factorsrecurring 20%, owner partly needed, 3 to 10 years: score 43 of 100Our weighting: recurring revenue 40, owner dependence 35, years 25. 50 sits on the median; 0 and 100 sit on the ends of the range. It is a reading, not a published number.
Point estimate$270,000 × 2.69 = $726,300

Source	Multiple	Value
IBBA, SDE deals, 2023 to 2026	2.0× to 3.1×	$540,000 to $837,000
IBBA Q2 2026, $500K to $1M	2.8×	$756,000
Your factors	2.69×	$726,300

Sources: IBBA and M&A Source, Market Pulse Q2 2026 Highlights (median multiples by deal size, Q2 2023 to Q2 2026); Peak Business Valuation, HVAC valuation multiples. Checked 2026-10-08.

Key takeaways

Small service businesses sell for a multiple of earnings. Under about $2 million the earnings used are SDE; above it, EBITDA.
In the IBBA Market Pulse survey, median multiples for Main Street deals ran from 2.0× to 3.1× SDE between Q2 2023 and Q2 2026.
Recurring revenue, a business that runs without the owner, and a long record are what move a business toward the top of its range.

How a small service business is valued

Most small service businesses are bought for what they earn. A buyer looks at how much cash the business throws off in a year, then pays a multiple of it. The multiple reflects how sure the buyer is that the earnings will keep coming after you leave.

There are other ways to value a business. An asset value adds up the trucks, tools and inventory. A revenue multiple divides price by sales. For a profitable service business, both are rough. Two companies with the same sales can earn very different amounts, and the trucks are worth the same whichever one owns them. Earnings multiples are what brokers and buyers lean on.

This calculator does three things:

Works out your earnings two ways, SDE and EBITDA, from numbers on your profit and loss statement.
Picks the multiple that sale data shows for a business of your size.
Gives a range, with a point inside it based on the factors that buyers price in.

A range, not an appraisalThe result is an estimate from published medians. It is not an appraisal or an offer. For a sale, a loan or a partner buyout, use a business broker or a certified business appraiser who will look at your books, contracts and assets.

SDE vs EBITDA: which earnings number a buyer uses

SDE, seller's discretionary earnings, is everything one working owner gets out of the business in a year. Start with net profit on the books, then add back:

The owner's salary or draw, and the payroll taxes and benefits on it
Interest on business loans, and depreciation and amortization
One-off costs that will not repeat, like a lawsuit or a move
Personal costs run through the business, like a family phone plan or a personal vehicle

EBITDA, earnings before interest, taxes, depreciation and amortization, is close to SDE with one big change: it assumes someone is paid a market salary to do the owner's job. EBITDA = SDE − the cost of a manager.

Smaller businesses are usually bought by someone who will work in them, so SDE is the number that matters. Larger businesses are bought by groups or companies that will hire a manager, so they price on EBITDA.

The calculator's starting numbers show both:

Line	Math	Amount
Sales		$1,200,000
Gross profit	$1,200,000 − $640,000 job costs	$560,000
Net profit on the books	$560,000 − $430,000 overhead	$130,000
SDE	$130,000 + $110,000 owner pay + $30,000 add-backs	$270,000
EBITDA	$270,000 − $85,000 manager	$185,000

Add-backs need proofEvery dollar you add back gets multiplied, so buyers check them. Keep the receipts and a list. A buyer who finds an add-back that is really a running cost will take it out and trust the rest of the numbers less.

Which earnings to use is not your choice alone. The calculator picks by size, the way the survey does: if SDE times the small business multiple would put the price over $2 million, it switches to EBITDA. A business near that line can see a jump in value from one band to the next. Treat the edge of a band as a range, not a cliff.

Valuation multiples for small businesses

The International Business Brokers Association and M&A Source run a quarterly survey of business brokers and M&A advisors called Market Pulse. It reports the median multiple paid in deals each quarter, split by deal size. Deals under $2 million are measured against SDE. Deals of $2 million and up are measured against EBITDA.

Deal size (price)	Priced on	Q2 2023	Q2 2024	Q2 2025	Q2 2026
Under $500K	SDE	2.0×	2.0×	2.3×	2.0×
$500K to $1M	SDE	2.8×	2.8×	2.8×	2.8×
$1M to $2M	SDE	3.0×	2.8×	3.0×	3.1×
$2M to $5M	EBITDA	4.5×	3.5×	3.9×	4.0×
$5M to $50M	EBITDA	4.8×	5.3×	5.5×	5.8×

Two things stand out. Multiples rise with size: a bigger business is less risky to a buyer and draws more of them. And the medians move from year to year, by a few tenths for small deals and by more for larger ones.

The calculator uses those numbers this way:

Size band. It checks which band your business lands in by multiplying your earnings by each band's Q2 2026 median, smallest band first.
Range. For SDE deals the range is the lowest and highest median in the survey from 2023 to 2026, 2.0× to 3.1×. For EBITDA deals it is 3.5× to 5.8×.
Point. Your factors place you inside that range. A middle score sits on your band's Q2 2026 median.

With the starting numbers, $270,000 of SDE at 2.0× would be $540,000, which is over the $500K top of the smallest band, so the business lands in the $500K to $1M band at 2.8×. The range is $540,000 to $837,000.

The survey also shows how deals were paid for. In Q2 2026, cash at close made up 88% to 92% of the price in the three Main Street bands, and seller financing 6% to 11%. Expect a buyer to ask you to carry some of the price.

What moves a business up or down its range

Brokers and buyers name the same handful of things again and again. The calculator weighs three of them to place you in the range. The weights are our own reading, set out here so you can judge them.

Factor	Weight	Bottom of range	Top of range
Share of sales from plans and repeat contracts	40	0%	60% or more
Owner dependence	35	Mostly stops without you	Runs as normal without you
Years in business	25	Under 3	Over 10

A score of 50 out of 100 lands on the median for your band. 0 lands on the bottom of the range, 100 on the top. The starting numbers (20% recurring, slows down without you, 3 to 10 years) score 43, which puts the multiple at 2.69× and the point estimate at $726,300.

Other things move value that the calculator does not score:

Customer concentration. One builder or property manager making up a big share of sales is a risk.
Trend. Rising sales and margins over three years are worth more than one good year.
Clean books. Accrual-basis statements that match the tax returns make buyers and lenders comfortable.
Staff. Licensed techs who will stay, and a manager or lead who can run the schedule.
Equipment and vehicles. Usually included in the price of a small deal, so their condition matters.

None of these work overnight. A buyer looks at the last three years, so a business that added maintenance agreements last month does not get credit for them yet. Changes that show up over two or three years of statements count for the most.

What a buyer will ask to see

When a buyer or their lender looks at your business, they ask for the same set of papers. Having them ready shortens the sale and supports your numbers.

Document	Why they want it
Three years of profit and loss statements and tax returns	To see the trend and check that the books match what was filed
A list of add-backs with proof	To confirm SDE
Sales by customer and by kind of work	To check customer concentration and the service and install mix
Maintenance and service agreements	To count recurring revenue and check that the agreements can transfer
Equipment and vehicle list	To see what is included and what will need replacing
Staff list with roles, pay and licences	To see who runs the work and who holds the licences
Lease, insurance and licences	To check the business can keep operating after the sale

A buyer who gets clean answers fast tends to trust the numbers, and a buyer who has to dig tends to lower the offer. Put the folder together a year or two before you plan to sell.

How to raise what your business is worth

Value is earnings times a multiple, so there are two levers.

Raise earnings. Every $10,000 of extra SDE at 2.8× adds $28,000 of value. Price jobs for the margin you need (the profit margin calculator helps), charge a rate that covers every hour (the labor rate calculator), and cut overhead that does not earn its keep.

Raise the multiple. Move sales toward recurring work with maintenance plans and service agreements. Write down how the business runs so it does not live in your head. Put a lead tech or office manager in charge of the schedule. Keep two or three years of clean books.

Start early. Buyers look at the last three years, so changes made the year before a sale count for little. Run the calculator once a year with your real numbers and watch the trend.

Koira's reporting shows sales, job costs and plan revenue in one place, which is what a buyer will ask for. See pricing.

Keep the earnings and the multiple in view together. A cost cut that makes the business depend more on you can raise SDE and lower the multiple at the same time.

Last checked October 8, 2026.

FAQ

How much is my service business worth?

For most small service businesses, a multiple of yearly earnings. In the IBBA Market Pulse survey, median multiples for deals under $2 million ran from 2.0× to 3.1× SDE between 2023 and 2026. Put your numbers in the calculator for a range. For a real sale, get a broker's or appraiser's opinion.

What is SDE?

Seller's discretionary earnings: net profit plus the owner's pay and perks, interest, depreciation and any one-off or personal costs run through the business. It is what one working owner takes out in a year.

What is the difference between SDE and EBITDA?

EBITDA is SDE minus a market salary for someone to do the owner's job. Smaller businesses are priced on SDE because the buyer usually works in them. Larger businesses are priced on EBITDA.

What multiple do service businesses sell for?

It rises with size. In Q2 2026 the IBBA medians were 2.0× SDE for deals under $500K, 2.8× for $500K to $1M, 3.1× for $1M to $2M, 4.0× EBITDA for $2M to $5M and 5.8× EBITDA for $5M to $50M.

What are add-backs?

Costs on your books that a new owner would not have: your own salary and benefits, interest, depreciation, one-time costs and personal expenses run through the business. They are added to net profit to get SDE. Keep proof of each.

How can I increase the value of my business before selling?

Raise earnings with better pricing and lower overhead, and raise the multiple with recurring revenue, a business that runs without you, and clean books. Buyers look at three years, so start well before a sale.

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