[sharemywin]

I don't think it's wise to pay more for a business than it's generated in profits. So, I'm a little skeptically of buying a site that's only been around 18 months and they want 2.5x profit for last years profit plus what the owners taken out. If it's a fad,trendy, etc or a buy once product(ran out of customers) or highly dependent on one channel like amazon or google ranking your taking a pretty big risk. Also, if the owners putting a lot of time in on the sales and marketing side or operations side and your basically buying a job.

[ThomasSmale]

You would be right to be skeptical in that case - often buyers for younger sites have teams already in place or other sites in that particular industry making it less risky. We tend to avoid "trendy" niches or at least make the valuation reflect the trend (or risk associated).

We also take into account owner time in a valuation. 2 seemingly identical businesses would be valued differently if one owner worked 5 hours a week vs. 50 hours a week by another.

[jorgecurio]

I disagree. you could be buying a SaaS for it's technology which could alone be worth a lot of development hours and tested code is very valuable imo vs. rolling out your own.

This of course won't apply to 99% of SaaS which seem to be just CRUD apps wrapped around bootstrap themes with the vanilla $19/month with a free plan.

The more technically complex a SaaS means the problem it's solving is more complex. Lack of sales could mean a business or marketing issue.

I wouldn't mind paying $100,000 for a complete SaaS if the product worked as advertised and the minimum time and development resources needed to replicate it was very high.

[sharemywin]

that's good point too.