Answers
Should I value an online business on SDE or net profit?
Short answer: Seller's discretionary earnings (SDE) add the owner's pay and personal costs back to profit, so they are higher than net profit. A multiple on SDE assumes you will do the owner's job unpaid. For small online businesses, put every listing on the same basis and subtract the cost of your own time before judging the price.
What is the difference between SDE, EBITDA and net profit?
- Net profit is revenue minus every cost, before tax. If the owner's work is unpaid, it is not a cost here, which flatters small businesses.
- EBITDA is earnings before interest, taxes, depreciation and amortisation. For most small online businesses, with little debt or equipment, it is close to net profit.
- SDE (seller's discretionary earnings) starts from pretax profit and adds back the owner's pay and benefits, personal or one-off costs, interest and depreciation. It measures what the business pays one full-time owner-operator.
BizBuySell's buyer glossary (read 7 October 2026) defines its listings' cash flow this way: start with net profit before tax, then add back payments to the owner, interest and depreciation. Its example: $100,000 of pretax profit and a $70,000 owner salary make $170,000 of cash flow.
Which marketplaces use which?
From their public pages, read 7 October 2026:
- BizBuySell listings show cash flow on the SDE-style definition above, and the glossary warns that BizBuySell does not verify listing figures. Its Q2 2026 Insight Report gives an average cash-flow multiple of 2.7 for US Main Street businesses sold.
- Acquire.com asks sellers for trailing and last-month net profit, and its multiples report is built on profit multiples, with a 3.9x median for confirmed SaaS sales. Its P&L Builder summary may show net income and SDE side by side.
- Other marketplaces use their own labels, often just "profit". Ask the seller what is and is not deducted, especially their own pay.
Because the bases differ, a 2.7x cash-flow multiple and a 3.9x profit multiple cannot be compared directly. The same business has a higher SDE than profit, so its SDE multiple is lower.
How do I convert SDE to profit I would keep?
Subtract a fair cost for the owner's work, at the hours the business really takes. In the composite below, a listing states $5,000 a month of SDE and asks $150,000, which looks like 2.5 times earnings. The seller works 20 hours a week; at $30 an hour, the profit you would keep after paying for that time is $2,400 a month, and the price is more than five times that.
Composite example, run through the true payback calculator
| Asking price | $150,000 |
|---|---|
| Stated monthly profit | $5,000 |
| Owner hours a week | 20 |
| Hourly cost of that time | $30 |
| Payback as listed | 30 months |
| Multiple as listed | 2.50× |
| Owner time per month | $2,600 |
| Profit you keep | $2,400 |
| True payback | 62.5 months |
| True annual multiple | 5.21× |
If you plan to do the work yourself, the SDE figure is what you earn for a part-time job plus a return on the price. That can be a fair deal, but it is a different deal from a business that runs without you. The owner works over 10 hours a week flag exists for this reason.
Which figure should I use?
Use profit after a fair cost for all the work, including yours, to compare listings and judge payback. Use SDE only when comparing with businesses quoted on the same SDE basis. Run every listing through the true payback calculator so they share one basis, then compare with the ranges in how many times profit online businesses sell for.
Sources
- BizBuySell, Buyer's Glossary: Definitions of Financial Terms, read 7 October 2026
- BizBuySell Insight Report, Q2 2026, read 7 October 2026
- Acquire.com Help, How to use the P&L Builder, read 7 October 2026
- Acquire.com Help, How are Customer, and Web traffic metrics calculated?, read 7 October 2026
- Acquire.com, Biannual Acquisition Multiples Report (11 February 2026, updated 1 September 2026), read 7 October 2026
Related
- Glossary: SDE
- True payback calculator
- Red flag: owner works over 10 hours a week
- How many times profit do online businesses sell for?
- What is a good payback period?
- Glossary of listing terms
- More questions buyers ask
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Composite examples are invented and labelled. Figures from other sites are quoted with a link and the date we read them; FirstPass figures are asking prices and seller-stated profit, not sale prices. Informational screening only, not investment, legal or tax advice.