Free calculator

True payback calculator

The FirstPass Memo true payback calculator is a free tool that shows how many months a business-for-sale listing takes to pay back, first as listed and then after the owner's time, costs the seller leaves out and one-time deal costs. Payback as listed is the asking price divided by stated monthly profit.

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How it works

Owner cost = hours a week × hourly rate × 52 ÷ 12
Adjusted profit = stated profit − owner cost − missing costs
Adjusted payback = (asking price + one-time costs) ÷ adjusted profit

The annual multiple is payback in months divided by 12. Payback of 27 months is a 2.25× multiple. The payback guide explains which profit figure to divide by and why the adjustments matter.

Worked example

A composite listing, not a real one: a site asking $54,000 on $2,000 of monthly profit. The seller works 8 hours a week and pays themself nothing in the P&L. Replacing them at $25 an hour costs about $867 a month. A $150 monthly tool bill sits on the seller's personal card, and escrow, a contract review and migration add $2,000 to the price.

The headline payback is 27.0 months (2.25×). After the adjustments, you keep about $983 a month on a $56,000 outlay, so payback is 56.9 months (4.75×), more than twice the headline.

Questions to send the seller

Does the P&L include any pay for your own time? If not, what would it cost to replace you?
How many hours a week do you and any contractors spend, and on which tasks?
Can you list every recurring cost, including hosting, tools, contractors, payment fees and software subscriptions?

Frequently asked questions

Should I count my own time if I plan to run the business myself?

Yes. Your time has a price even if no money changes hands. Counting it lets you compare a listing that needs 15 hours a week with one that needs two, and shows what the business would earn if you later hired someone.

Which profit figure should I enter?

The average monthly net profit over the last 12 months, after all costs. If the listing only gives a shorter average or one month, use it but treat the result as provisional and ask for 12 to 24 months of figures.

Does a longer payback mean the listing is overpriced?

Not on its own. A growing business can justify a longer payback, and a shrinking one can be expensive at a short one. The calculator shows what you would earn on today's figures, not what the business will do next.

Get the deal-tracker spreadsheet

Join the FirstPass Memo waitlist and the next page gives you the deal-tracker spreadsheet (Excel and CSV) straight away, along with the other free files: seller question checklists for eleven business types, the 72-hour vetting plan and a deal-tracker spreadsheet. Nothing is emailed; you download them on the page.

We will write when paid memos open, and occasionally before. Unsubscribe any time by replying "stop" to hello@firstpassmemo.com. Looking at a live listing priced $10k–150k? Apply for a free beta memo instead; its confirmation page has the same downloads.

This calculator does arithmetic on the figures you enter. It is not investment, legal, tax or valuation advice, and it does not check whether a seller's figures are true.