Pricing a business for sale is one of the most consequential decisions a seller makes — and one of the most commonly mishandled. Sellers who price too high sit on the market for months, watch buyer interest evaporate, and eventually sell for less than they would have at a well-priced launch. Sellers who price too low leave money on the table they never get back.

The right price is not what you need to retire comfortably. It's not what you paid to build the business. It's the price that a knowledgeable, financed buyer will pay — and that a lender will support — given your business's actual financial performance.

Here's the framework for getting there.

Step 1: Establish Your Earnings Figure

Your asking price is a multiple of your annual earnings. Before you can set the price, you need to know what your earnings actually are.

SDE (Seller's Discretionary Earnings) is the standard earnings measure for owner-operated businesses — those where the owner works in the business. SDE starts with net profit and adds back:

The owner's salary (since the new owner will pay themselves differently)
Owner's personal expenses run through the business (phone, car, health insurance)
Depreciation and amortisation
One-off or non-recurring costs (legal disputes, equipment replacements)
Interest on business debt

EBITDA is used for businesses where the owner does not work day-to-day and there is a management layer. EBITDA excludes personal add-backs because the business can operate without the owner.

Which to use: If you work in the business daily, use SDE. If you have a GM or management team running operations and you work strategically, EBITDA is more appropriate — and will typically produce a higher multiple.

Critical: Be honest and conservative with your add-backs. Buyers and their accountants will verify every add-back in due diligence. Inflated add-backs kill deals when the truth emerges. Well-documented, legitimate add-backs are expected and accepted.

Step 2: Know Your Industry Multiple Range

Every industry trades within a multiple range that reflects what buyers historically pay for businesses in that sector. The multiple is asking price divided by SDE or EBITDA.

Asking Price = Earnings × Multiple

Typical ranges by sector (these are illustrative — use your specific industry benchmark):

Sector	Typical SDE Multiple
Café / restaurant	2x – 3.5x
Professional services (accounting, legal)	3x – 5x
Trade services (plumbing, electrical)	2x – 3.5x
E-commerce / online businesses	3x – 5x
Healthcare (allied health, dental)	4x – 6x
Software / SaaS	5x – 10x+

These ranges move with market conditions and deal size. Larger businesses — those earning $500K+ SDE — typically command higher multiples because they attract more buyers and can support institutional financing.

Where to find accurate benchmarks: BizBuyScore's industry pages cover 64 sectors with current benchmark ranges. Use those, not rules of thumb from a decade ago.

Step 3: Position Within the Range

Knowing the range is only the start. The question is where within that range your business belongs.

Price at the top of the range if your business has:

Above-average margins for your sector
Positive earnings trend (growing revenue or profit)
Recurring revenue (subscriptions, retainers, annual contracts)
Low customer concentration (no single client above 15–20% of revenue)
A management layer that operates without the owner
Long-term lease with confirmed renewals

Price at the midpoint if your business has:

Average margins for the sector
Flat or modestly growing earnings
Mostly transactional (non-recurring) revenue
Some customer concentration but within acceptable range
Owner working in the business but with trained staff

Price at or below the midpoint if your business has:

Below-average margins
Flat or declining earnings
High owner dependency
Customer concentration above 25%
Lease expiring within 18 months without confirmed renewal

The single most common pricing mistake: Sellers price at the top of the range because the business "feels" premium, without having the metrics to justify it. This generates low-quality buyer interest, long negotiations, and eventual price reductions — often ending up at or below where a realistic initial price would have landed.

Step 4: Run the Financing Test

This step is overlooked by most sellers but is critical: verify that a buyer can finance your business at your asking price.

Most buyers borrow 50–70% of the asking price. At standard lending terms:

Loan-to-value: 60% of asking price
Interest rate: approximately 8.5%
Term: 7 years

At these terms, calculate the annual loan repayment and divide your SDE by that figure. The result is the Debt Service Coverage Ratio (DSCR). Lenders require a minimum DSCR — typically 1.25x–1.5x depending on the industry.

If your DSCR falls below the minimum at your asking price, you are pricing out most financed buyers. Your realistic buyer pool shrinks to cash buyers only — a much smaller group who will negotiate harder knowing your options are limited.

Practical test: If your SDE is $180K and you're asking $700K, the annual repayment on a $420K loan at 8.5% over 7 years is approximately $79K. DSCR = $180K ÷ $79K = 2.3x. That passes easily. Now test $900K: loan is $540K, repayment is approximately $102K, DSCR = 1.76x. Still passes. At $1.2M: loan is $720K, repayment $136K, DSCR = 1.32x — marginal, depending on the industry minimum.

Run this test before you set your price. BizBuyScore calculates DSCR automatically when you enter your financials and asking price.

Step 5: Decide Whether to Use a Broker

Brokers typically charge 8–12% of the sale price. On a $500K deal, that's $40K–$60K. The question is whether that fee is worth it.

When a broker earns their fee:

You have no time to manage buyer enquiries and due diligence yourself
Your business is in a sector where brokers have active buyer networks
The broker can help you find buyers outside your local market
You need help with deal structuring or negotiation

When you may not need one:

Your business has a clear, identifiable buyer pool (a competitor, a supplier, a key employee)
You have time and capacity to run the process yourself
The transaction is straightforward and the price range is well-established

If you use a broker, interview at least three. Ask specifically: How many businesses in my sector did you sell in the last 12 months? What were their SDE multiples? How long did they take to sell?

The Asking Price Is Not the Final Price

Most SMB transactions involve negotiation. Your asking price sets the ceiling — the starting point for a conversation, not the endpoint.

Two things protect your negotiating position:

First: Price accurately rather than aspirationally. An accurate price generates more enquiries, more serious buyers, and a faster process. An aspirational price generates few enquiries and slow, sceptical buyers who assume there's a reason it's overpriced.

Second: Know your number before you enter any conversation. Understand the lowest price at which the deal makes financial sense for you — your walk-away number. Sellers who haven't done this thinking get pushed below it in negotiation without realising it until it's too late.

Validate your asking price before you list. Score your business with BizBuyScore — free. See your DSCR, valuation multiple, and how your asking price compares to industry benchmarks across 64 sectors.

How to Price a Business for Sale Without Leaving Money on the Table