The first time a seller asked me what his store was worth, I told him: “It depends.”
He hated that answer.
But it’s the only honest one. There are three ways to price a Shopify business, and they don’t agree with each other. Run all three on the same store and you’ll get three different numbers. The skill isn’t picking the “right” method. It’s knowing which one a buyer will actually use.
Method 1: SDE (Seller’s Discretionary Earnings) Is King
If you’re doing under $5 million a year, forget revenue. Forget asset value. SDE is the number buyers care about.
Seller’s Discretionary Earnings. Fancy name, simple concept. Take your net profit. Add back everything a new owner wouldn’t have to pay. Your car lease. Your health insurance. That conference in Barcelona that was half vacation. If a buyer won’t need to spend it, it goes back into your profit number.
I saw a guy last year leave $28K on the table because he forgot to add back his car lease. Twenty-eight thousand dollars. Gone. From an expense he was already paying.
The formula: (Annual SDE × Multiple) + Inventory = Value.
Inventory gets priced separately at landed cost and added on top. Every time. Don’t let a buyer tell you it’s “included in the multiple.” It’s not.
The multiple depends on four things buyers obsess over:
- Revenue trend—growing stores get more
- Traffic sources—organic beats paid every time
- Owner hours—less is more
- Age—three years of history beats six months of guessing
Most Shopify stores land between 2x and 3x. A store with diversified traffic, growing revenue, and an owner who works 10 hours a week pushes toward 3x. A store dependent on Facebook ads with the founder doing 60-hour weeks slides toward 2x.
SDE covers 90% of deals.
Sometimes, though, it misses the point.
Method 2: When Revenue Multiples Make Sense
A buyer who thinks they can run your store better than you doesn’t care about your profit margin. They care about your top line.
Amazon aggregators do this constantly. They look at your 12% margin and see their 35% margin. Same revenue. Dramatically different profit once it plugs into their supply chain and ad infrastructure.
They’re not buying your P&L. They’re buying your product rankings, your customer reviews, and your shelf space.
Revenue multiples run lower than SDE multiples—usually 0.5x to 1.5x annual revenue. Makes sense. Revenue isn’t profit. A store doing $2 million with 8% margins and a store doing $2 million with 35% margins don’t get the same number, even if both are priced on revenue.
This method applies when a strategic buyer with better infrastructure is circling your brand, when revenue is growing fast but profits are temporarily squeezed, or when someone’s consolidating market share and your customer base matters more than your earnings.
If no one’s knocking on your door offering to buy your brand at a revenue multiple, don’t price your store this way. Stick with SDE.
Method 3: Asset-Based Valuation (When Parts Are Worth More)
Sometimes a Shopify store is worth more dead than alive.
Asset-based valuation treats the business like a pile of things someone could sell individually. Inventory at cost. Domain name. Email list. Social accounts. Custom theme. Product reviews. Supplier contracts.
A failing store with $40,000 in inventory, a solid domain, and an email list of 15,000 buyers might be worth $50,000 to a competitor who can plug those assets into their existing operation. That same store priced on SDE? Near zero. There are no earnings to multiply.
The key number here is inventory. Buyers pay close to landed cost for sellable stock, even when the business around it is struggling. Know your inventory value before you talk to anyone. And don’t let a buyer convince you they’re doing you a favor by “taking the inventory off your hands.”
So Which One Applies to You?
| Your Situation | Method That Fits |
|---|---|
| Profitable store under $5M | SDE |
| Fast growth, tight margins, strategic buyer circling | Revenue Multiple |
| Unprofitable but valuable assets | Asset-Based |
Most Shopify sellers only need to understand SDE. It’s what buyers use, brokers price by, and marketplaces list on.
But here’s something I tell every seller I work with: run all three anyway.
Get an SDE number. See if a revenue multiple tells a completely different story. Check if your assets alone would get you a decent exit. If all three cluster around the same range, your valuation is solid. If they’re wildly different, figure out why before a buyer does it for you—because they will.
Get a Full Valuation Report
Skip the spreadsheets. Enter your store URL, founding year, and monthly revenue range. We’ll send you a complete valuation report breaking down exactly what your store is worth and which factors moved the number.
Frequently Asked Questions
Which method do most Shopify stores use?
SDE. Over 90% of deals under $5 million use it. Learn this one first.
Can I use more than one method?
You should. If SDE says $200K and asset-based says $80K, you know the value is in the earnings, not the inventory. That tells you what to protect during a sale.
What if the numbers are completely different?
A big gap usually means you’re calculating something wrong—or your business has an unusual risk that one method captures and the other misses. If the spread is more than 30%, talk to a broker.
Do I need a professional valuation?
For a rough estimate, no. Our report gives you a data-backed number. For a precise sale price above $500K, hire someone who does this every day. The commission usually comes back to you in a higher sale price.
How often should I check my store’s value?
Every year if you’re not selling. Every quarter if you’re planning to exit. Knowing your number helps you make better decisions about where to invest your time.
