There are three ways to value a Shopify store. They don’t agree with each other. Run all three and you’ll get three different numbers.
The skill isn’t picking the right method. It’s knowing which one a buyer will use—and why.
Method 1: SDE (Seller’s Discretionary Earnings)
This is the one that matters for most sellers.
If your store makes under $5 million a year, this is how it gets priced. Buyers start with your net profit, then add back owner perks—salary, car, health insurance, phone—things a new owner wouldn’t pay. For a deep dive on calculating SDE with real examples, read our full guide to Shopify store valuation.
The formula: (Annual SDE × Multiple) + Inventory at Cost = Business Value.
Inventory is always separate. Anyone who tells you otherwise is wrong.
The multiple—usually 2x to 3x—depends on risk. A store with three years of growth, diversified traffic, and an owner working 5 hours a week gets 3x. A store with 14 months of history, Facebook-dependent traffic, and an owner working 55-hour weeks gets 2x. Same SDE. Different risk. Different check.
Method 2: Revenue Multiple
Sometimes a buyer doesn’t care about your profit. They care about your top line.
This happens when the buyer believes they can extract more profit from your revenue than you can. Amazon aggregators do this—they look at your 12% margin and see their 35% margin. They’re not buying your P&L. They’re buying your product rankings, customer reviews, and shelf space.
Revenue multiples are lower than SDE multiples—usually 0.5x to 1.5x annual revenue. Makes sense. Revenue isn’t profit.
If no strategic buyer is knocking on your door, don’t price your store this way. Stick with SDE.
Method 3: Comparable Sales
Sometimes the best way to value something is to look at what similar things actually sold for.
Comparable sales—comps—are recent transactions of stores like yours. Same platform. Similar niche. Similar revenue range. If three Shopify pet stores doing $200K in SDE all sold for 2.8x last quarter, your pet store probably isn’t going to fetch 4x.
Find comps on marketplaces like Flippa and Empire Flippers. Talk to brokers even if you’re not ready to sell—they’ll tell you what’s been trading.
Comps work best for standard stores in well-defined niches with enough recent transactions to spot patterns. If your store is unusual, don’t force the comparison. Fall back on SDE.
Which Method Fits You?
| Your Situation | Method |
|---|---|
| Profitable store under $5M | SDE |
| Strategic buyer circling, fast growth, thin margins | Revenue Multiple |
| Standard niche, lots of recent sales data | Comparable Sales |
Most sellers only need SDE. But smart sellers run all three. If the numbers cluster, your valuation is solid. If they’re wildly different, figure out why before a buyer does.
Want to see your number? Enter your store details and we’ll send you a complete valuation report breaking down exactly what your store is worth and which method applies.
Frequently Asked Questions
Which method do most Shopify stores use?
SDE. Over 90% of deals under $5 million. Learn this one first.
Can I use more than one method?
You should. If SDE says $200K and comps say $130K, you know the value is in the earnings, not the assets. That tells you what to protect during a sale.
What if the numbers are completely different?
A big gap usually means something’s off—either in your calculation or in how buyers perceive your risk. Talk to a broker if the spread is more than 30%.
Do I need a professional valuation?
For a rough estimate, no. Our free report gives you a data-backed number. For stores above $500K, hire a pro—the higher sale price they negotiate usually covers their fee.
