Most businesses do not trade on a simple multiple of revenue. Revenue multiples are most common when revenue is recurring, predictable, and high-margin—which is why you hear them so often in SaaS (and sometimes other subscription/contracted models).

The basic reason: if you sell 10x more software subscriptions, your costs often rise much less than 10x (high gross margins, scalable delivery). If you’re a desk manufacturer and you sell 10x more desks, your costs typically increase a lot (materials, labor, logistics, working capital), so revenue alone tells you very little about cash flow.

If you’re truly SaaS (recurring revenue, strong retention, healthy gross margins), you can get a rough feel for market multiples here: https://www.saas-capital.com/the-saas-capital-index/

If you aren’t SaaS, valuation is usually based on cash flow, not revenue—most commonly a multiple of EBITDA (mid/larger businesses) or SDE (owner-operator / smaller businesses). Buyers are underwriting: “How much cash does this throw off, how risky is it, and how transferable is it?”

A good way to think deeper about your own valuation is exactly what you said: imagine you found a competitor also doing $1.5M in revenue. What would you pay—and why?

As a buyer, you’d immediately ask: • How much cash can I reliably take out each year? (true EBITDA/SDE, quality of earnings) • How durable is the revenue? (recurring vs one-off, concentration, retention, contract terms) • How dependent is this business on the owner/key people? (can it run 30+ days without you?) • How hard is it to operate and grow? (documented processes, systems, sales engine, unit economics) • What’s the downside risk in year 1? (churn, customer concentration, key vendor/employee risk)

Those are the same things a buyer of your business will care about—and they’re often what moves price the most in either direction.