REVENUE METHOD × SDE METHOD · Q3 2021–Q2 2026
The margin where two valuation methods agree.
Every business type has a different crossover point. Compare the SDE margin where its reported revenue and earnings multiples imply the same relative value—then see which method runs higher above or below that line.
INTERACTIVE METHOD CHECK
Choose a business type. Move the margin.
This public tool never asks for revenue or SDE dollars. It isolates one question: at a given SDE margin, which published average-multiple method is mathematically higher?
Crossover SDE margin
25% × 2.83× SDE multiple ÷ 0.60× revenue multiple = 1.18 relative ratio
The crossover is not a target margin. It is the point where the two reported average-multiple methods produce the same indication. Above it, the SDE method is mathematically higher; below it, the revenue method is higher.
Open hvac business benchmarks| # | Business type | SDE multiple | Revenue multiple | Crossover margin | At 25% margin |
|---|---|---|---|---|---|
| 01 | Restaurants | 2.18×reported average | 0.39×reported average | 17.9% | SDE higher40% apart |
| 02 | Coffee shops & cafes | 2.27×reported average | 0.47×reported average | 20.7% | SDE higher21% apart |
| 03 | Home health care businesses | 3.00×reported average | 0.63×reported average | 21.0% | SDE higher19% apart |
| 04 | HVAC businesses | 2.83×reported average | 0.60×reported average | 21.2% | SDE higher18% apart |
| 05 | Trucking companies | 3.00×reported average | 0.66×reported average | 22.0% | SDE higher14% apart |
| 06 | Electrical & mechanical contractors | 2.77×reported average | 0.63×reported average | 22.7% | SDE higher10% apart |
| 07 | Auto repair shops | 2.85×reported average | 0.65×reported average | 22.8% | SDE higher10% apart |
| 08 | Nail salons | 1.74×reported average | 0.41×reported average | 23.6% | SDE higher6% apart |
| 09 | Hair salons & barbershops | 2.10×reported average | 0.52×reported average | 24.8% | SDE higher1.0% apart |
| 10 | Staffing agencies | 2.66×reported average | 0.66×reported average | 24.8% | SDE higher0.8% apart |
| 11 | Moving & shipping businesses | 2.52×reported average | 0.63×reported average | 25.0% | Methods align0.0% apart |
| 12 | Plumbing businesses | 2.61×reported average | 0.69×reported average | 26.4% | Revenue higher5% apart |
| 13 | Daycare & child care centers | 3.28×reported average | 0.88×reported average | 26.8% | Revenue higher7% apart |
| 14 | Food trucks | 2.03×reported average | 0.55×reported average | 27.1% | Revenue higher8% apart |
| 15 | Gyms & fitness centers | 2.54×reported average | 0.70×reported average | 27.6% | Revenue higher9% apart |
| 16 | Dental practices | 2.75×reported average | 0.76×reported average | 27.6% | Revenue higher10% apart |
| 17 | Landscaping & yard services | 2.49×reported average | 0.72×reported average | 28.9% | Revenue higher14% apart |
| 18 | Websites & ecommerce businesses | 3.37×reported average | 1.06×reported average | 31.5% | Revenue higher21% apart |
| 19 | Cleaning businesses | 2.25×reported average | 0.72×reported average | 32.0% | Revenue higher22% apart |
| 20 | IT & software service businesses | 3.22×reported average | 1.08×reported average | 33.5% | Revenue higher25% apart |
| 21 | Property management businesses | 2.66×reported average | 0.92×reported average | 34.6% | Revenue higher28% apart |
| 22 | Laundromats & coin laundries | 3.70×reported average | 1.33×reported average | 35.9% | Revenue higher30% apart |
| 23 | Car washes | 4.87×reported average | 1.96×reported average | 40.2% | Revenue higher38% apart |
| 24 | Pest control businesses | 2.46×reported average | 1.01×reported average | 41.1% | Revenue higher39% apart |
| 25 | Accounting & tax practices | 2.27×reported average | 1.08×reported average | 47.6% | Revenue higher47% apart |
| 26 | Insurance agencies | 2.87×reported average | 1.52×reported average | 53.0% | Revenue higher53% apart |
Swipe to compare all columns →
Reported US sold-business average SDE and revenue multiples from BizBuySell for Q3 2021–Q2 2026. businessvaluation.fyi calculates each crossover as revenue multiple ÷ SDE multiple. The source periods are not blended with our protected transaction index.
WHAT THE COMPARISON REVEALS
One generic margin assumption cannot reconcile every industry.
The span is wide because the reported relationship between revenue and owner earnings differs across business models.
Restaurants
0.39× revenue ÷ 2.18× SDE.
Median crossover
Half of the business-type crossover points fall below this margin and half above.
Insurance agencies
1.52× revenue ÷ 2.87× SDE.
READ THE RESULT CORRECTLY
A reconciliation tool—not a margin benchmark.
The math is transparent.
If revenue is $1 and SDE margin is 25%, SDE is $0.25. Multiply each by its published market multiple; the crossover is where the two results match.
Disagreement is information.
A wide gap can flag unusual margins, a poor category fit, or earnings that still need normalization. It should trigger investigation, not automatic averaging.
A real valuation needs context.
Size, growth, recurring revenue, customer concentration, owner dependence, assets, liabilities, working capital, and terms can all move the outcome.
YOUR BUSINESS · PRIVATE
Now apply the market to your actual numbers.
Create a private account to compare the revenue and SDE methods using your financials. Contribute operating context only when you want richer anonymized cohorts.
COMMON QUESTIONS
Using the crossover correctly
What is an SDE margin?
SDE margin is seller’s discretionary earnings divided by annual revenue. SDE should first be normalized for one owner’s compensation, supported personal expenses, and genuine one-time items.
What is the crossover SDE margin?
It is the SDE margin where applying the reported average SDE multiple and applying the reported average revenue multiple produce the same indication. It equals the revenue multiple divided by the SDE multiple.
Does the crossover show a healthy or typical profit margin?
No. It is a mathematical reconciliation point between two market methods, not an operating-margin benchmark, performance target, or statement about the profitability of a typical company.
Which valuation method should I trust?
Neither should be used alone. SDE is usually more responsive to owner benefit, while revenue can provide a cross-check when earnings are unusually high, low, or still being normalized. Business quality, assets, liabilities, working capital, and deal terms still matter.
Is this a valuation of my business?
No. The public tool compares method mechanics without using your revenue or SDE dollar amounts. A company-specific market reference requires actual financials and additional operating context.