Smaller brands are priced on seller’s discretionary earnings, larger ones on adjusted EBITDA with market-rate salaries charged for the work the owner performs. Either way, expect the buyer to rebuild your profit rather than accept it: true landed costs including freight and duties, current advertising prices rather than last year’s, market-rate labour for everything you do yourself, and inventory accounted for properly rather than expensed when purchased. E-commerce P&Ls are full of judgment calls, and aggressive add-backs — ad spend reclassified as growth investment, one-time costs that recur annually — do not survive diligence. A conservative, documented adjustment schedule is the difference between a price that closes and one that shrinks on the way there.
Revenue from your own site, your email list and your customer accounts is priced above marketplace revenue, because you own the relationship and the data. A brand doing most of its volume through one marketplace account carries platform risk the buyer must underwrite: an algorithm change, a suspension or a fee increase can reprice the whole business overnight. Repeat behaviour is the other half of the argument. A brand whose customers come back — demonstrated with cohort data, not asserted — has forecastable revenue, and a multiple is a price paid for forecastable revenue. A brand that must buy every order with advertising is a media plan wearing a logo, and buyers price it that way.
Buyers discount for concentration wherever they find it: one supplier, one country of origin, one hero product carrying most of the volume, one advertising channel driving most of the traffic. Documented second sources and a workable tariff posture are worth real money in the current environment. Inventory is normally purchased separately at cost or an agreed value, with stale stock excluded, so offers are rarely comparable until the inventory treatment is settled. Beyond that, buyers pay more for trademarks and registered brand protection, documented processes a new owner can operate, and growth that comes from repeat purchase rather than rising ad spend. Most of these are fixable in a year or two, which is why the useful time to ask what your brand is worth is before you need the answer.
Profit. Revenue multiples are occasionally quoted for very large or strategic deals, but the working market for owner-operated brands prices on SDE or adjusted EBITDA after the buyer rebuilds the numbers with true landed costs and market-rate labour. Two brands with identical revenue can differ enormously in value because their margins, channel mix and repeat rates differ — which is why anchoring on a revenue rule of thumb misleads in both directions.
Good, saleable inventory is normally purchased on top of the multiple, at cost or an agreed value, while stale or slow-moving stock is excluded or discounted. This matters when comparing offers, because a headline number that includes inventory is not comparable to one that does not. It also rewards discipline before the sale: running down dead stock and keeping purchasing tight in the final year puts real money in the seller’s pocket at closing.