SDE (seller’s discretionary earnings) is your net profit plus the owner’s salary and any one-time or personal expenses added back. It’s the standard earnings base for valuing owner-operated ecommerce businesses under about $5M, typically at 2.4× to 3.8× SDE. Add your figures below.
Add-backs
Seller's discretionary earnings
SDE
$130,000
Estimated value
$312,000 – $494,000
2.4x–3.8x SDE
SDE = net profit + owner salary + one-time and personal expenses a new owner won’t inherit. The standard earnings base for valuing owner-operated ecommerce businesses under about $5M; value shown at 2.4x–3.8x SDE is an estimate, not an appraisal.
What SDE includes
SDE starts from net profit and adds back the benefits a single owner-operator enjoys that a new owner wouldn’t inherit: the owner’s salary or draw, genuinely one-time costs (a website rebuild, a legal settlement), and personal expenses run through the business. The result is the total discretionary cash the business throws off for one owner, a cleaner basis for comparison than raw net profit, which varies with how each owner pays themselves.
SDE vs. EBITDA
SDE adds an owner’s salary back; EBITDA does not. SDE is used for small, owner-operated businesses where one person’s labour is material; EBITDA suits larger businesses run by a salaried management team. Most ecommerce stores under roughly $5M are valued on SDE.
Frequently asked questions
What is SDE (seller's discretionary earnings)?+
SDE is a business's net profit with the owner's salary, one-time costs, and personal expenses added back. It reflects the total financial benefit to a single owner-operator and is the standard earnings base for valuing ecommerce businesses under about $5M.
How do I calculate SDE?+
Start with net profit, then add back the owner's salary or draw, any one-time or non-recurring expenses, and personal expenses run through the business. The total is SDE. Multiply SDE by about 2.4x to 3.8x to estimate the business's value.
What's the difference between SDE and EBITDA?+
SDE adds the owner's salary back to earnings and is used for small, owner-operated businesses; EBITDA does not add back an owner's salary and is used for larger businesses run by a management team. Most ecommerce stores under about $5M are valued on SDE.
What are add-backs?+
Add-backs are expenses added back to net profit when calculating SDE, because a new owner won't inherit them — typically the owner's salary, one-time costs, and personal expenses. Well-documented add-backs raise SDE and therefore the valuation.
How is the estimated fair valuation range calculated?+
TrustProfit applies a profit-multiple band — currently about 2.4x to 3.8x of trailing annual profit — to produce the low-to-high estimated fair range shown on each listed store. It is an automated estimate to frame negotiations, not a formal appraisal.
