What your home service business is worth, and how to raise it

What a buyer is really buying

Picture two window cleaning companies with the same sales last year. One runs on routes: the same homes every month, a team that schedules itself, and an owner who spends the mornings on sales. The other sells every job one at a time, and the owner quotes, schedules and fixes every one. On paper they look alike. To a buyer they are very different businesses.

That is because a buyer is not buying last year. They are buying the earnings the business will produce for them next year and the years after, and paying today for that stream. The usual shorthand is a multiple: the price divided by a year of earnings. A business that sells for three times its earnings pays the buyer back in about three years, before financing, if nothing goes wrong.

So two questions decide what your business is worth. How much does it really earn, counted the way buyers count? And how sure can a buyer be that those earnings continue without you? The first sets the earnings, the second sets the multiple. Revenue matters only for what it says about both.

SDE or EBITDA: which one fits you

Buyers count earnings one of two ways, and the one that fits depends on who will run the business after the sale.

Seller's discretionary earnings (SDE)

SDE is what the business earns for one owner who works in it. Start with pre-tax profit. Add back interest, depreciation and amortization, because a new owner will finance and depreciate the business their own way. Then add back one owner's pay and the personal or discretionary costs the business pays for you, plus any true one-time costs. If two owners work in the business, only one is added back; the second counts at what it would cost to hire someone to do that job.

SDE fits most home service businesses that sell to a buyer who will step into the owner's seat and run the trucks. It is how most small businesses are priced.

EBITDA

EBITDA is earnings before interest, taxes, depreciation and amortization. Unlike SDE, it keeps a wage for whoever runs the business. Larger businesses are generally priced on EBITDA after paying a manager a market-rate wage, because their buyers, often other companies or investors, will hire someone to run them rather than run them themselves. Those businesses also tend to sell at higher multiples, since their earnings depend less on any one person.

A worked example

Here is one made-up home service business's year, counted both ways:

1. Sales: $900,000. Sales do not go into the formula; they are here to show that the value is not a multiple of them.
2. Pre-tax profit on the profit and loss: $82,000.
3. Add back interest ($6,000) and depreciation ($20,000). That is EBITDA: $108,000.
4. Add back the owner's salary: $72,000.
5. Add back a one-time legal bill ($5,000) and the owner's personal phone and family car run through the books ($4,000). That is SDE: $189,000.

At the multiples sold service businesses went for (next section), that SDE puts the business at about $331,000 at the lower end, about $450,000 in the middle, and about $592,000 at the upper end. Same business, same year, and the range is wide. Where it lands inside that range is the part you control.

Every add-back needs proof. A buyer pays for the earnings they can see in the books, so an add-back you cannot show with a receipt or a payroll record is usually argued away. And income that never reached the books cannot be counted at all: a buyer will not pay for earnings you did not report.

EBITDA to cash walks the other direction: from EBITDA down to the cash that actually reaches your account.

What sold service businesses went for

The figures here are BizBuySell's public valuation benchmarks, read on October 22, 2026. They cover businesses sold from 2021 through 2025, and they are sale prices, not asking prices, each divided by the SDE the owner or broker reported.

Service businesses

Line up every sold service business from the lowest multiple to the highest. A quarter of them sold for less than 1.75× SDE. The one in the middle, the median, sold for 2.38×. A quarter sold for more than 3.13×. So half of all those sales landed between 1.75× and 3.13× SDE.

The average was 2.58×, a little above the middle, because a few high sales pull an average up. When you want to know what a typical business got, the median is the better guide.

By trade

Where BizBuySell publishes a figure for a single trade, it is the closer comparison. These are averages of each sale's own multiple, so read each as a little above what the typical sale in that trade got:

• HVAC: 2.75× on average
• Plumbing: 2.49× on average
• Landscaping: 2.46× on average
• Pest control: 2.40× on average
• Cleaning: 2.19× on average

If your trade is not on the list, the service-business figures above are the nearest published guide.

What these numbers are not

BizBuySell itself says its figures should not be relied on to value a specific business, and that sales of comparable businesses near you may differ. Treat them as the starting line, not the answer. The same goes for this guide: it is a way to think about value, not an appraisal and not tax advice. When a sale, a loan, a partner buyout or an estate plan depends on the number, get a valuation from a qualified professional and talk to your CPA.

What moves your multiple up or down

On the example business, the value at the lower quarter and the value at the upper quarter are about $261,000 apart. Same sales, same earnings. What closes that gap is how sure a buyer can be that the earnings will keep coming once you are gone.

What raises it

• Work that comes back without being sold again. Maintenance plans, service agreements and routes, such as monthly window cleaning, quarterly pest control or an annual HVAC tune-up, are earnings a buyer can count on before they have made a single sales call.
• A business that runs without you. If the teams are scheduled, the jobs are sold and the problems are fixed while you are away, the buyer is buying a business, not a job. The getting off the truck guide walks the stages that get you there.
• Clean monthly books. A profit and loss closed every month, bank accounts that reconcile, and personal spending kept apart from the business. A buyer discounts what they cannot check.
• Customers spread wide. No single builder, property manager or commercial account carrying a large share of sales.
• Steady growth. Three years of sales and earnings moving up beat one big year.
• Written processes. How a job is sold, scheduled, done and checked, written down so a new owner can follow it.
• A team that stays. Team leads, techs and office staff who will still be there after the sale, and the records to show people do not leave every few months.
• Trucks and equipment in good shape. A buyer prices in a fleet that is about to need replacing.

What drags it down

• The owner holds every customer relationship, the license or the only real sales skill.
• Sales or earnings falling over the last year or two.
• Books that are a year behind, or that mix the business with your household.
• One customer or one lead source the business cannot live without.
• A lease, a key supplier or a license that ends soon after the sale.
• Open lawsuits, unpaid taxes or warranty claims a buyer would inherit.

Most of these take a year or more to change, which is why the time to work on them is long before you want to sell. They also make the business better to own in the meantime.

From value to what you walk away with

The value is not the price, and the price is not what reaches your bank. Several things come out between them, and owners who plan only on the headline number are often surprised at closing.

• Loans are paid off at closing. Truck loans, equipment loans and a line of credit are usually paid from the price, so the business's debt comes out of what you receive.
• You usually keep the cash. Many small businesses sell with the bank balance staying with the seller, and the buyer buying the equipment, the name, the customers and the goodwill.
• Working capital may stay behind. A buyer often expects a normal level of receivables and materials left in the business, or the price moves to make up the difference. Deposits you have taken for work not yet done are usually credited to the buyer at closing, because the buyer will do the work. Ask about all of this early.
• Taxes. How the price is split between equipment, goodwill and any agreement not to compete changes the tax you pay, sometimes by a lot. Settle the split with your CPA before you sign a letter of intent, not after.
• The broker's fee. A business broker is usually paid a commission out of the price at closing. Get the terms in writing before you list.
• Not all of it at closing. Many small deals include a seller note, where you lend part of the price to the buyer and are paid back over years, or an earn-out, where part of the price depends on how the business does after you leave. That money is real, and it is at risk if the new owner runs the business badly.

So the number to plan around is what is left after the loans, the working capital, the taxes and the fees, and the date you actually receive it.

Do not bet your retirement on the sale

Many owners plan to retire on the sale of the business. It is a risky plan. The sale might come in under what you hoped, take years longer than you expected, arrive partly as a note paid over time, or not happen at all if your health or the market picks the date for you.

Save outside the business every year, so the sale is a bonus and not the plan. A SEP IRA, a SIMPLE IRA or a Solo 401(k) can let you put away part of your own pay before tax; the retirement calculator compares the three on your own numbers.

Saving does not cost you value. Money the business puts into your own retirement plan is part of your pay, so it is normally added back with your pay when SDE is worked out. A good test: decide what you need to retire on without the sale, and treat whatever the sale brings as extra.

Start this month

1. Pull the last twelve months of your profit and loss and work out EBITDA and SDE the way the example does. Write down every add-back and the proof for it.
2. Pick a multiple. Start at the median, 2.38×, and move it up or down for the strengths and weaknesses you can prove, not the ones you hope for. It is easy to rate your own business high.
3. Multiply. That is a working estimate, not a price.
4. Choose the one thing from the lists above that would move your multiple most, and give its first step a date this week.
5. Do it again next month. The trend tells you more than any single number.

Tracking it in GameTime OS

Owner's Box in GameTime OS reads the QuickBooks reports you load each month, sets out your statements, works out SDE and EBITDA from them, applies the multiple you choose, and shows what moved since last month's report. Its settings show the BizBuySell figures on this page beside the multiple you pick. See the plans.