Business valuation calculators
Recurring Revenue and Business Value Calculator
Measure your recurring revenue mix and model an illustrative future scenario
In short
Recurring revenue is income a customer is contractually committed to pay again, with a defined term and notice period. Divide contracted revenue by total revenue to get the recurring share. Repeat purchasing is valuable but uncommitted, and project work is not recurring at all. Buyers pay for contracted revenue they can evidence.
Buyers pay for predictability, but not every repeat sale is recurring revenue. This calculator separates contracted income from repeat purchasing, sizes the gap to your target and lets you test an illustrative future scenario.
Part of the business valuation calculators suite from BusinessValuation.co.uk. Your result is saved in this browser, so you can compare it with your other calculator results.
How to use this calculator
Enter your current turnover, recurring revenue and target recurring-revenue percentage. The calculator will show how much additional recurring income would be needed and, if you choose, an illustrative future valuation scenario.
How to read this result
Recurring revenue is income a customer is committed to pay again, with a defined term and notice period. Repeat purchasing is valuable but not contractually committed, and project work is not recurring at all. The future figures here are an illustrative scenario built from the growth, margin and multiple you entered. A buyer will not pay a higher multiple simply because the recurring share has risen: they must be able to support it on contract quality, retention, customer concentration, margin and growth.
Contract quality observations
- Contracted or subscription revenue is the strongest form, provided the contracts survive a change of control.
- A higher multiple is never automatic. A buyer must support it on contract quality, retention, concentration, margin and growth.
Suggested next steps
- List the contracts behind your recurring figure, with term, notice period and any change-of-control clause.
- Measure retention from your own records rather than estimating it, because a buyer will test the number.
- Decide which non-recurring work could realistically be converted to a contracted service.
- Book a confidential review to test what your contract base would support in a sale.
Your recurring revenue position
Current recurring revenue share
40%
- Current recurring revenue
- £1,200,000
- Current recurring share
- 40%
- Current non-recurring revenue
- £1,800,000
- Target recurring revenue at today's turnover
- £1,800,000
- Additional recurring revenue needed today
- £600,000
- Projected total revenue at the end of the period
- £3,779,136
- Target recurring revenue at projected turnover
- £2,267,482
- Recurring revenue growth required
- £1,067,482
- Annual recurring revenue growth required
- 23.6%
- Annual churn implied by your retention rate
- 10%
- Current indicative enterprise value
- £2,025,000
- Illustrative future EBITDA
- Not calculated
- Illustrative future enterprise value
- Not calculated
- Illustrative difference in enterprise value
- Not calculated
Before you rely on this
- The future figures are an illustrative scenario built from your own assumptions. They are not a forecast or a valuation.
- A rising recurring-revenue share does not automatically raise the multiple. A buyer must support any higher multiple on contract quality, retention, concentration, margin and growth.
Next steps
Your result is above and stays visible. Discuss how recurring revenue may affect your valuation position.
Important information
This calculator provides general, indicative guidance based solely on the information entered. It is not a formal business valuation, tax calculation, legal opinion or recommendation to accept or reject an offer. Actual value and sale proceeds depend on detailed financial, commercial and transaction-specific factors.
How this calculation works
- Recurring share = contracted recurring revenue ÷ total revenue
- Repeat share = repeat but uncontracted revenue ÷ total revenue
- Annualised recurring revenue = monthly contracted revenue × 12
- Net revenue retention = (opening recurring revenue + expansion − churn) ÷ opening recurring revenue
Worked example: support and installation business
| Total revenue | £2,400,000 |
|---|---|
| Contracted support and maintenance | £960,000 (40%) |
| Repeat but uncontracted consumables | £600,000 (25%) |
| Project installations | £840,000 (35%) |
| Average remaining contract term | 14 months |
| Annual churn | 8% |
A 40% contracted share with 14 months of remaining term and 8% churn is an evidenced position. Describing the 65% of revenue that recurs in practice as recurring revenue is the claim that fails in diligence.
What each input means
- Total revenue
- Revenue for the most recent full year.
- Contracted recurring revenue
- Revenue under written contract with a term and notice period.
- Repeat revenue
- Revenue customers reliably re-order without commitment.
- Average contract term and notice period
- How long the commitment runs and how easily it can be ended.
- Churn or retention
- The proportion of recurring revenue lost each year.
- Growth, margin and multiple assumptions
- Used only to illustrate a future scenario from your own inputs.
How to read the result
The result shows your recurring share and how it is composed. A buyer will not pay a higher multiple simply because the recurring percentage is high: it has to be supported by contract quality, retention, margin and customer spread.
What can materially change the result
- Contract length, notice periods and change-of-control clauses.
- Churn and net revenue retention over several years.
- Whether pricing is indexed or fixed for the term.
- Margin on recurring work compared with project work.
- Concentration within the recurring base.
Limitations
- It does not set or confirm a valuation multiple.
- It does not verify your contracts; the classification you enter is taken as given.
- Future figures are scenarios from your assumptions, not forecasts.
When this calculator is appropriate
Use it when you want to evidence revenue quality before a sale, investment or valuation, or to set a target for contracted revenue.
When it is not appropriate
Do not use it to support a revenue-multiple claim for a subscription business without contract-level analysis.
Bottom line
Contracted is not the same as repeat. Buyers pay for commitment they can read in a contract, priced through retention and margin.
Questions owners ask
- What counts as recurring revenue?
- Revenue a customer is contractually committed to pay on a repeating basis, such as a subscription, retainer, maintenance contract or managed service, usually with a stated term and notice period.
- Is repeat business the same as contracted revenue?
- No. Predictable repeat purchasing is valuable, but the customer can stop at any time. Buyers discount it against contracted income with a defined term.
- Why do buyers value recurring revenue?
- It reduces the risk in the earnings they are buying, supports lending against the business and shortens the time before the acquisition covers its cost.
- Does more recurring revenue guarantee a higher multiple?
- No. It improves the case for one, but the buyer will still test contract quality, retention, customer concentration, margin and growth before paying more.
- How do churn and retention affect value?
- Churn is the share of recurring revenue lost each year and retention is its inverse. High churn means the recurring base must be constantly rebuilt, which weakens the predictability argument.
- Does contract length matter?
- Yes. Remaining term gives a buyer forward visibility. An average remaining term of two years or more is a genuine strength, while under 12 months leaves renewal risk inside their diligence period.
- Should project revenue be included?
- No. Project and one-off work should be counted as non-recurring, even where the same customers return each year.
- Is the future value a forecast?
- No. It is an arithmetic scenario from the growth, margin and multiple you entered, shown so you can test what a target would require.
Related reading
Free business valuation
We test how your revenue mix is likely to be assessed and what evidence supports a stronger reading.
Where owners usually go next
- Customer Concentration Calculator
Check whether the recurring base is spread or held in a few relationships.
- Business Value Growth Calculator
Model what improving revenue quality could contribute to value.
Written and reviewed by Tony Vaughan, founder and lead adviser, BusinessValuation.co.uk.·Last reviewed: September 2026·How we produce these figures
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