Model the per-order economics that decide whether an online store is worth buying — GMV, contribution margin after fees and CAC, and an SDE-multiple valuation.
Online stores — whether Shopify-native or Amazon FBA — are valued on a multiple of seller's discretionary earnings (SDE): the profit a single owner-operator takes home after all costs and add-backs. Because most small e-commerce businesses are owner-run, contribution margin after fees, COGS, and advertising is the practical proxy for SDE used here. The multiple is then a function of brand strength, channel diversification, and how dependent the business is on paid acquisition.
The default 3x SDE is a fair midpoint for a stable FBA brand. Diversified, branded businesses with strong repeat rates trade higher (3.5–4.5x); single-product, ads-dependent stores trade lower (2–2.8x).
| Metric | What it means | Benchmark range |
|---|---|---|
| Contribution Margin | Profit per order after all variable costs + CAC | >20% strong; 10–20% workable; <10% fragile |
| Platform / FBA Fees | Referral + fulfillment as % of AOV | 15–25% on Amazon FBA |
| COGS | Landed product cost as % of AOV | 25–40% typical |
| Repeat Rate | Share of orders from returning customers | >30% reduces ad dependence |
| 1st-Order Margin / CAC | Whether you profit on the first order | >1x ideal; <1x relies on repeat |
| SDE Multiple | Equity value as a multiple of annual SDE | 2.5–4x for most FBA brands |
Verify revenue and fees directly inside the seller's Amazon Seller Central or Shopify admin — never from a spreadsheet alone. Pull product-level profitability: a store can look healthy in aggregate while one hero SKU subsidizes a dozen losers, and that SKU's ranking or supplier is the real asset you're buying. Check inventory age and any stranded or aged stock that ties up cash. Review the advertising account for ACoS trends — rising ad costs to hold the same revenue is a sign the organic ranking is decaying. Finally, confirm supplier relationships and whether they transfer, plus any trademark, Brand Registry, or account-health issues that could suspend the listings post-close.
A store doing $2M in GMV at 8% contribution margin generates less owner profit than one doing $1M at 22%. Amazon fees, advertising, and COGS can consume the vast majority of revenue, so a high GMV figure tells you almost nothing about what the business is worth. Always work down to the per-order contribution — the number above — before anchoring on a price.
Use the Working Capital Cycle tool to model how much cash inventory will tie up as you grow the store.
An editable Excel workbook — 5-year income statement, balance sheet, cash flow, DCF + exit-multiple valuation, and a deal tab with debt schedule, IRR & MOIC. Pre-filled with the inputs above; every assumption recalculates.