I'm selling my residential cleaning business and a buyer is very interested in the customer list. How do I put a value on that? We have about 120 recurring clients. Any advice appreciated.
Business Valuation
How to value customer lists to sell my cleaning business?
Recurring clients are worth more than one-time. Typical range is 1-2x annual revenue from those clients, but cleaning is low-margin so maaybe lower.
Do you have contracts? Without contracts the list is just names. Buyers will discount heavily if clients can leave anytime.
No written contracts, just verbal agreements and recurring schedules. Does that kill the value?
Not kill it but reduce it. You'll need to show retention rates. If most clients havve been with you 2+ years that helps.
Look at cost per acquisition. If you spent $100 to get each client and they stay 3 years, that's a baseline.
Also consider the database itself—emails, phone numbers, addresses, access codes. That has some standalone value for marketing.
A buyer will want a transition period. Include 30-60 days of you introducing them to clients to preserve the list's value.
Appreciate the points. So should I calculate based on annual revenue from those clients or a flat per-client fee?
Both. Revenue multiple for the ongoing stream, plus a per-client acquisition cost for the list itself. Then negotiate.
Get an NDA and only share the list after a serious offer. Otherwise you risk them copying it.