Why SaaS is priced differently
A software business with real Annual Recurring Revenue (ARR) is valued on a revenue multiple more often than an SDE multiple, because the thing being bought is a subscription base with predictable forward cash flow, not primarily the owner's labor. ARR strips out one-time implementation fees, usage spikes, and non-recurring revenue, leaving the number that actually recurs month over month, annualized.
Not every listed software business has real ARR. A tool with a handful of one-off project fees and no subscription mechanism is still better valued on SDE, the same basis as an operating business (see deriveValuationBasis in this codebase: a software_business listing only moves to an ARR basis once genuine recurring revenue is present).
What to check before trusting an ARR figure
Net revenue retention (are existing customers expanding or churning), gross churn rate, customer concentration (one customer at 40% of ARR is a different business than the same ARR spread across hundreds of accounts), and whether the ARR figure is gross or net of refunds and involuntary churn all change what that ARR is actually worth.
Technical diligence matters here in a way it doesn't for most operating businesses: codebase quality, hosting cost as a percent of revenue, and how much of the product depends on the founder personally (versus a documented, transferable codebase) all move the effective multiple a buyer should underwrite to.