Graphic & Web Design Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating graphic and web design businesses relative to industry standards.

See also: Software, SaaS, & App and IT & Software Services.

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Highlights of Graphic & Web Design Businesses Sold on BizBuySell

Graphic and web design companies listed and sold on BizBuySell are primarily individually owned and operated businesses offering a wide array of design services, but skew heavily toward web design, website generation, and related services. Their customers are almost exclusively other businesses, making the industry slightly more stable compared to consumer facing businesses. These businesses often include marketing services, such as search engine optimization (SEO), marketing materials design, logo creation, and more. Occasionally they may perform print design services as well, creating brochures, menus, and related print products.

Graphic & Web Design Business Transaction Trends

Sales volume and median sale price of graphic and web design companies have been volatile for the past few years, starting with a sharp drop in transactions during the height of the Covid-19 pandemic, as transactions all but stopped, with only small shops selling. That trend changed dramatically in 2021, as online businesses became the hot commodity while WFH became the new norm. Median sale price that year ballooned to $1.25MM, and median days on market fell to a low of 70 as many owners of thriving graphic and web design businesses took the opportunity to exit while revenues and valuations were at sky-high levels. Inflation and the resulting interest rate hikes in 2022 brough sales prices back down, before settling at more typical levels in 2023 and 2024.

Graphic & Web Design Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of sales and income. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth. Average valuation multiples of graphic and web design businesses peaked in 2021, as demand for development of websites and online apps dramatically increased. Rising interest rates and related economic factors reined in valuations in 2022, and both average revenue and earnings multiples returned to more typical levels, holding fairly consistent through 2024.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as the seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most small business valuations will hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall annual sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its top line sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of graphic and web design businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are usually higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses. When current listing multiples are lower, that signifies decreasing values or previously inflated values of sold businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Businesses with lower revenue, thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of graphic and web design businesses are valued between 2.07 and 3.59 times their annual seller discretionary earnings, with 25% of exceptional, large businesses trading above this range, and 25% of smaller, less desirable businesses trading below.

Graphic & Web Design Business Financial Benchmarks

To determine how a business compares in terms of revenue and earnings performance relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated financial ranges of graphic and web design businesses useful for comparing an individual business to the broader industry.

Graphic & Web Design Business Revenue and Earnings Trends

Financial performance of graphic and web design businesses has fluctuated dramatically as the Covid-19 pandemic created massive demand for their services. While revenues in 2021 rose, earnings really took off, resulting in a 50%+ profit margin for owners. This was driven by huge increases in demand for websites, and anything online, as WFH became the new norm and people were conducting most of their daily business online. Since that year, revenue has remained strong, but profits have come back down to normal levels.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to similar businesses traded on the market. Below you will find discretionary earnings ranges of graphic and web design businesses sold over the past five years, as well as recent business for sale listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of graphic and web design businesses sold over the past five years, as well as recent businesses listed for sale.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Well-run graphic and web design companies that generate higher sales (and maintain benchmark profit margins) tend to sell for earnings multiples on the higher end. So, a web design agency with sales over $1MM may sell for an earnings multiple of 3.5 or higher, while a lower volume design business with sales below $300k may trade closer to 2 times earnings.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough cash flow to pay the new owner a reasonable return on the acquisition cost.

Technology Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader technology sector when benchmarking graphic and web design businesses. The chart and table below include key metrics from sales of technology businesses on BizBuySell between 2020 and 2024.

Graphic and web design companies fall right on the trend line of tech business valuation to size ratios. They do not get the premium that highly scalable software companies do, nor the discount typical of service heavy managed IT businesses. 

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