A service business has almost nothing a buyer can repossess, so the price is entirely a bet that the customers stay. That makes four things decisive: who owns the relationships, how repeatable the revenue is, whether the delivery survives the owner, and how concentrated the customer base is.
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Whose customers are they
If clients buy because of you personally, a buyer is purchasing a handover rather than a business. Evidence to the contrary is what removes the discount: contracts in the company's name, multiple staff contacts per client, a documented sales process and a record of clients won by someone other than you.
Repeatability of the revenue
Retainers, contracts and subscriptions price differently from project work won repeatedly. If your work is projects, the argument is the repeat rate: what share of this year's revenue came from clients who also bought last year, over several years. Buyers will construct that number themselves, so construct it first and present it.
Delivery and concentration
A business where one person does the skilled work carries key person risk regardless of the profit. A business where one client is a third of revenue carries concentration risk. Both are visible discounts, and both take a year of deliberate work to reduce, which is the argument for preparing long before marketing.
Questions people ask about selling a service business
How are service businesses valued?
On a multiple of adjusted earnings, with the multiple set by how durable those earnings look without the owner. Two firms with identical profit can price very differently.
Will the buyer want me to stay?
Usually, and longer than in an asset heavy business, because relationships transfer slowly. That period is part of the consideration and is negotiated with the price.
What raises the price most?
Turning the owner's relationships into the company's, and turning project revenue into contracted revenue. Both change the multiple rather than the earnings.