Cheap 409A Valuations, Without the Catch
A low price is only a good deal if the report survives an audit. Here is what drives 409A pricing, and what to check before buying on price alone.
Why 409A valuations vary so much in price
Most of the cost of a valuation is analyst time: building the allocation model, working through the waterfall, and documenting it so a reviewer can follow it. Providers who automate the mechanical parts can charge less without cutting the review. Providers who cut the review itself are selling something different.
What a cheap valuation should still include
Price should not determine whether the fundamentals are present. Check for all of these regardless of what you pay.
- An independent, credentialed appraiser signing the work
- An allocation model built on your actual cap table and rights
- A documented marketability discount with stated reasoning
- A report an auditor can follow from assumptions to conclusion
- Support if the report is questioned later
The real cost of getting it wrong
A valuation that does not hold up is more expensive than any price difference. Options priced below fair market value expose employees to ordinary income on the spread as the options vest, rather than at exercise, plus an additional 20% federal penalty tax under Section 409A, and a rejected valuation can force repricing, restatement, or a cheap stock charge during IPO diligence.
409A valuation pricing
| Capital raised | 409A valuation price |
|---|---|
| $0-999k | $899 |
| $1-5M | $1,249 |
| $5-10M | $1,749 |
| $10-20M | $2,999 |
| $20M+ | $3,499 |
Frequently asked questions
What is the cheapest defensible 409A valuation?
409.AI publishes tiers starting at $899 for companies with under $1M raised. What matters more than the headline number is whether the report is prepared by a credentialed appraiser, models your actual cap table, and can be defended if questioned.
Is a cheaper 409A more likely to be challenged by the IRS?
Price itself is not the trigger. Safe harbor depends on the appraisal being performed by a qualified independent appraiser using a reasonable methodology, applied to accurate company data. A well-documented lower-priced report qualifies, while a poorly documented expensive one may not.
Why do some providers quote $3,000 or more?
Traditional firms price case by case and staff engagements manually, which suits genuinely complex situations. For a typical venture-backed cap table, much of that work is repeatable, which is what makes lower published pricing possible.