Valuing a SaaS startup which has a large number of free members (and no paid plan yet for monetization)?

I'm going to helping a friend try and sell a service of his which is completely free to users. It's a social media tool similar to ManageFlitter.

He has a large number of active users. The service is completely free and there isn't a paid plan to monetize.

How would you go about valuing such a startup (which has traction but no revenues)?

The first step is a business plan, preferably with 5 year financials, complete with assumptions and sound logic on how you will create value. This is usually the minimum required for people or firms that perform valuations on early stage companies.

Unfortunately, without some sort of plan to monetize, I'm really not sure how, or on what value drivers, you would value the company.

On an interesting side note, according to pricing experts for SaaS companies, conversion of free to paid is around what credit card offers deliver - very low percentages. I know this can vary (and I can't point to any research study), but I just wanted to point out that you really have to have a solid plan to convert free to paid.