Rule of 40 Calculator
Is my SaaS company balancing growth and profit?
The Rule of 40 says a healthy software company’s growth rate plus profit margin should be at least 40%.
How this calculator works
Score = revenue growth % + profit margin %. A fast grower can afford losses; a slow grower should be profitable.
Frequently asked questions
Which margin should I use?
Investors commonly use EBITDA margin or free cash flow margin. Be consistent when comparing companies.
Does it apply to early-stage startups?
It is most meaningful for companies with meaningful revenue. Very early startups can grow far faster than 40% and are judged differently.
Results are estimates based on the numbers you enter and simplified assumptions. They are not financial advice. See our disclaimer.