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%.

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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.

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