SaaS Rule of 40 Calculator
Growth rate plus profit margin benchmark.
Calculate SaaS Rule of 40 — revenue growth rate plus profit margin should sum to at least 40%. Free calculator with the working shown and a worked example.
What this tool does
Enter revenue growth and profit margin. The tool shows Rule of 40 score.
Enter Values
Formula Used
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Calculations, display, or translation — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Revenue growth 25% + profit margin 20% = 45, above 40 threshold. Rule of 40 balances growth vs profitability — either high growth with low margins, or lower growth with strong margins. Used by VCs and public markets to assess SaaS health.
SaaS health benchmark.
Run it with sensible defaults
Using revenue growth of 25%, profit margin of 20%, the calculation works out to 45.00. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Revenue Growth % and Profit Margin % — do not pull with equal force. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.
How the math works
Standard Rule of 40. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
Using this as a check-in
Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
Related calculations worth running
Plans get firmer when you triangulate. Alongside this one, the mrr growth calculator, the saas ltv cac ratio calculator, and the rule of 40 calculator tend to come up in the same conversations. Running two or three together exposes inconsistencies in any single assumption — which is usually where the useful insight lives.
Rule of 40 produces a score based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Standard Rule of 40.
References
Frequently Asked Questions
Why 40?
Early vs late stage?
GAAP or cash?
Negative margin OK?
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