The Rule of 40 is the SaaS benchmark that combines growth rate and profit margin into a single score. Companies above 40 are considered to be balancing growth and profitability well. Use this free Rule of 40 calculator to score your SaaS business.
Rule of 40 Score = Revenue Growth Rate (%) + Profit Margin (%). Profit margin can be EBITDA margin, free cash flow margin, or operating margin depending on stage and disclosure standards.
DealARR tracks the Rule of 40 alongside 100+ other SaaS metrics and surfaces it in your investor and board reports automatically.