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Free Rule of 40 Calculator for SaaS

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 Formula

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.

How to Interpret

  • Above 40: Healthy balance of growth and profitability
  • 30-40: Acceptable but should be improving
  • Below 30: Unhealthy mix - either growth or margin needs work

DealARR tracks the Rule of 40 alongside 100+ other SaaS metrics and surfaces it in your investor and board reports automatically.