Rule of 40

The ultimate SaaS health metric

From Revenue Architecture

Rule of 40 = Growth Rate (%) + Profit Margin (%)

The Rule of 40 is the gold standard for measuring SaaS company health. According to Revenue Architecture, healthy companies should score above 40%. This metric balances growth and profitability - you can be high-growth with negative margins, or profitable with moderate growth, as long as they sum to 40% or more.

Input Parameters

YoY Revenue Growth Rate (%)

%

Year-over-year revenue growth percentage

Profit Margin (%)

%

Net profit margin (can be negative)

Example Scenarios

Results

Your Rule of 40 Score

0

Health Status

Growth Rate

0%

Profit Margin

0%

Interpretation

Enter your values to see the interpretation

Rule of 40 Benchmarks

< 0 Critical

0 - 20 Poor

20 - 40 Fair

40 - 60 Healthy

> 60 Exceptional

Fill in the parameters and click Calculate to see your Rule of 40 score

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