Free SaaS calculator
Rule of 40 Calculator
Use this Rule of 40 calculator to combine SaaS growth and profitability into one simple score. It is a directional benchmark, not a complete measure of company quality.
How to use this calculator
Enter a growth rate for the period you are evaluating.
Enter the margin definition you want to use and keep it consistent.
Review whether the combined score is above or below 40.
Calculator Inputs
Adjust assumptions and review the result.
Annual recurring revenue or revenue growth rate.
Operating margin, EBITDA margin, or free cash flow margin depending on your analysis.
Export or save this scenario for planning notes.
Rule of 40 score
43%
Growth + margin
Growth rate
35%
Revenue growth input
Profit margin
8%
Margin input
Interpret this result
At or above the Rule of 40
This scenario is at or above the common Rule of 40 threshold. That can be a useful efficiency signal, but it should still be reviewed with retention, gross margin, cash burn, and customer acquisition quality.
Assumption quality check
- Use the same margin definition each time you compare Rule of 40 scores.
- The score should be interpreted with company stage and market context.
Formula used
Rule of 40 score = Revenue growth rate + Profit margin
Rule of 40 score
Revenue growth rate + Profit margin
For broader model limits, read the Aura Revenue methodology.
Educational disclaimer
Aura Revenue provides educational forecasting tools and examples only. Outputs are estimates based on user-provided assumptions and should not be treated as financial, legal, tax, accounting, or investment advice.
Common mistakes to avoid
- Mixing margin definitions across periods or companies.
- Using the benchmark without checking company stage, market, and retention quality.
- Treating a high score as proof that the business is healthy in every area.
Next planning step
Use this result in a forecast workflow
A single metric is useful, but SaaS planning works best when revenue, churn, acquisition efficiency, and capital efficiency are reviewed together.
Rule of 40 FAQ
What is the Rule of 40?
The Rule of 40 combines revenue growth rate and profit margin. A score of 40 or higher is often used as a directional SaaS efficiency benchmark.
Which profit margin should I use?
Teams often use operating margin, EBITDA margin, or free cash flow margin. The key is to label the margin and keep it consistent.
Does Rule of 40 apply to early startups?
It can be educational, but very early companies may have volatile growth and margins, so the score needs context.