Finance & Strategy
Rule of 40 Calculator
The SaaS health metric every board uses.
A SaaS company should have revenue growth rate + operating margin ≥ 40%. Below 40%, the business is consuming value to grow.
Inputs
Adjust to model your scenario
45%
%
-10%
%
Rule of 40 score
35.0%
Below 40 — investors will pressure either margin improvement or accelerated growth. Gap: 5.0 percentage points.
Gap to 40%
5.0%
Formula
Rule of 40 = Revenue Growth Rate + Operating Margin
Benchmarks
< 20%Underperforming — premium discount applied
20–40%Below benchmark — pressure to improve
40–60%Healthy — meets SaaS bar
> 60%Elite — best-in-class
Related tools
Tools operators run alongside this one.
Need more than the math?
Get the SAZ team running this for your business.
Email info@Sedighi.ca or call (604) 632-4959. A senior partner responds within one business day.
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