SaaS Health
Rule of 40 Calculator
Growth rate plus profit margin should clear 40. The benchmark every SaaS investor screens against.
— CategoryFinance & Profitability
Revenue Metrics
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Profitability & Efficiency
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ARR$10.0M
Growth40%
EBITDA Margin5%
QuadrantGrowth Mode
Rule of 40
45%
Passing
Magic Number
3.33x
Efficient
R40 (FCF)
43%
Using FCF margin
Burn Multiple
0.3x
Efficient
Growth + Profitability Score
Rule of 40 Score45% (Target: 40%)
40%
Growth: 40%+ Margin: 5%= 45%
Growth
40%
High Growth
EBITDA Margin
5%
Breakeven
SaaS Magic Number
3.33x
Invest more in S&M
Quadrant
Growth Mode (High Growth, Low Profit)
Rule of 40 = Revenue Growth + Profit Margin. You're passing at 45% — this signals strong combined health.