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Rule of 40 calculator

Score revenue growth plus profit margin against the SaaS rule of 40, and see how far each company or period is from the bar.

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Rule of 40 calculator

The rule of 40 is a shorthand SaaS investors use to judge whether a company is growing fast enough to justify the profit it gives up, or profitable enough to justify slower growth: revenue growth rate plus profit margin, both in percent, should add up to at least 40. Paste one company or period per line as name;growth;margin — for example "Acme SaaS;28;15" — and this tool scores every row, ranks them from strongest to weakest, and shows how many points each is above or below the bar.

Margin type labels the second number as EBITDA, operating or free cash flow margin, whichever your figures represent — the math only needs a percentage, so pick the matching label. Turn on "Calculate growth from two revenue values" to enter name;previous revenue;current revenue;margin instead, and the tool works out year-over-year growth for you. Threshold defaults to 40 but can be set to whatever bar your board uses, decimal places control precision, and output format switches between an aligned table and a plain text report.

Blank lines and lines starting with # are skipped, and a row that doesn't parse — a missing field, text where a number was expected — is reported by line number underneath the results rather than dropped silently. Windows and Unix line endings are both handled, and long lists process without a hitch, capped around 10 MB of output so a huge paste never freezes the tab.

Everything runs locally in your browser. Revenue, growth and margin figures are commercially sensitive, and none of it is uploaded anywhere. Copy the ranked report, download it as a .txt file, or send it back into the input to try a different threshold or margin type.

FAQ

What counts as a good rule of 40 score?
A score at or above 40 — growth percent plus margin percent — is the traditional bar for a healthy SaaS business balancing growth and profitability. Higher is better, and the tool shows exactly how far above or below 40 each row lands.
Which margin figure should I use?
Whichever one you have: EBITDA margin, operating margin or free cash flow margin all work the same way in the formula. Pick the matching option so the output labels the number correctly — the calculation itself just adds it to growth.
Can I enter raw revenue instead of a growth percentage?
Yes. Turn on "Calculate growth from two revenue values" and enter name;previous revenue;current revenue;margin — the tool computes the year-over-year growth percentage from those two figures before scoring the row.
How do I change the 40% bar?
Set the target threshold option to any number. Every row is then compared against that value instead of 40, which is useful if your fund or board uses a stricter or looser bar.
Is my financial data uploaded anywhere?
No. The rule of 40 calculation runs entirely in your browser — growth, margin and revenue figures never leave your device.