Quick guide
How to use this calculator
- Gather Recurring-revenue growth (%), and Selected profit margin (%) for the same business scenario before calculating.
- Do not mix logo and revenue retention, bookings and recognized revenue, or monthly and annual rates without an explicit conversion.
- Apply the displayed saas rule of 40 result to the stated decision only after checking every entered assumption.
Calculation method
Calculation method
Rule of 40 score = revenue growth percentage + selected profit margin percentage.
The calculation uses these named inputs: Recurring-revenue growth (%), and Selected profit margin (%). No market rate, benchmark, tax rule, or accounting classification is inserted automatically.
Fixed-decimal arithmetic remains exact through display unless a result is explicitly labelled approximate, such as a square-root inventory quantity.
Subscriptions and SaaS economics
Where the SaaS Rule of 40 Calculator helps
Add an entered recurring-revenue growth rate and profit-margin convention.
Use the result to connect entered recurring revenue, retention, acquisition cost, service cost, and account counts on a common cohort and time basis.
- Review one customer cohort
- Compare acquisition-cost and retention scenarios
- Reconcile recurring-revenue movement for a reporting period
Interpretation check
How to audit the result
Recalculate the scenario when any of these inputs changes: Recurring-revenue growth (%), and Selected profit margin (%).
Keep this formula beside the result: Rule of 40 score = revenue growth percentage + selected profit margin percentage. Then compare the output with the source records and the calculator-specific assumption below.
- Confirm that all amounts use one currency and reporting period.
- Check that rates, counts, and quantities describe the same population or transaction set.
- Save the entered assumptions with the decision; the result alone is not reproducible evidence.
Worked example
Worked example
Growth 28% and EBITDA margin 15% give a score of 43%.
Rule of 40 score = revenue growth percentage + selected profit margin percentage.
Supported inputs
Precision and limits
Visible input limits
Fixed decimals accept up to 30 digits and 12 decimal places and are capped at an absolute value of 1e12 per input. Rates are capped at 1000%; percentage shares and method-specific domains may be narrower.
International scope
No currency, tax jurisdiction, accounting framework, payroll rule, marketplace fee schedule, financing term, or industry benchmark is selected automatically.
Decision boundary
Use the result to connect entered recurring revenue, retention, acquisition cost, service cost, and account counts on a common cohort and time basis. Results remain arithmetic scenarios, not accounting records, forecasts, valuations, legal interpretations, professional advice, or recommendations.
Calculator-specific assumptions
The metric depends on the selected growth period and profit convention. The calculator does not label a score as good or bad.