The Rule of 40 says growth rate plus profit margin should total at least 40%. Enter yours to see your score instantly — then track it over time and by scenario with the full tool.
Track growth, margin, and the Rule of 40 quarter by quarter.
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The Rule of 40 is a benchmark for software and subscription businesses: your annual revenue growth rate plus your profit margin should add up to at least 40%. It captures the trade-off between growing fast and being profitable — a company can score well by growing quickly at a loss, or growing modestly with strong margins. Below 40% suggests the balance of growth and profitability needs work.
Typically year-over-year revenue growth as a percentage, and a profit margin — often an operating or free-cash-flow margin, though EBITDA margin is also used. The key is to be consistent about which margin you pick so your Rule of 40 score is comparable over time. This calculator adds whatever growth and margin figures you enter.
A ready-to-use spreadsheet (Excel & Google Sheets): your Rule of 40 score from growth and margin, tracked quarter by quarter with the trend, plus growth-vs-margin scenarios — delivered instantly after checkout. AI-assisted, human-built; not financial advice.
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