Rule of 40
MetricRevOps
A SaaS health benchmark: revenue growth rate + profit margin should equal or exceed 40%.
The Rule of 40 is a SaaS benchmark stating that a healthy company's revenue growth rate plus profit margin should be 40% or higher.
Formula
Rule of 40 = Revenue Growth Rate (%) + Profit Margin (%)
- Revenue Growth Rate: Typically year-over-year ARR or revenue growth