How to Calculate Rule of 40 and Grow Your B2B SaaS
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Abhi Jadhav Abhi Jadhav
Posted Oct 25, 2024 10 min read
How to Calculate Rule of 40 and Grow Your B2B SaaS

The balance between growth and profitability is a struggle for any SaaS – from quickly expanding startups to successful enterprises seeking to gain traction in new markets. The Rule of 40 is a widely used efficiency metric that provides key insight and helps leadership maintain balance. It's a metric that appeals to both investors and internal stakeholders by offering a clear framework for evaluating a company's financial health. Knowing how to calculate Rule of 40 is critical. The formula is simple: a company's revenue growth rate plus its profit margin should equal or exceed 40%.

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