What is the “rule of 40”?
What is the “rule of 40”?
The rule of 40 is a metric used to quickly measure the attractiveness of a SaaS company. The “Rule of 40 Number” is calculated by: Growth% + Profit% = Your Rule of 40 number. The resulting figure will give investors information about whether your company is sacrificing profitability to grow, or be extremely profitable with no intentions to grow.
For more information on this topic, check out this article from our friends at The SaaS CFO.