Method and assumptions
Rule of 40 is a heuristic for mature SaaS businesses, not a universal valuation rule. Choose the same growth and profit definitions every period.
Rule of 40 score = revenue growth rate + profit margin.
Common questions
Which profit margin should I use?
Use a consistently defined operating or free-cash-flow margin and label it clearly.
Is 40 a valuation guarantee?
No. It is a heuristic that should be considered alongside retention, market and cash position.
Independent planning calculator. Not financial, tax, legal or investment advice.