What is Rule of 40?
A SaaS rule of thumb: revenue growth rate plus profit margin, in percentage points, should reach about 40. It lets fast growth offset losses; 30% growth with a 5% margin scores 35, below the bar.
Where you will use it: this term comes up in the Entrepreneurial Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Entrepreneurial Finance course by Devon Coombs, CPA, MBA.