Glossary/Marketing Finance/Rule of 40
Marketing Finance
Rule of 40
A SaaS benchmark stating that revenue growth rate plus profit margin, often EBITDA or free cash flow margin, should be at least 40%.
By Brandon Mina·CEO, BrandPilot AI·Updated November 2026
Short answer
The Rule of 40 is a SaaS benchmark stating that revenue growth rate plus profit margin, often EBITDA or free cash flow margin, should be at least 40%. It lets investors compare companies with different strategies, since fast growth can offset losses and strong profitability can offset slower growth.