Rule of 40 Calculator
Growth plus profitability in one score.
Enter your values
Enter the revenue last year in $.
Enter the revenue this year in $.
Enter the ebitda or free cash flow in $.
Results update instantly as you type — no submit needed. Your values are remembered on this device, and the shareable link reopens the calculator with exactly these numbers.
- Rule of 40 score
- 31.1
- Revenue growth
- 39%
- Profit margin
- -7.9%
- Verdict
- Short by 8.9 points
- Margin needed to reach 40
- 1%
- Growth needed to reach 40
- 47.9%
- Profit needed at current growth
- $111,219.51
Quick answer
Rule of 40 score = revenue growth rate % + profit margin %. A score of 40 or more signals a healthy balance between growth and profitability.
Score = growth % + margin %
At a glance
| What it does | Growth plus profitability in one score. |
|---|---|
| Category | Business |
| Inputs needed | Revenue last year, Revenue this year, EBITDA or free cash flow |
| Main output | Rule of 40 score |
| Formula | Score = growth % + margin % |
| Cost | Free — no sign-up, no download |
How to use the Rule of 40 Calculator
- 1Enter revenue for last year and this year.
- 2Enter EBITDA or free cash flow — a loss is a negative number.
- 3Compare the score against the 40-point benchmark.
Inputs explained
- Revenue last year($)
- Enter the revenue last year in $.
- Revenue this year($)
- Enter the revenue this year in $.
- EBITDA or free cash flow($)
- Enter the ebitda or free cash flow in $.
Worked example
Using the values the calculator loads with:
Inputs
- Revenue last year8200000 $
- Revenue this year11400000 $
- EBITDA or free cash flow-900000 $
Results
- Rule of 40 score31.1
- Revenue growth39%
- Profit margin-7.9%
- VerdictShort by 8.9 points
- Margin needed to reach 401%
- Growth needed to reach 4047.9%
- Profit needed at current growth$111,219.51
Frequently asked questions
Which profit measure should I use?
Free cash flow margin is the strictest and most common with investors; EBITDA is acceptable if you apply it consistently across periods.
Is a score above 40 always good?
Usually, but a very high score driven by margin alone can mean you are under-investing in growth while the market is still open.
What do I need to enter into the Rule of 40 Calculator?
Just 3 values: revenue last year, revenue this year, ebitda or free cash flow. Every field starts with a realistic example, so you can change one number at a time and watch the result update instantly.
How does the Rule of 40 Calculator work out the answer?
Rule of 40 score = revenue growth rate % + profit margin %. A score of 40 or more signals a healthy balance between growth and profitability. It applies the formula Score = growth % + margin % and shows the working so you can check each step by hand.
Is the Rule of 40 Calculator free, and do I need an account?
It is completely free with no sign-up, no download and no usage limit. Everything is calculated in your browser, so the numbers you type never leave your device.
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.