2 min read
Rule of 40 = revenue growth % + profit margin %. A combined score of 40 or above is the healthy benchmark.
How to use it
Enter your annual revenue growth and your profit (or EBITDA) margin. The score adds them together — the idea is that a fast-growing company can run at a lower margin, and a slower grower should be more profitable, but the two together should clear 40.
It is a quick sanity check, not a valuation. A score well under 40 says you are neither growing fast enough nor profitable enough; well over 40 can mean you have room to invest more in growth.
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Frequently asked questions
Is the Rule of 40 only for SaaS?
It started with software but the logic applies to any company weighing growth against profitability. Use whichever margin best reflects how you run — net, operating or EBITDA — and keep it consistent.
Should I use net or EBITDA margin?
Either works as long as you are consistent month to month. EBITDA margin is common because it strips out financing and tax; net margin is stricter. Pick one and compare like with like.
Is this a quote?
No — it's a free illustration. Your actual Credicorp offer depends on an assessment of your company.
Related reading
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.