Rule of 40

Definition. A SaaS health benchmark: revenue growth rate (%) plus profit margin (%) should sum to at least 40. Codifies the growth-versus-profitability trade-off — high growth can justify low margin and vice versa, but failing both signals trouble.

@misc{shalvi_gtm_rule_of_40,
  author = {Singh, Shalvi},
  title  = {Rule of 40 — GTM World Model Glossary},
  year   = {2026},
  url     = {https://shalvisingh.com/gtm/glossary/rule-of-40}
}