Rule of X Calculator

What is Rule of X?

Rule of X weights revenue growth and free cash flow margin for later-stage SaaS, following Bessemer-style framing. Growth is multiplied by a weight before adding FCF margin so high-growth businesses are scored fairly.

Formula

Version v1. See methodology and the public formula repo for sources and change history.

Worked example

Using the default example inputs (Revenue growth: 30%; Free cash flow margin: 10%; Growth weight: 2), Rule of X equals 70 (Rule of X score). Rule of X weights growth more heavily than profitability for higher-growth SaaS companies.

What good looks like

Use when investors expect profitable growth, not growth-at-all-costs. Compare trends over time; weights should stay stable in your board pack.

Directional guidance only, not a cohort benchmark claim. Premium cohort bands appear when sample thresholds are met for your profile.

FAQ

What is Rule of X?

Rule of X weights revenue growth and free cash flow margin for later-stage SaaS, following Bessemer-style framing. Growth is multiplied by a weight before adding FCF margin so high-growth businesses are scored fairly.

What is the Rule of X formula?

Rule of X = (Revenue growth % × growth weight) + Free cash flow margin %

What growth weight should I use?

Common weights are 2 to 3 for high-growth companies. Document the weight you choose so quarters are comparable.

Rule of X vs Rule of 40?

Rule of 40 uses EBITDA margin with equal weight to growth. Rule of X emphasizes growth and FCF discipline.

How do I get FCF margin?

Free cash flow divided by revenue for the period, expressed as a percent. Use the same revenue definition as growth.