In order to provide complete functionality, this web site needs your explicit consent to store browser cookies. If you don't allow cookies, you may not be able to use certain features of the web site including but not limited to: log in, buy products, see personalized content, switch between site cultures. It is recommended that you allow all cookies.

This content is currently only available to TSIA members.

If you believe you are seeing this message in error,
please let us know.

Research Report

Framework: The TSIA Rule of 35

This report is for members only

Ask about TSIA membership to access.

Already a TSIA Member? Sign In.

Investors have rewarded the entire SaaS industry for pursuing growth over profitability for a long time. However, TSIA believes those days are waning. There are new expectations for what defines a highly valuable SaaS business. Current economic conditions are forcing high-growth (but unprofitable) SaaS startups to tighten their financial belts. SaaS companies will have to focus on improving free cash flow and overall profitability. 

For SaaS companies, the Rule of 35 is a key measure of scalability. In this paper, we will review how this framework emphasizes optimizing revenue by balancing costs, and helps companies efficiently grow while controlling expenses.

Authored By:

Thomas Lah

Executive Director and Executive Vice President, TSIA

Lionel Fournier

Data Journalist, TSIA

Publish Date: October 3, 2023

TSIA is well worth the investment. This is the one place where you can come and get a fusion of ideas that you can then marry up to the goals and objectives of your organization and boil that down into several actionable plans that you can implement over the next 6 months to a year.

Peg Rodarmel, SVP, Subscription Services, Infor

Experience Our Community

Our thriving community of 40,000 technology and services leaders rely on TSIA insights every day.