EBITDA margin benchmarks vary significantly by industry. A 15% EBITDA margin is excellent for a retailer but mediocre for a mature SaaS company.
SaaS and software
| Stage | EBITDA margin range |
|---|---|
| Pre-revenue / early stage | Negative (investing in growth) |
| $1M–$10M ARR | -20% to +10% |
| $10M–$50M ARR | 0% to 20% |
| $50M–$200M ARR | 15% to 30% |
| $200M+ ARR (mature) | 25% to 40% |
The "Rule of 40" states that growth rate + EBITDA margin should equal at least 40 for a healthy SaaS business.
Professional services and consulting
Typical range: 10–25% EBITDA margin.
Pure consulting (low fixed costs) can achieve 20–30%. Agency models with high headcount and overhead typically land at 10–15%.
E-commerce
Typical range: 5–15% EBITDA margin.
Gross margins are lower (30–50% for branded e-com), and marketing spend is high. Brands with strong direct relationships and low CAC achieve the upper range.
Healthcare
Typical range: 8–25% depending on sub-sector. Healthcare tech (EHR, practice management software) achieves 15–30%. Clinical practices run 8–15%.
Manufacturing
Typical range: 5–15%. Capital-intensive. Higher margins at premium brands with proprietary products; lower for commodity manufacturing.
The Rule of 40 for SaaS
For SaaS specifically, investors often use:
Rule of 40 Score = ARR Growth Rate % + EBITDA Margin %
A 60% ARR growth with -20% EBITDA margin scores 40. A 20% growth with 25% EBITDA margin also scores 45. Both indicate a healthy business.
Calculate your EBITDA margin with the EBITDA Calculator.