Decision trees for founders and operators
Pricing, hiring, a new market: see which option is worth most, how sure you need to be, and what to tell the board.
The problem
Every big call is a bet you can't rerun
A price rise, a senior hire or a second market can't be A/B tested. You get one go, so you need the expected value and the downside before you commit.
The board asks why
"We think it's right" doesn't survive a board meeting. A tree shows the options, the odds you assumed and what each one is worth, on one page.
Your gut has the numbers, but not the maths
You know roughly how customers will react. Put those guesses in and see whether the answer depends on them, or holds either way.
Raise prices by 20%?
A software company can raise prices for everyone, raise them for new customers only, or hold. Payoffs are the extra gross margin over the next twelve months compared with holding the price; the cost is the work to change the pricing page and billing.
Where it flips. If the chance of customers accept it under Raise for everyone falls below 47.3% (it is 60% now), Raise for new customers only wins instead.
Range of outcomes. If you follow the recommendation, the chance of ending up with a loss is 40%; the worst case is −90,000 and the best is 240,000.
Open with the recommendation and how far ahead it is. Then give the switch point: it's the share of customers who must accept the rise for it to beat the safer option, which is the number your board will want to argue about.
This example as text
# Analytical: raise prices by 20%?
Raise prices by 20%?
Raise for everyone
Customers accept it (p 0.6): 240000
Churn spikes (p 0.4): -90000
Raise for new customers only (cost 5000) # pricing page and billing changes
Conversion holds (p 0.7): 110000
Conversion drops (p 0.3): -20000
Keep today's price: 0What you get
The best option, with its value
Expected value on every option, and the margin over the next best, updated as you change a number.
How sure you need to be
The switch point for each assumption, so you know which guess is worth checking before you decide.
The downside in plain view
Every outcome with its probability, so the chance of losing money is on the page, not hidden in an average.
What research is worth
The most a customer survey, a pilot or an advisor is worth before you commit.
A slide for the board
Export a 16:9 PowerPoint slide with the tree and the recommendation, or a PNG or PDF.
Private until you share it
Keep strategy work private: five private trees free, unlimited on Pro.
How people use it
- 01
Pricing
Raise for everyone, for new customers only, or hold. Put a probability on churn and see where the answer flips.
- 02
Hiring
A senior hire now, a contractor for six months, or wait a quarter. Put a cost on each and a chance on it working out.
- 03
Expansion
Launch in a second market, pilot one city, or stay focused. The launch template is a ready-made starting point.
Templates for this work
- Launch a product
Launch nationally, pilot first, or hold? A decision tree with the expected value of each option, the recommended choice and the demand level where the answer flips.
- Build vs buy software
Build in-house or buy off the shelf? Compare the expected cost of each path, including overrun risk, and see which wins.
- Bid on a tender
Is the bid worth the cost of bidding? A decision tree with the win probability, the bid cost and the expected value of a full bid versus a light one.
All templates · How to make a decision tree · Expected value and decision trees
Questions
- What if I don't know the probabilities?
- Use your best guess, then check the switch point. If the answer only flips far from your guess, the guess doesn't matter; if it flips close to it, that's the thing to find out first.
- Can I show this to my board or investors?
- Yes. Export a PowerPoint slide with the tree and the recommendation, or share a link where they can change a number and watch the answer move.
- Is my data private?
- Yes. Trees are private unless you publish them, and you can use the editor without an account if you just keep the link.
Start with the example, or your own decision.
The editor is free and needs no account. Describe the decision in a sentence and the AI builder drafts the tree.