Cheatsheet

Decision Rules

When…	Do…	Because…
Nobody complains about your price	Raise it	You’re probably priced too low.
A prospect says “too expensive”	Build until the product is worth the price before cutting	Price is your biggest lever.
Raising prices on existing customers adds less than 10% MRR	Grandfather them	Rule of 10: the support load, brand damage, and churn aren’t worth it.
You’re unsure about a price change	Make it reversible and watch new cohorts daily	It’s the poor person’s split test.
You’re tempted to change pricing, trial, and plans together	Change one variable at a time	Otherwise you can’t tell what worked.
You’re deciding on freemium	Offer it only for a simple, viral, low-support, low-cost product	Freemium pushes cash into the future.
You’re deciding on a credit card for trials	Require one by default	It qualifies trials and keeps support manageable.
A feature request comes in	Triage it: Crackpot, No-Brainer, or In-Between	You protect your vision and keep the UI simple.
A white-label request comes from a small player	Decline. With a large player, charge $30–50K up front.	Small players have no distribution, and you lose brand.
Growth is slow	Fix product-market fit or marketing, not translation or new verticals	Siren songs add complexity without solving the cause.
A competitor raises money	Ignore it unless it’s $5M+ (then watch for a free or low-price push)	Most burn through funding in about 18 months.
You’re losing deals to a competitor	Find out why and respond	That is one of the two competitor signals worth watching.
You’re about to spend more on traffic	Check the bottom of the funnel first	Top-of-funnel numbers are vanity when the bottom leaks.
You’re choosing marketing channels	Filter by ACV and the Three Factors, rank with ICE, run one fast and one slow	Scale one or two channels; don’t spread thin.
Someone says customers come from “word of mouth”	Set up attribution	Usually it means nobody knows.
A low-value prospect books a demo	Send a recorded demo	Live demos are for prospects worth the effort.
You have 5–6 employees	Hand off sales and join only large deals	Demos are easy to teach.
You’re a developer founder	Learn sales and marketing and hire developers	“Developers are gonna develop.”
A department reaches 2–3 people / 4–5 people	Appoint a lead / hire a manager	Too many direct reports overwhelm the founder.
MRR reaches $20–40K	Hire project- and owner-level thinkers	Task-level teams push every decision back to you.
Early churn is high	Ask why customers leave before optimizing the number	Before product-market fit, reasons matter more than rates.
A problem feels fatal	List plans B, C, and D	Most roadblocks are speed bumps.
You consider raising money	Have a plan and some product-market fit first	Money without a plan means bigger mistakes, faster.

Thresholds and Defaults

• Price by sales model (monthly ARPA): consumer $10–15; healthier $50+; niche or demo-led $250+; multi-call high-touch $1,000+; enterprise $30,000+/year. Enterprise tier: 10–20× standard.
• Revisit pricing: every 6–12 months. Notice for an increase: 2–4 months. Enterprise contracts: 5–10% yearly increases.
• Removing the card: more than $20K MRR, metrics known, try for 1–2 months.
• Funnel: high-touch needs about $500+/month. Drip closed 25–35% of demos.
• Affiliates: 10–30% commission; about 20% standard, 30% for premium affiliates.
• CAC payback: 2–6 months for bootstrappers; 7–8 is the high end.
• Gross monthly churn: >10% catastrophic; 8–10% not good; 6–7% meh; 4–5% fine; 2–3% good; <2% great. Aim for under 3%. Above $25K contracts: fine 2–3%, good 1–2%, great ≤1%.
• Plateau: max MRR = new MRR per month ÷ churn rate.
• LTV: ARPA ÷ churn. Value at exit: 4–8× ARR; at 5×, $1,000 MRR ≈ $60,000.
• Product-market fit firms up: about $10–20K MRR. Product manager: above about $1M ARR.
• Word of mouth: arrives with a brand around seven figures; was 15–25% of Drip’s new users.
• Cofounder vesting: usually 4 years, with a 1-year cliff. Investors want active founders to own 80–90%.
• Profit sharing pool: 10–15% of profits. Option pool: 10–15% of shares.
• Mentors: one or two. Founder retreat: 48–72 hours, once or twice a year.

Warning Signs

• No one ever complains about price → underpriced.
• You check competitors every morning → focus is on them instead of customers.
• You rely on unique features to stand out → you’re on “a hamster wheel of features.”
• High traffic with few trials → problem with value proposition, copy, or positioning.
• Many trials, few conversions → onboarding or sales problem.
• Heavy churn in months 1–2 → customers aren’t reaching value.
• You’re doing the work the company needs, are good at it, but don’t enjoy it → burnout risk.
• “This is too big to fix” → you may be turning a speed bump into a roadblock.