2025-07-09T19:51:01Z

Create a Monte Carlo model that simulates the product recovering value. Use it to derive a probability distribution for the valuation.

Dorian Taylor

Get the value of the outcome out into the open.

How does one valuate an outcome that hasn't happened yet?

https://en.wikipedia.org/wiki/Markovian_arrival_process

https://en.wikipedia.org/wiki/Monte_Carlo_method

Inventory all the mechanisms by which the outcome creates marginal value (e.g. causes one sale, prevents one churn, eliminates some cost…).

Process Model Issues

Use the mode (it will almost certainly be asymmetric) or agree on a sensible percentile for the distribution, as well as a sensible time horizon.

What if the client insists on a number rather than a probability distribution?