Vose SoftwareModelChoice decision tree · Technology
Startup Product Launch Decision
Launch a new software product at full scale, launch a minimum viable product first, or not launch?
From the model’s decision tree
Best first decision: Launch MVP
The expected value of each first option when every later decision is also made well (the tree rolled back).
| First decision | Expected value | |
|---|---|---|
| Launch Full Scale | $70,000 | |
| Launch MVP | $178,200 | ✔ best |
| Don't Launch | $0 |
| Measure | Value |
|---|---|
| Expected value of the best strategy | $178,200 |
| Chance of a loss on the best strategy | 42.0% |
| Best outcome on the best strategy | $550,000 |
| Worst outcome on the best strategy | −$200,000 |
S-curve (cumulative probability) of Launch MVP from the saved simulation.
The decision
A technology startup has developed a new SaaS product and must decide how to bring it to market. The management team is evaluating three strategic options, each with different cost structures and risk profiles.
Objective
Maximize expected net profit. The MVP approach demonstrates the value of staged investment: spend a small amount first to learn, then decide.
The options
- Option 1: Launch Full Scale
Invest $500,000 in a full market launch (marketing, sales team, infrastructure). Market response is uncertain: 30% chance of strong demand ($1.2M revenue), 50% chance of moderate demand ($400K), or 20% chance of weak demand ($50K).
- Option 2: Launch MVP - Minimum Viable Product
Invest $100,000 in a limited launch to test the market. After observing customer feedback (favorable 60%, unfavorable 40%), a second decision arises:
- If favorable: Scale to full ($450K more, 70% success) or stay small ($150K)
- If unfavorable: Pivot ($80K more, 40% success) or abandon ($20K salvage)
- Option 3: Don't Launch
Preserve capital. Net payoff: $0.
The decision tree
The tree has 3 decisions, 4 chance events and 10 outcomes. The best path is open: at every decision the best choice is marked, and the expected value beside each branch counts every cash flow from the start. Open any other branch to see what follows it.
DecisionChance event+$ cash flow on the branch
Launch Full Scale −$500,000expected $70,000
Chance: Market Response- 30% Strong Demand +$1,200,000payoff $700,000
- 50% Moderate Demand +$400,000payoff −$100,000
- 20% Weak Demand +$50,000payoff −$450,000
Launch MVP −$100,000expected $178,200 ✔ best
Chance: MVP Feedback60% Favorableexpected $325,000
Decision: Scale DecisionScale to Full −$450,000expected $325,000 ✔ best
Chance: Full Launch Outcome- 70% Success +$1,100,000payoff $550,000
- 30% Moderate +$350,000payoff −$200,000
- Stay Small +$150,000payoff $50,000
40% Unfavorableexpected −$42,000
Decision: Pivot or AbandonPivot Product −$80,000expected −$42,000 ✔ best
Chance: Pivot Outcome- 40% Pivot Works +$300,000payoff $120,000
- 60% Pivot Fails +$30,000payoff −$150,000
- Abandon +$20,000payoff −$80,000
- Don't Launchpayoff $0
Change the numbers. Open the workbook with ModelChoice, change a probability or a cost in the tree, and the best decision updates at once.
Key assumptions
| Assumption | Value | Notes |
|---|---|---|
| Full Scale Launch Cost | $500,000 | Marketing, sales team, infrastructure |
| MVP Launch Cost | $100,000 | Limited product, small team |
| Scale-Up Cost (after MVP) | $450,000 | Additional investment to go full scale |
| Pivot Cost | $80,000 | Product redesign after poor feedback |
| Strong Demand Revenue | $1,200,000 | Full-scale path, 30% probability |
| Moderate Demand Revenue | $400,000 | Full-scale path, 50% probability |
| Weak Demand Revenue | $50,000 | Full-scale path, 20% probability |
| Favorable MVP Probability | 60% | Market validates the concept |
| Scale Success Rate | 70% | Given favorable MVP feedback |
| Pivot Success Rate | 40% | Given unfavorable MVP feedback |
The figures are illustrative: the companies and numbers are invented for teaching.
Try it in ModelChoice
- Strategy Table. Shows all 6 strategies with risk-return frontier chart
- Sensitivity Analysis. Which assumptions drive the most value?
- Risk Profile. Compare outcome distributions across strategies
Find similar models
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Further reading
Download the workbook and open it with ModelChoice. The free trial opens every example.
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An illustrative example: the figures are invented for teaching. Last updated 9 October 2026.