January 30th, 2023 | Equilibrium
The most important equation in business. It's called the equilibrium equation, and it tells you with your current churn and acquisition rate at how many clients you will hit equilibrium. Example: - 20% churn - 4 new clients per month That seems to be my most likely scenario. What would that look like? 20% (churn) of what (total clients) makes 4 (clients)? 20% (churn) of 20 (total clients) equals 4 (clients). So 20 is the answer. I would hit equilibrium at 20 clients. Taking churn down from 20% to 10% would be insanely difficult. I think. Taking my acquisition from 4 per month to 8 per month would also be. Doubling my prices is effortless. That’s always been my motto. 20 clients at $3k per month. And another 20k/month from the newsletter. That puts me at $1M/year.