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Lesson Goal

In Lesson 10 you built a simple, conservative LTV model and a few revenue scenarios for your game.
Now you need to answer the scary question: “So what do we actually do with this?”

In this lesson you will:

  • Translate your forecast into clear spend limits for user acquisition and production.
  • Decide on safe vs aggressive growth strategies that still fit your runway.
  • Build a simple “stoplight” check you can revisit every month to avoid runaway risk.

By the end, you will have a one-page decision sheet that tells you what you can safely spend, when to slow down, and what would have to be true before you ramp up.

Step 1 – Turn Revenue Scenarios into Monthly Cash Flow

Open the model from Lesson 10 and pick your three scenarios:

  • Conservative – the numbers you would be comfortable betting rent on.
  • Expected – what you think is most likely if things go reasonably well.
  • Optimistic – a nice surprise, not your plan.

For each scenario, translate revenue into monthly cash flow:

  • Total revenue per month (after platform fees).
  • Average monthly new installs and active players.
  • Any obvious seasonality (launch spikes, sale events, big platform promos).

You are not trying to be perfect; you are trying to see shape:

  • Does revenue ramp slowly and steadily?
  • Is it front-loaded in the first 3–6 months?
  • Is there a cliff where long-term revenue collapses?

Mini‑task:
Make a tiny table with 6–12 rows (months) and 3 columns (Conservative, Expected, Optimistic).
Fill in approximate revenue for each month in each scenario. Highlight the conservative column – that is the one you will base decisions on.

Step 2 – List Your Fixed and Variable Costs Honestly

Forecasts are useless if you ignore what money is already leaving the account.

List your fixed monthly costs:

  • Software, hosting, and tools (engine subscriptions, repos, build servers, analytics).
  • Salaries or stipends for you and any collaborators.
  • Office / coworking costs if applicable.
  • Loan repayments or other committed expenses.

Then list variable or optional costs:

  • Paid user acquisition (ads, influencers, sponsored posts).
  • Outsourcing (art, audio, QA, localization).
  • Contractors for short bursts of production or live ops.

Mark each cost with one of:

  • Must‑have – if you cut this, the project or company dies.
  • Nice‑to‑have – helpful but can be paused or reduced.
  • Experiment – small, time‑boxed bets you can cancel quickly.

Mini‑task:
Write down your total monthly must‑have spend.
Then add a second number that is must‑have + a small buffer (for taxes, surprises, and the fact that people get sick).

Step 3 – Define Your Safety Guards: Runway and Maximum Burn

Now combine forecast and costs into simple safety rules.

Two concepts matter most:

  • Runway – how many months you can survive at a given burn rate.
  • Maximum burn – the most you are willing to lose per month before hitting “stop”.

Using your conservative scenario only:

  1. Subtract your must‑have monthly costs from conservative revenue.
  2. If the result is negative, that is monthly loss at that scale.
  3. If the result is positive, that is money you could reinvest, but do not have to.

Decide on rules such as:

  • “We will not allow monthly loss to exceed X for more than Y months.”
  • “We will only treat the expected and optimistic scenarios as upside, never as budget.”

Mini‑task:
Write one sentence that starts with:
“As long as we are losing no more than \$X per month and still have Y months of cash, we consider the project safe.”

Step 4 – Set Practical Budgets for UA, Content, and Team Time

With guards in place, you can propose budgets that do not rely on wishful thinking.

For each optional cost area, decide:

  • User acquisition (UA) – a monthly cap you will not exceed without revisiting the model.
  • Content & live ops – how many days per month you can afford to spend on new content vs maintenance.
  • Team growth – when, if ever, you would add another person and what milestone must be hit first.

Good rules look like:

  • “UA budget is no more than 20–30% of conservative monthly revenue.”
  • “We only expand content cadence when conservative revenue covers must‑have costs + 3 months of buffer.”
  • “We do not hire until conservative revenue has covered N months of our own salary.”

Tie each rule back to actual numbers in your sheet so you can quickly check if reality matches the plan.

Mini‑task:
Create three rows in your model: UA_budget, content_budget, team_budget.
Fill each with simple monthly numbers for the next 3–6 months based on the conservative column only.

Step 5 – Build a Monthly “Stoplight” Review Ritual

Forecasts age quickly. What keeps you safe is a repeatable review ritual, not a perfect spreadsheet.

Once per month (or per release), answer three questions:

  1. Green: Are we on or above the conservative scenario for revenue and retention?
  2. Yellow: Are we between conservative and expected? If so, do we pause any experiments?
  3. Red: Are we below conservative for more than 1–2 months in a row?

When you hit yellow or red, you do not panic; you follow a pre‑agreed playbook:

  • Pause or reduce UA spend.
  • Delay new hires or contractor work.
  • Focus on retention, funnels, and early‑game clarity before adding more monetization.

Mini‑task:
Write a one‑page “Stoplight Playbook” with three columns (Green, Yellow, Red) and 2–3 concrete actions you will take in each state.

Step 6 – Communicate the Plan to Co‑Devs, Partners, or Yourself

Your model is only useful if everyone making decisions understands it.

Summarize the whole thing in plain language:

  • What we believe conservative revenue will be over the next 6–12 months.
  • What we are allowed to spend on UA, content, and tools.
  • What events would make us slow down, pivot, or shut the project down gracefully.

Keep this summary short enough that you can read it aloud in under two minutes.

If you are solo, still write it down – future you will forget the guardrails once a flashy marketing idea appears on social media.

Mini‑task:
Draft a short “Monetization Operating Agreement” in a shared doc.
Include your safety guards, budgets, and stoplight rules, and share it with anyone who has a say in money decisions.

Common Mistakes to Avoid

  • Treating the optimistic scenario as the plan. Use it for fun, not for payroll.
  • Scaling UA before retention is stable. Buying users into a leaky bucket burns cash and morale.
  • Hiding scary numbers. If the conservative scenario looks bad, that is a signal to shrink scope or pivot, not something to ignore.
  • Never revisiting assumptions. Benchmarks age; revisit them at least every few months or after big updates.

Quick Recap

In this lesson you:

  • Turned your LTV and revenue scenarios into a simple monthly cash‑flow view.
  • Listed your real costs and defined clear safety guards for burn and runway.
  • Set practical budgets for UA, content, and hiring that respect the conservative scenario.
  • Built a monthly stoplight ritual and a short “operating agreement” you can share with collaborators.

In the next lesson, you will start using these guardrails to prioritize concrete monetization experiments (offers, bundles, ad placements, and retention updates) so that each change has a clear hypothesis, success metric, and exit condition.