Monte Carlo simulation runs your financial model thousands of times with randomized inputs to generate a probability distribution of outcomes. Instead of a single revenue projection, you get "there's a 70% chance revenue will be between €3M and €6M."
Monte Carlo is the gold standard for uncertainty quantification. It shows the probability of different outcomes, not just point estimates.
Key Takeaways
- Monte Carlo gives probability distributions, not point estimates.
- Shows the range and likelihood of outcomes.
- Key inputs to vary: revenue, costs, timing, conversion rates.
- Present results as "70% chance revenue is €3-6M" — more honest than "revenue will be €4.5M."