The model
- Trapped ARR =
pilots × ACV. The headline number. No probability tricks.
- Close probability =
50% × e^(−0.17 × months stalled). A fresh enterprise pilot converts about half the time in this model; every month without a decision multiplies the odds by ~0.84.
- Still recoverable (expected) =
trapped ARR × close probability now. Expected value, not a promise about any single deal.
- Cost of one more month =
(pilots × monthly cost per pilot) + the expected ARR that decays between this month and next.
- Already burned = support cost paid so far + expected value lost since the pilot was fresh (probability then vs. now).
What it leaves out (on purpose)
- Founder attention and morale — real, but not honestly quantifiable here.
- Reference value: one production logo often unlocks the next three deals. Losing the pilot can cost more than its ACV.
- Fundraising drag: stalled pilots show up in diligence as pipeline quality questions.
Why decay at all?
Champions change jobs, budgets get reallocated, and “next quarter” compounds. The industry data points the same way: S&P Global found 42% of companies abandoned most of their AI initiatives in 2025 (up from 17% in 2024) and IDC found only about 4 of every 33 AI POCs reached production. If your decay rate should be gentler — or harsher — the formula above is the whole argument. Change the exponent and the verdict changes with it.