How to decide whether an idea is worth pursuing?
You have a business idea, how do you decide whether it's worth pursuing?
i.e, say you plan to provide a SaaS service to users (which you think would be very useful for people), how do you know that do people really want to pay for this service?
3 Answers
Atul
Here is a golden rule - meet with at least 10 potential customers and validate your idea with them. Make sure you have sufficient level of detail thought through in your concept and how you will present it to them.
Know that often the end-users are NOT the same as the payers (especially enterprise software). In this case first meet with the END-USERS, then if you pass with very high validation rate, then meet with Payers.
Find out the following from each customer
- What do they use now to do what your product does (competition or substitutes)
- Explain your concept and see if their eyes light up - will they use your product
- What value do they see in your product? (does it save them time? money? other?)
IF you get more than 5 out of the 10 nodding in excitement, you have a pretty good and useful concept. Next you need to see if they will pay for it. You may need to do some homework in between to take the answer from #3 above and translate it into Enterprise value in terms of $ (ROI). Unless you can do that it will be hard to get the payers to nod.
Ask them (the payers):
#4. Will they pay $X (whatever pricing you have) for the value (from answer #3)
Hope this helps.
And yes (regarding your comment to the other answer) - you will have to share your idea - that is the only way to get feedback. If you can get an NDA before that - more power to you. But that will be rare unless you already have the product ready and it is so good that they will not mind signing an NDA.
-Siva
You ask around. Find someone who you think would be an ideal customer (that is, they actually need your product/service) and ask what they would pay for it.
In general, more people will say that they'll pay for something than will actually buy it. But if in your initial queries, the amount people say they would pay is negligible, you'll have a hard time selling it later. If people generally indicate that they would pay a significant amount for it, then you may be on the right track.
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Is it fair enough to assume that in many cases, you can't just go out and share your idea with everyone... otherwise your suggestion sounds good. – Atul Goyal 13 years ago
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Depends on how you share. Asking someone how much they would pay for a solution to X is not the same as asking how much they would pay for a particular solution. You can leave out enough information from your questions to keep your idea "safe". For example, you could ask something like "how much would you pay for a better way of organizing your day" rather than "how much would you pay for my new calendar program". – Elie 13 years ago
By selling it... create the mailer, make the calls, and see what happens. Put up a temp site and see if they let you explain what it is and if they're interested - you're looking for early adopters at a 50% discount.. they'll likely say no to that but you'll be able to find out just how really interested they are.
