Most of us think we’ll just build X for Y and make loads of passive income”. But we forget if others feel the same pain and would be willing to pay for a solution? Unless you are willing to make an open source software product – profitability is something which you need to plan early on. No product is guaranteed to succeed, so your goal should be to minimize risk and maximize opportunity by picking the ideas that will most likely succeed. That’s because you are not a Microsoft or Google; who can write-off a few million dollars and move on. Google Wave was technically impressive; but failed like so many other software products.
Software product idea
The best way to find a niche idea for building a software product is while working on “something”. The idea pops-up naturally & you are sure of it. That’s wonderful; but don’t just stop there. We show you how to validate your idea and get some “proof” of your concept before you invest your time, energy and money on it.
6 simple ways to validate your software product idea
- Market size: The bigger the market, the higher the potential payoff. By putting in the same amount of effort and time you can reap more profit out of it. But it’s not that simple. You have also account for active competitors and marketing expenses. Metrics like ROMI(Return on Marketing Investment), Addressable Market size, demographic data, gender info comes handy.
- Demand / Customer pain Points: You already know the addressable market size (in terms of revenue) which your product can capture. But is there a demand for people to actually pay for your product?One of the best ways to do a research is by searching on Google or Bing. Find out if people are looking for a solution more than the actual solutions to the problem themselves. If the customer pain points are not addressed or effectively solved; there lies your chance to position your software product in front of them.
- Competitive advantage: Whether you have the maximum number of features or the cheapest software or a patented solution to a problem; it’s the competitive advantage that makes you stand out in the crowd. Use it to your advantage!
- Profitability: Being profitable allows you degrees of freedom you don’t have when you rely upon other people’s money. What’s your business objective? Do you plan to run a small business but maintain healthy profits? Are you looking to potentially sell the company in the next year or two? Do you want to raise VC and try to build a faster growing company?” Its imperative that you decide this early on.
- Licensing & Distribution: If your software product is targeted at Android marketplace or Apple Appstore ; don’t forget to account the commission which these marketplaces charge per sale. Make this a part of your Business plan. Apart from them you also may have to pay referral fees; affiliate commissions or go for a professional licensing & software entitlement solutions provider to secure your IP.
- Scalability: This is a good measure to evaluate your growth strategies. The good part is – Software products are infinitely scalable. But the challenges will be in the form of evolving technology(such as cloud computing), new devices formats(such as Smartphones) and new distribution models(such as SaaS). Whether you are mentally and technically equipped to adapt to them is crucial to the success of your software product.
Building your own venture is an amazing experience but a little intimidating one! Reducing the risk by doing research is an important first step. This is also the shield against the doubters and haters which any entrepreneur will have in plenty! To build your own business, you have to believe in your abilities and in the product. Everything will fall into place from there.
Comment and let us know how you successfully ideate and validate a software product idea before working on it?