Product-Market Fit

Creating a solution to a problem is not the same as creating a product that the market accepts and pays for. That product must ‘fit’ its target market in functionality, aesthetics, price etc.

There will be a perceived value in the product, which will either be derived by the cost of the problem (this device will save me $x, so it’s worth paying $y for it), or by a perception of value based on other similar products (this is like X, so it should cost about the same).

Communicating the value that the solution brings to the customer is key to whether they will want it, and how much they will be willing to pay for it. That value must be to the target customer, just because you offer a feature or advantage, if the customer doesn’t care about that, they will not attach a value to it.

Breaking into an existing market is easier, as the data is available, or can be obtained. A new market needs evaluation and this will inevitably require some assumptions or estimates, so record these as inputs into your financial model.