Find customers to pay for the product before you build it
Today, we’ll talk about product development for startups.
In growing your business you must prioritize what products you develop. In developing a new product it’s helpful to ask ‘who is going to pay for it’ before you spend money on it.
The goal is to match the costs to sources. For existing product upgrades this could be current customers. They are ideal candidates for paying for the upgraded product. By surveying your current customers you’ll get a better idea of what they need.
In building new products you should consider finding anchor clients who will prepay part of the expense of the product development. If you can’t find anyone who will pay for it, then you may want to reconsider building the product.
Most startups avoid pre-selling a product because they think it will be too difficult. In reality it’s about the same amount of work.
There are benefits from working with customers in the product development phase.
You’ll learn the problem to be solved in a much deeper way. You’ll learn what customers will actually pay for and you’ll also gather competitive intelligence.
Matching product development with customer payments keeps you aligned with the market.
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Copyright (c) 2021, Hall Martin and investorconnect.org. All rights reserved.
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.