In Search of Product-Market Fit for a Custom MVP App Startup

What is Product-Market Fit, and how do you make sure your Custom MVP App Startup has it? In this article, we’ll take a look at finding product-market fit as well as how determining the right metrics for product-market fit.

Got an idea for a business? Are you sure it will work? Are you really sure?

One way to increase the chances of your Custom MVP App Startup being successful is to ensure you’ve got an excellent Product-Market Fit in place.

With 35% of new businesses failing because there was no market need, Product-Market fit can make the difference between going the distance and going back to the drawing board.

If product market fit (PMF) is a new concept to you, you might have a lot of questions. What is Product-Market fit? How do you measure it? And most importantly, how do you know that you’ve achieved it?

We’ve put together this introduction to Product-Market Fit to give you some help. Take a read, and you’ll be one step closer to using PMF to validate your Custom MVP App Startup idea.

And remember, if you need a little extra support determining the right Product-Market Fit strategy, we’re here to help.

What is Product-Market Fit? How to find the right Product-Market Fit for your startup? You are launched

What is Product-Market Fit?

Product market fit is when you identify a target customer and provide them with a product that fits their needs

Basically, it means you’ve found a market that will buy your product, and a product that makes your market happy. It’s a win-win situation for your business!

A good PMF means you’re in an excellent position to grow your business and can take steps toward hiring new staff and getting funding.

It’s hard to get a Product-Market fit right on the first attempt. You’ll likely spend a substantial amount of time trying to understand what your customers want and making changes to your product to achieve this.

For an example of a company that had to make changes to find the right product fit, take PayPal. At the turn of the century, PayPal was designed for people to exchange money through Palm Pilots and pagers. However, research showed that not enough people had Palm Pilots and pagers to take advantage of the service. If PayPal didn’t do something, there was a risk that the business would fail.

The company carried out extensive market research and decided to pivot by letting people send money by email instead. PayPal found its PMF and as a result, is still with us to this day.

How do you know if you have a good Product-Market Fit? you are launched

How do you know if you have a good Product-Market Fit?

‘If you have to ask whether you have PMF the answer is simple. You don’t.’ Eric Ries, founder of the Lean Startup method

Many Custom MVP App Startups think they have product market fit when they don’t. This can cause major problems as they get excited and start to grow their company when they don’t have the PMF to justify spending.

Read more about some of the failed startups that there was no market need for.

If you don’t have PMF in place, scaling your business becomes a significant risk.

With this in mind, how do you know if your product and market fit are well-aligned? It’s a tricky question and there are several potential answers.

YCombinator refers to ‘explosive’ usage – when you’re so busy keeping your product up and running that you don’t have time to make any major changes. So if you can’t keep up with demand… it’s a good sign!

Here are just some of the ways you can see if you have a Custom MVP App Startup PMF. We’ll go into some of the specific metrics you can use later on.

Some Specific Metrics

  1. Users want to pay for your product. Let’s say you offer a free or freemium product. If customers are more than happy to pay for it, it’s a promising sign that you have a PMF. Similarly, if you have a waiting list and people want to pay before they can access your product, it means your product has a lot of value
  2. People use your product even if it’s not working. If customers still use your product even when it is buggy or frequently breaks, that means you have a good PMF. Take Twitter in its early days. Even though the social media platform frequently went down, people still wanted to use it
  3. You have a unique product or service. Think about if your product can be easily replicated by other competitors. If it can’t, you may have PMF by default. Bear in mind though that if this is the case, you will have to frequently review PMF in case of competitors replicate your idea

Remember that you don’t need to launch your product to see if you have PMF – we’ll talk about this in more detail later on in this article.

The Sean Ellis test. urlaunched

The Sean Ellis test

There is one other way you can test for product market fit – the Sean Ellis test.

The test is named after Sean Ellis, an entrepreneur and founder of GrowthHackers. Sean said you can see if you’ve achieved PMF by asking one simple question: ‘how would you feel if you could no longer use this product?’ 

If over 40% of people say they’d be ‘very disappointed` if they couldn’t use your product anymore, you’re on the right track. This means you have a dedicated set of target users who would do anything to use your product. 

Find out more about implementing the Sean Ellis test in your startup.

Do I need an MVP to know if I have a good product market fit? urlaunched

Do I need an MVP to know if I have a good product-market fit?

We talk about minimum viable products (MVP) a lot at You are launched, and with good reason! An MVP is a no-frills version of your product that you can quickly launch to get customer feedback. 

You might be wondering if you need an MVP in place to determine product market fit. While an MVP can help you see if the market is there for your product and get that all-important customer feedback, the truth is, you don’t definitely need one.

Any idea you have can be validated without even a single line of code. This means you can see if you have a product-market fit in place early in your startup life cycle. And the earlier you can identify PMF, the matter.

How can you do this without resorting to an MVP? There are lots of different ways, and the method that’s right for you will depend on your business and the product you have created.

Some Samples

For example, you could create a website describing your idea and see how many people express an interest. That’s what Buffer did. Alternatively, you could create a quiz in Typeform to see how many people want to use your product.

This works in the physical world too. Uber started off by offering free rides to tech events in San Francisco and monitoring how many people took advantage of the service.

Creating a prototype can be a good way to test your product with a select group of people and see if the product market fit is there. You can find out more about building a solid prototype here.

In summary: if you are ready to launch your MVP and are willing to make changes to it to determine if the product market fit is there, go for it! However, remember that it’s not a mandatory requirement. 

As it’s better to determine PMF as soon as possible, you might want to focus on getting PMF right before putting time and resources aside for creating your MVP.

The best metrics for product market fit for Custom MVP App Startup. urlaunched

The best metrics for product market fit

How do you measure product market fit? The metric you choose to determine PMF depends on your product and the method you use to measure customer interest.

While we talked about the Sean Ellis test earlier on, here are some of the other metrics that will help you see if the product market fit is there.

  1. Churn and retention rate. While it’s great if a lot of customers have downloaded your app, you want to keep an eye on the number of people that continue to use it after the first try. Monitoring churn and retention rate lets you see what drives customers away, and what encourages them to keep using your product
  2. Referrals. It’s great if a customer uses your product, but it’s even better if they recommend your product to someone else! A high referral rate means your customers like your product so much, that they’d tell a close friend or family member to use it too
  3. Lead conversion rate. How many prospects like your product so much, that they agree to become a customer? A high conversion rate is a positive sign that you’re making the right decisions
  4. Net promoter score (NPS). NPS is a good metric as it monitors customer satisfaction. You can see how many people like your product a little and how many like your product a lot
  5. Customer lifetime value (CLV). By CLV, we mean the average profit you get from each customer that uses your product. The more money that users invest, the more your product market fit is validated

And the last now

  1. Customer acquisition cost (CAC). CAC is the amount it costs to bring a new customer on board. If you see that this number is dropping over time, it’s a good sign. If you’re spending less to acquire more users, it indicates that your product is offering a lot of value

Don’t forget qualitative data can be just as valuable as quantitative data. Feedback and comments from your customers will help you see if you’re on the right track, especially in the early stages of building your product.

Remember to keep tracking PMF metrics throughout the lifespan of your product. Many Custom MVP App Startups think that once they’ve got product market fit, they’re immune to failure and can spend money on whatever they want. 

However, the market can quickly change. Case in point, Skype. The video communication software company became complacent and lost significant ground to newcomers like Zoom during the pandemic. When you hit PMF, it’s important to invest in sales and marketing to make even more people aware of your product; otherwise, you may lose out like Skype did.

Don’t disregard the importance of Product-Market Fit for Custom MVP App Startup

In summary: Don’t disregard the importance of Product-Market Fit

‘The only thing that matters is getting to product market fit’ – Marc Andreessen

If you don’t have a PMF already, it’s important to do what you can to achieve it. When you do, your chances of long-term success increase dramatically.

So make product development a priority, don’t be afraid to pivot your product, and you’ll be one step closer to being able to scale your business with confidence.

And of course, if you need a little extra help determining when your Custom MVP App Startup will have product market fit, we’re here to help. 

Don’t know where to start with your MVP? We prepared the document to fill out and share with your potential technical partner. We would also recommend diving into the article about MVP Success Factors to keep an eye on.

Check also the article about 20 Myths About Custom MVP App Development: Busted

Frequently Asked Questions (FAQ)

What is Product-Market Fit?

Product-Market Fit (PMF) is achieved when a startup identifies a target customer and provides them with a product that meets their needs. It signifies finding a market that is willing to purchase your product, creating a win-win situation for your business.

How do you know if you have a good Product-Market Fit?

If you’re questioning whether you have PMF, according to Eric Ries, founder of the Lean Startup method, the answer might be simple: you don’t. However, signs of good PMF include “explosive” usage, where demand is so high that making major changes becomes challenging.

What are some specific metrics for Product-Market Fit?

Users willing to pay: If customers are eager to pay for your product, even if it’s offered for free or as a freemium, it indicates strong PMF.
Usage despite issues: If customers continue to use your product even when it’s not working optimally, it suggests good PMF. For instance, Twitter in its early days faced frequent issues but retained active users.
Uniqueness: Having a unique product or service that can’t be easily replicated by competitors can be a sign of inherent PMF.

What is the Sean Ellis test?

The Sean Ellis test involves asking users how they would feel if they could no longer use the product. If over 40% express that they would be “very disappointed,” it indicates a dedicated user base and suggests a good PMF.

Do I need an MVP to know if I have a good Product-Market Fit?

While an MVP (Minimum Viable Product) can help gather customer feedback, it’s not mandatory. Validating ideas without code—using methods like creating a website or a prototype—can also reveal early signs of PMF.

What are the best metrics for measuring Product-Market Fit?

Churn and retention rate: Monitoring how many customers continue using your product after the first try.
Referrals: A high referral rate indicates satisfied customers who recommend your product.
Lead conversion rate: Measures how many prospects become paying customers.
Net Promoter Score (NPS): Gauges customer satisfaction.
Customer Lifetime Value (CLV): Represents the average profit from each customer.
Customer Acquisition Cost (CAC): The cost to acquire a new customer.

Why is Product-Market Fit important for a Custom MVP App Startup?

PMF is crucial for a startup’s success as it ensures there is a market need for the product. It increases the chances of long-term success, and achieving PMF allows the startup to scale with confidence.

What should be a priority to achieve Product-Market Fit?

Making product development a priority, being open to pivoting your product based on feedback, and investing in sales and marketing are key steps to achieving and maintaining Product-Market Fit.

Where can I get help with my MVP development?

If you need help with MVP development, You are launched has prepared a document to fill out and share with potential technical partners, providing guidance on where to start.

How You are launched can help you find the right Product-Market Fit

We’ve been working with Custom MVP App Startups since 2014, helping them to work through their ideas and launch high-quality products that their target audience love.

Product-Market Fit is at the heart of what we do, and we want to make that all-important PMF is there for all businesses we work with.

Contact us today and see how we can help you with your audience targeting.

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