Minimum Sellable Product (MSP) and how it is different from MVP

Minimum Sellable Product is a complementary concept to MVP and originated to specifically focus on immediate financial success as a primary goal. MVP (Minimum Viable Product) is surely a powerful concept, especially for innovative or disruptive startups, but it is more of an experimental methodology. It tests assumptions and validates hypotheses about the market and consumers. In MVP, monetization is a consideration in the later stages. However, there is a need for a more pragmatic sales-oriented approach. In this blog post, we’ll discuss Minimum Sellable Product use cases and how MSP differentiates from an MVP approach.  

This is not the kind of article to argue in favor of one at the expense of the other. Both concepts have their undisputable use cases. Let’s just imagine Instagram or Facebook. They are clearly examples of MVPs that would not have been created any other way. Imagine putting a price tag on any of them in the early days – they would have remained unknown. At the same time, one can hardly imagine Netflix or Amazon not focusing on sales from the get-go. It is true that Amazon did prioritize the user experience and reinvested all of its money back into business. But this is the point, MSP depends on sales and generating cash flow to iterate and develop its concept. As always, the nuances make all the difference, so let’s dive in!

Minimum Sellable Product (MSP) Use Cases

Minimum Sellable Product being a pragmatic solution is suitable for cases when there are strong grounds to believe that customers will pay for the product from day one. Yet, it is still a minimum version and not a full-fledged solution. It is not an MVP when you are just testing a hypothesis about a potential market or user need. 

For instance, let’s look at Nike’s example when they launched their Nike Training Club. 

• An MVP approach would be to test whether users are willing to follow free online training programs. 
• An MSP approach is to deliver a selection of free and premium workouts. 

For this example, it would not have made much sense to test whether there were users who would follow online workouts. This is a well-researched market. Same there was not much sense in discovering the Nike User Persona  – the brand already had a loyal audience. Surely, it would be a different thing if, let’s say, Nike was launching an innovative outside-the-box solution. It would make sense to launch it first to a group of early adopters. Still, having a large loyal consumer base, it would quickly transform into an MSP within a few iterations. 

So basically MSP is a fitting approach when there is a clear market and well-defined user need. 

Use Case 1: MSP for B2B SaaS products

For example, Salesforce. It started as a Business-to-Business Software-As-A-Service company. Salesforce offered software for sales teams to automate customer relationship management. It has considerably expanded its product range at present, but each product is well-defined and has a clear target market. So, in this case, there is not much need for exploration. And it makes perfect sense to target financial success from the start. So, if you have a well-defined market or know a specialized user problem your product can solve, you can invest in a robust straightforward solution. In general, most of B2B solutions start with the MSP approach.

Use Case 2: MSP for obvious value proposition

Think of Netflix or Spotify. Each of those offers is straight as an arrow. The value proposition is evident for the user, and the user will be willing to sign up from the very beginning. Many premium apps or subscription services can be launched as Minimum Sellable Products or MSPs. 

Use Case 3: MSP for e-commerce or financial services 

Consider Shopify with a customizable storefront, payments, and inventory management system, or Square with a card reader attachable to mobile devices. These two started as MSPs, varied in functionality but presenting a clear solution to a small business problem. They invested in a complete and sellable product, yet the functionality was just enough to start selling it. Overall, the commerce and financial sectors require MSP rather than the MVP approach. The exceptions might be those business ideas that rely on network effects and novel technology that need to go through user adoption first. 

Use Case 4: MSP for established brands

Here, the examples include Apple launching Apple Music, Uber expanding to Uber Eats, and Nike with its Nike Training Club App. All of these were either fully paid or included paid options from the start. These businesses already have a user base and user trust. Plus they have earned credibility. So, it makes more sense to start selling from day one of launching a new product.

Use case 5: MSP for IoT products

First of all, they include hardware. Anytime there is a physical product involved, the MSP approach is better suited to cover the costs of manufacturing and distribution. Secondly, IoT apps require a certain level of data security and reliability. This puts extra costs that need to be recovered. Moreover, consumer expectations from IoT technology are generally higher than MVP should cater to. So, all in all, IoT solutions follow the MSP path rather than MVP. 

Developing Minimum Sellable Product (MSP) vs Minimum Viable Product (MVP): The Differences

The major difference comes from the fact that MSP includes payment for the product. Because of that:

• There are higher consumer expectations compared to, let’s say, just watching an explainer video and signing up for updates as might be in the MVP approach. 
• Then, when payment data is involved,  more security is required. Due to the fact that the app handles sensitive information. 
• Since the user is paying, the access to functionality must depend on user credentials. And that leads to the app having an authorization layer.
• And because users are paying, there might be disputes, refunds, and the need for support. 

So these are basic considerations for MSP development compared to MVP development. 

Critical Features & Scope of Works

MSP is sellable immediately. In most cases, billing, payment, authorization, and customer support are core features. The test coverage is much wider compared to an MVP app. While an MVP may lack some polish, an MSP app must achieve a considerable degree of performance and reliability including bug-free experience. 

For the use cases mentioned above, MSP means a special case of MVP with a much narrower focus on financial performance. It includes a more extended functionality list to include billing, authorization/authentication, payment processing, and a more secure environment. 

Can MSP and MVP apps ever have the same functionality?

Technically, yes. Consider Wizard of Oz MVP or a Concierge MVP. In these cases, the development focuses on the front end only. Most back-end operations are manual. So, once a customer places an order, your team member creates an invoice, sends it manually to a customer’s email, or sends a link via SMS or messenger. Then, your team tracks the payment. Upon payment confirmation, your team member can send an access code to some content or manually assign app minutes or Megabytes depending on the product or service. So, you are basically selling from day one but still have a very rudimentary app functionality. Once sales grow to a level that is hard to manage manually and your revenue stream allows for more development work, you can automate these processes along with other improvements on your next iteration.

Therefore, professional and skilful  MVP development can cover the scenario of prioritizing revenue generation. 

Additionally, even though it is often said that MVP apps can lack some polish, with modern commercial MVP development standards, MVP apps are required to be scalable, performant, and bug-free. Today’s Startup Services are thorough to ensure competitiveness and results for their clients. 

Development Cost

MSP development must meet the requirements of the paying customers. This often requires a larger budget than that of an MVP. 

• You might need to custom-make a great onboarding experience, 
• develop a ticket system for customer issues, and 
• have a helpful FAQs section about the product/service. 

Remember to stay Minimum

Yet, the reminder is that it is a Minimum product. So, most of these things don’t need to reach perfection. The degree of automation and synchronization can be low till the revenues prove to be reliable for further iteration.

So, basically, even with the requirements of the paying customer in mind, the MSP feature set still goes under scrutiny with the following questions:

• Is it a ‘nice-to-have’ feature or a core one? You should cut down or delay nice-to-have features. 
• Can we utilize third-party libraries, available APIs, or other existing services to replace some features and cut down the development time/cost?
• Can the remaining features be simplified even further without losing core functionality?
• If the feature takes a long time and costs a lot to develop, can we perform tasks manually for the foreseeable future?   

Groupon Example

Though doing things manually sometimes sounds harsh, it is quite efficient for launching a startup. For instance, Groupon started in a very cost-efficient way. Its founder, Andrew Mason, created a website on WordPress. Then, manually posted each discount offer. When the customer purchased one, the founder created a discount PDF coupon using free software. Then the very same founder would send the created pdf coupon to the customer via email. 

To conclude, even though MSP often means a larger development cost, you can still adjust it to your budget. Even though it may require some degree of the DIY attitude.  

Privacy Laws Compliance

Generally speaking, it’s only early basic MVPs that will have minimal consumer data protection needs. Both MVPs and MSPs are wired to gather analytics, feedback, and data for further improvement and refinement. In terms of payments, third-party services handle those for both MVP and MSP. It becomes a concern when you store credit card details for reccuring payments like Amazon, Audible, or Netflix. 

Let’s remark that there might be an edge case of an MVP that requires no privacy compliance. Similarly, there might be an edge case of an MSP that requires strict and sophisticated privacy law compliance. However, on average privacy laws compliance is about the same for both MVP and MSP. Business and, consequently, development are data-driven these days. In addition, if the project includes investors, data also becomes a focal point. When there is data involved, there is a need to be compliant with privacy laws. So, there is really no result-oriented way around it.

Syncing With Marketing

Here the difference is the greatest between MSPs and MVPs. The longer MVP grows organically the better it is for the outcomes. MSP tends to get a full-blown marketing campaign: the louder, the better. MSPs are tested sellable even though limited in options products. They often have an audience that awaits their launch. Pre-sales often is a non-negotiable part of the launch. It is not only the chance to create buzz around the product but also to get initial feedback from the paying users. It allows you to better align your product with customer expectations and secure extra financing/customer commitment. Therefore, MSP includes much more work to synchronize itself with the marketing efforts.

Minimum Sellable Product: Origins

MSP as Minimum Sellable Product has many variations – minimum marketable product (MMP), minimum buyable product (MBP), and whatnot. The need to create the terminology is rather pragmatic as the term is. 

When a business owner wants to create a new product, viability is quite an abstract concept. What is exactly a viable feature set? So… Mark Denne and Jane Cleland-Huang wrote a book long ago in 2003 called Software in Numbers. It is much less abstract, way more specific, and clearly outlines MMFs (minimum marketable features) and links them to ‘mini-ROI’ (return on investment) assessments. This is where the actual Minimum Sellable Product comes from. 

Those who need funding or finance things out of pocket should opt for meeting pragmatic needs first. Having a functional MSP under the belt, one could aim further with a completely different or connected MVP idea.   

Summary

Here is a summary of the reviewed points. 

FAQ: Minimum Sellable Product (MSP) vs. Minimum Viable Product (MVP)