Model market fitting threshold jpeg
Posted: Thu Feb 06, 2025 5:13 am
Find out if you have model-market fit
Of course, once you have a $100 million business, it’s easy to understand where you’ll end up on the Model Market Fit graph. But what about before then? Your Model Market Fit assumptions revolve around some simple math:
ARPU x Total number of customers in the market x Percent you think you can capture >= $100 million
Take the average annual revenue per customeruser, multiply it by the total number of customersusers in your target market, and then multiply that by the percentage you think you can capture. This should be macedonia mobile database equal to or greater than $100 million.
This may seem simple, but many teams I see and advise don’t do it this way. Each variable in this equation has some assumptions, and I recommend considering them in the following order:
Total number of market customers
First, define your target market. You should have done this during the market-product fit phase anyway.
Once you have this definition, you should then research how many of your target customers meet these criteria. If you find that number is too small, then you can expand the criteria to target a larger market, but you will need to go back to the market-product fit step to see if this is still the case. You will also need to understand if customers who meet your expanded criteria are willing to pay the same amount.
Of course, once you have a $100 million business, it’s easy to understand where you’ll end up on the Model Market Fit graph. But what about before then? Your Model Market Fit assumptions revolve around some simple math:
ARPU x Total number of customers in the market x Percent you think you can capture >= $100 million
Take the average annual revenue per customeruser, multiply it by the total number of customersusers in your target market, and then multiply that by the percentage you think you can capture. This should be macedonia mobile database equal to or greater than $100 million.
This may seem simple, but many teams I see and advise don’t do it this way. Each variable in this equation has some assumptions, and I recommend considering them in the following order:
Total number of market customers
First, define your target market. You should have done this during the market-product fit phase anyway.
Once you have this definition, you should then research how many of your target customers meet these criteria. If you find that number is too small, then you can expand the criteria to target a larger market, but you will need to go back to the market-product fit step to see if this is still the case. You will also need to understand if customers who meet your expanded criteria are willing to pay the same amount.