product, product-market-fit, minimum-viable-productI’ve been thinking about this matter for months now. I have an idea of producing something similar to a mood lamp. I’ve made a prototype and I think people would love to have it.
But I don’t know how to start producing it. At first I decided to make a few of them, say 20-100 of them, to assess the market and see if people like to buy it or not. But it needs some custom plastic parts which requires plastic injection molding (which unfortunately costs too much).
Packing is also another issue I have to order at least 1000 packing cases so that the price is reasonable. So if I want to produce up to 100 of them it will cost too much and as a result the final product will be unaffordable.
I’m stuck, I don’t know what to do. It is too risky for me with limited budget to take the risk of going for 1000 of them. What should I do? What other successful entrepreneurs with similar ideas have done?
First of all see if you can sell the one you have.
It is pointless investing money into these lamps if no one wants even that one.
If it sells and you have made a profit then consider making more or getting orders. Kick starter and other online crowdfunding places are ideally set up for product creation and funding as you get as many pre-orders as you can and if it hits your funding target you get the money then are able to make the product afterwards.
You have to then make sure that your costs are correctly negotiated and your marketing is right (neither of which are small jobs in themselves)
If no one will buy the first one, for an amount that makes a profit then I would recommend stopping - finding out that a product or idea doesn’t work is a valid outcome and allows you to assess why (bad marketing, wrong product) and saves you a lot of money and wasted time. You can then move onto the next idea.
Again, selling one may be a fluke. If your gathering of orders does not work or you don’t hit targets for orders that would make you profitable then again it may not be the right idea or the right way to market them. Again you can assess if you forge ahead, test a new marketing message or move onto another idea
My advice blends Kev’s post and Denis’ comment.
Use the prototype you have as a “demo,” and try to “pre-sell” as many as you can. That is, show it to people, and ask how many will buy a model, and at what price. While you’re at it, you might ask them what packaging or other features they prefer. Basically, you need to get a sense of how many you can sell.
Basically, you need to “pre-sell” enough units to cover the costs of the injection molding, which is a “fixed” cost. For packaging, which is a “variable” cost, you need to structure it to the number that you can sell (and price accordingly). That is particularly true if the number is significantly less than 1000.
Basically, a successful market launch requires an intersection of product, price, packaging, and consumer preference. That is a tall order. If you can hit all four, you’ve made it. So you need to test the market beforehand by “pre-selling.”
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