[AntiTrace]

http://www.fourhourworkweek.com/blog/201...hihuahuas/

I want to share with you all this article where Noah Kagan (facebook, mint.com, appsumo) provides a pretty solid breakdown of ways to evaluate if your biz idea is worth executing, mainly if your target market is worth more than a million dollars.

He breaks it down into 5 steps:

1. Find your idea

Basically scan amazon, craigslist, ebay to see what is selling. Also, think about everything you use on a daily basis and if it could be improved, or if any products that are used to make that could be improved.

2. Find 1 Mil worth of customers

Take a look at google trends, facebook advertising reach, ebay listings, established competitors, etc. This will give you a good number of potential buyers that you can use in the next step.

3. Asses your customers value

Your trying to find out what your customers spend in your category to help determine your pricing point and establish if your target market is valuable enough to move forward.

Heres the example from the article:

Quote:

1. Find out how much it costs, on average, to buy a Chihuahua (about $650). This is the base cost.

2. See how much it costs to maintain a Chihuahua each year (i.e. recurring costs). Looks like it’s between $500-3,000. For this example, we’ll call it $1,000.

3. Look up their life expectancy, which is roughly 15 years. This is the number of times they’ll have to pay those recurring costs.

Therefore, a Chihuahua’s average total cost of ownership is:

[$650 + ($1,000*15)] = $15,650

Then you use the TAM (total available market) formula:

(number of customers) x (value of customer) = TAM

and if TAM > $1,000,000 then its time for step four.

For example:

I ran a test on a target market I was thinking about entering.
Through researching the industry I found the average customer spent $120 in a single purchase for a similiar product every year.

Through more research I found the target market had a conservative estimate of 12 million customers, growing at a solid 3-4% per year.

(12 million customers) x ($120) = $1.44 billion dollars annually. 122 million monthly.

Now obviously your not going to pull 100% of your target market. This step just lets you if your target market is large enough to justify spending the time and money to reach.

Step 4: Validate your idea

I read this as your minimum viable product. The lowest cost test to see if people actually want your product and if they will actually open their wallets.

You can use landing pages driven by facebook advertising or a google ad campaign. You could tell all your friends your buying product X and want to make one big bulk order. You could go door to door. You could post ads on craigslist in the major cities. You could list similiar items on ebay.

There are many ways to test your MVP, it is limited only by your imagination.

Step 5: Execute.

In this section he has a call to action in the form of a competition. But at this point you just need to get off your ass and fork out the money to get a small operation going with the possibility of scaling up in the future.

If you have made it this point you have establish that you have a target market worth "X" amount of dollars (the higher X is the better) for a product that people are actually willing to buy.

There should be no second-guessing at this point.

[Atlantic]

$15,650!? Fuck buying a Chihuahua.

[AntiTrace]

(08-12-2013 03:19 AM)Irishman Wrote:  

$15,650!? Fuck buying a Chihuahua.

And thats only at 1,000 a year, $83 a month. Between food, toys, collars, leashes, vet bills, registration fees, etc thats a pretty conservative estimate.