How to Find a Niche and Validate Early Stage Pricing

I recently wrote an article about my little SaaS experiment in the Russian market that brought me a steady $1,000 in monthly revenue, Menumake.

That article went viral. Many people asked a lot of questions about the details of the building process and what they needed to do to replicate that success.

Here’s a detailed follow-up on the most interesting and complicated parts, plus some tricks on how to find a niche and validate early stage pricing.

Table of contents:

  1. find your niche with 3 simple tactics
  2. bootstrapping a lean MVP
  3. ship quickly with this tech stack
  4. nail early stage pricing with 2 simple tactics

Three Simple Tactics To Find a Niche

How do you find your next idea and validate demand?

After all, you don’t want to waste time building an MVP that nobody wants.

The first and the most obvious way is to have some stats that identify a pain point.

Tactic 1: Data that leads to a pain point

In the SaaS example from my first article, I used Google Analytics data on keywords people used to find my other startup, Postio.

I built Postio to make it easier for people to find and publish content to their social accounts and groups. As a part of its marketing strategy, I bought and published a dozen articles on various subjects targeted at the web services audience to get some extra traffic.

All of a sudden, Postio started to get a large amount of traffic from Google and Yandex (a Russian search engine) with keywords that have nothing to do with Postio itself.

The keyword data looked like this:

Keyword data for Postio

Clearly, people were having real issues with this menu thing.

I had two options:

  1. build it in the existing project
  2. start a spin-off

I chose the latter, because it would be easier to implement SEO strategy and branding later on.

Also, the concept of menu generation is entirely different than the concept of post publishing, which Postio had been built on.

Back to discovering ideas.

Tactic 2: Paving

You can follow the method below, even if you don’t have any existing projects or stats.

I call it paving.

All you have to do is to go to any niche forum and start analyzing what people are doing there and which problems they’re trying to solve using the community.

For example, since we’re on SitePoint now, let’s consider their sister site, Flippa.

Most webmaster forums follow a common trend: they all have a marketplace section.

This method of buying and selling online is highly inconvenient and risky.

This path was just asking to be paved. And Flippa has done it, elegantly and efficiently, by creating a spin-off centered around making website and domain transactions seamless.

I also observed this trend in the Russian market, and I’m sure people from other local markets can tell the same story.

DigitalPoint screen shot

Just go to niche communities, listen to people, and every time you see an issue, ask yourself: How can I optimize it using the technology I wield?

It’s incredibly valuable to encourage this attitude as a mental process. I know it’s hard to do, because, since school, we’ve been taught to solve problems, not to find them.

You aren’t always going to be given problems to solve. Reverse engineering the process is a valuable skill to have in the workplace and in your personal projects.

Tactic 3: My niche-specific insight tool

Okay, the third method. It’s quite chaotic, but I often use it to reignite my brain and to set it to the right mood. I wrote a simple script that generates a table of entities and corresponding verbs to facilitate discovering new connections.

Here’s an example:

A simple script that generates a table of entities and corresponding verbs

Remember, you need to fine-tune this script to match the niche you’re trying to get insights into. And it doesn’t need to be verbs and entities; you can try anything. The point is to get as many relevant intersections as you can.

Here’s the code I used for the example:

<?
$entities = array('image', 'photo', 'text', 'source', 'site', 'traffic', 'money', 'book', 'e-book', 'file', 'smartphone', 'camera', 'notebook', 'cities', 'distances', 'cars', 'mobile', 'book', 'sex', 'love', 'classifieds', 'ads', 'alcohol', 'travel');
$verbs = array('sell', 'buy', 'rent', 'exchange', 'free', 'give', 'book', 'clean', 'find', 'classify', 'compare');

echo '<table style="width: 100%">';

foreach ($entities as $entity)
{
    echo '<tr>';
    foreach ($verbs as $verb)
        echo "<td style='font-size: 14px; padding: 5px; text-align: center'>$verb $entity</td>";
    echo '</tr>';
}

echo '</table>';
?>

There are plenty more tricks for finding a good idea, but let’s not become laser-focused on them now, as we need to move to the next step of bootstrapping a startup.

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Source: Sitepoint