Ask HN: Can you put a value on your product at development stage?
As the title really.
I'm building a software product that I aim to make a business of. How do I place a value on its potential?
I'm building a software product that I aim to make a business of. How do I place a value on its potential?
Would it be appropriate to place the valuation somewhere in between the current mobile and desktop products?
Anyway, you you know the number of potential customers (TAM, or "Total Available Market), you then have to figure out pricing for your product. Again, this is a heuristic process, with a fair amount of guesswork. But if there are any similar products to yours, you can find out how much they cost, and approximate based off of that. You'll also have to know if you intend to compete as the "low cost" option or as a "premium" option or something else.
Once you have # of cusomers and prices, you can just multiply to get a theoretical maximum revenue for your product. If there are 10 customers for your $200.00 product, you probably need to try again. If there are 2,000,000 potential customers for your $5,000,000 product, you are probably onto something.
Of course you won't actually get to all of your TAM. Your competitors will snag some business, some just won't feel like they need what you're selling, some will want it but won't have a budget for it, etc. But this kind of "back of the envelope" stuff can give you a baseline to start working from.
If you're US based, various US and State level government bodies have demographic info (business and consumer) that can help you size your market, and for B2B there are companies like Hoovers that you can pay for data that will help out.
There are also market research firms that specialize in doing this sort of research.