Technology

How Do You Estimate the Value of New Product Ideas?

Before you fully throw yourself into developing a product, you should do proper research and test your idea against some parameters. From estimating the time and money you’ll put into the development process, to evaluating how much would users go for your product – there are lots of things to keep in mind.

After all, thousands of products get launched every month, but not all of them are noticed. So here are some things to think about when pursuing your ideas.

First Things First: Estimating an Idea’s Impact

Any idea you are thinking about developing into a product must have some positive aspects, otherwise, it would have been forgotten much sooner. But it’s essential to take note of how they will impact your business. You should always calculate your overall business objectives, which should of course be in your product roadmap.

While many visions and suggestions could be beneficial and have a significant impact on users, they will have the greatest impact if they are in line with the objectives and complement the initiatives already listed in the roadmap.

It is also essential for the features that are put into development to align with the overall goals and strategy of the entire product line. If the head of the product team has created a portfolio roadmap, it is also worthwhile to refer to that. For instance, an idea that alters the way you communicate with customers might be a good candidate for a feature if one of the objectives for the ongoing quarter is to enhance customer communication.

Evaluating the Cost of the Idea

When choosing which concepts to develop into product features, the cost is a significant factor to consider in addition to the idea’s actual impact. At this point, you should keep in mind that suggestions from others will differ greatly from official feature requests or plans you develop on your own.

Externally generated ideas might have some merit, but you will probably have to put in more effort to develop them into real feature plans because they are likely to be lacking perspective and detail.

The extra time required to work on the idea should be accounted for in the cost of the idea. The cost will also be calculated in the time required for development and any additional resources required to make the product a reality. To determine whether it is worthwhile to progress on this concept, consult with colleagues in the necessary departments, such as engineers, solution architects, product devs, and QA testers, among others.

Develop a Product Idea Estimation Checklist: Most Important Steps

What happens after you estimate the value of a product idea? You can use a checklist to help you create an action plan.

And we’ve prepared a checklist just like that below.

  • Assign a score for each value factor: For instance, you can categorize an idea as requiring high, medium, or low effort. That estimate becomes a metric you can monitor using a numerical value which is generally between 1 and 10. 
  • Put together a product value scorecard: A value scorecard combines various metrics into a single value score, providing a consistent way to compare concepts. A weighted calculation can help give some factors more weight than others. For instance, you might value strategy alignment more highly than the effort demanded.
  • Sort ideas in order of value. It is simple to rank ideas from most valuable to least valuable once you have assigned each one a total value score. With so many possibilities, sorting values can be a confusing job. Your team can always enlist temporary help from product development consultancy with proven track records.
  • Continue to assess value. Over time, value scores will change. As you identify additional customer needs or work toward new product objectives, be sure to update value metrics. After the products are shipped, you should revisit your value scores. To determine whether your perceptions were accurate and whether the value you perceived was well received, collect feedback from customers.

Overall, to have value, a product should do more than follow trends in the industry. The most successful and profitable product ideas help to solve issues or fill substantial holes in the market to change users’ lives for the better.

Summarize Your Findings

You ought to be able to assess at this point in the procedure whether you should add features to the product roadmap. And, the procedure ought to indicate whether you require a more precise analysis, so others could understand the point you’re trying to make with your product features. Thus, consolidating all the information into a single figure can make a presentation more impactful.

Two steps are used to calculate the single value figure. To obtain the segment’s weighted value, start by multiplying each segment’s value by its market share. To determine the single value figure, add up all the weighted values.

The aggregated figure should also have a simple text summary that emphasizes the key points of the analysis. You can save the remaining information as bonus data.

Final Word

Don’t be too hard on yourself if your product isn’t worth developing based on the checklist – the product is only as great as its realization, not its sole concept.

Remember, product dev is the spine of any meaningful organization. What you create today can alter the course of your business — whether you are a product manager working on feature advancement to an existing product, part of a sector developing something new, or a CEO reevaluating the organization’s total strategic direction. The aim is to invest in what will bring the most value to everyone involved.

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