Do Your Products Have Product-Market Fit (PMF)?

By Eric Dickmann

April 9, 2019

40% rule, Product, Product / Market Fit

Achieving product-market fit is an important milestone for any company. To be successful in business, you must understand how your products fit into the market. Who is your customer? Is there a market need? Does your product offer something unique? How much will people pay for it? These questions are critical for success in any business.

Product-market fit means having a product that can satisfy a market need at a price people are willing to pay.

When There is Product-Market Fit:

  • The customers are buying your product and responding to your marketing efforts
  • Usage is growing as customers find value in their purchase
  • Money is flowing and you begin to see the results on your balance sheet
  • You're hiring sales and customer support staff to support demand
  • Word is spreading and people are taking notice

When There is No Product-Market Fit:

  • The customers aren't seeing the value of your product
  • Usage isn't growing and there's an increase in attrition
  • Many of deals never close as prospects select a competitor's offering
  • The sales cycle takes too long and the product isn't "selling itself"
  • Product reviews are mixed or negative
  • You're failing to develop customer advocates

Why Do You Need Product-Market Fit?

According to CB Insights, 70% of start-ups failed because there is no market need for their product. So it would make sense that if you want to build a successful company, you need to build products that fulfill a market need. Finding the right product-market fit builds market influence and brand power. The right product at the right price can quickly gain momentum. When done correctly, your business can gain a competitive advantage in the marketplace. The key is a product that delivers value and keeps users coming back. Eventually, it builds customer advocates which in turn help sell your products and grow your business.

Product-Market Fit

Meeting a Market Need?

  • There are two general ways to know if your product has a product-market fit. First is desirability. A product desired by the market is a solution to a problem. Remember, a solution without a problem doesn't meet a need in the market. Second is the feasibility. A company must have the capability to satisfy the need and uniquely deliver a product to the market while making a profit.
  • The 40% rule is a great way to discover if your product is a fit for the market. It involves getting feedback from existing customers or prospects. Ask them how they would feel if they could no longer access your offering. When 40% reply they will be very disappointed, you have good product-market fit. If other solutions could easily fill the gap, your product doesn't have the differentiators to be truly successful.
  • When you're experiencing an increasing percentage of repeat purchases, your customers understand the value of your product. This builds word of mouth which can be an extremely effective and efficient way of attracting more customers. If you get good reviews, coverage in publications and positive feedback on social media; your product is showing a strong fit in the market.
  • Your sales cycle is also a good indicator. If the effort to sell your product is minimal, there is clearly a market need being addressed. This helps deals close quickly and often results in a shorter sales cycle.
  • Lastly, a company with a good product-market fit can grow faster than other companies that don't have products which fit as well into the market. It becomes a real competitive advantage when you do your homework and design products to meet a market need.


It doesn’t matter how innovative your idea is or your personal feelings on the value of your product. It’s about whether anyone needs it and whether anyone is willing to pay for it. The business world is full of examples where innovative products failed in the market. Failure could be the result of external factors or poor execution but often, it's because there was no product-market fit.

Know your buyer and what they need. Understand the competition and how their products fit into the market. What are the limits of price and how should you price your product to sell AND make a profit? When you understand all the factors of product-market fit, only then are you ready to build your product and go to market.

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About the author

Eric Dickmann is the founder of The Five Echelon Group, host of the weekly podcast - The Virtual CMO, and a CMO On Demand for a variety of small and midsize companies. An executive leader with over 30 years of experience in marketing, product development, and digital transformation, he has worked with large, global companies and small startups to develop and execute marketing strategies and bring innovative products to the market.

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