Searching for that perfect product to start a business with can admittedly be difficult. Many of today’s inventors stumbled across their idea by chance or they say it “just came to them.” Or, they were facing a problem in their daily life and came up with a product idea to solve that problem, and the rest was history. When starting from scratch, it can be difficult to identify which of your current ideas are ‘winning’ products.
While there’s no foolproof process for determining that winning product idea, there are three main identifications that can provide the confidence that the products are likely to sell well and be enjoyed by many. Here are three key identifiers for winning products that sell.
1. It’s something brand new
It’s far easier to create something novel than to try to create a product similar to something else that’s already on the market. It creates the element of surprise with a customer, and makes them want to try it out. And, you won’t be competing with other similar products on the market, which means you can dominate the market share as a first entrant to a new market.
One example of something brand new that sold successfully was fidget spinners. One pair of teens that made and sold the fidget spinners made $350,000 in six months alone. By year two, the spinners were last year’s news and stopped selling — but the novelty of them generated enough profit that first year that the founders now have the credibility and financial status to begin something new.
Of course, if you really come up with something brand new and novel, also make sure to get a patent on it to extend the profitability and your exclusivity. Part of the reason that fidget spinners lost their popularity was because of the high number of entrepreneurs who rushed to the market to create ‘copycat’ spinners, resulting in profit losses for the original founders.
2. It has decent profit margins
If you’re going to try selling a new product, it’s important to consider how large of a profit margin you can make on it. Can you make it or purchase it at a low price and justify selling it at a far higher price? This margin is important because you’ll be able to do more with what you sell — that profit margin can go right back into the company, allowing for greater advertising spend and more volume, so you’ll be able to scale quickly. Plus, the fact that you can price a product much higher than you made or purchased it for is a telltale sign that you’re onto something big – whether by virtue of the product, addressing a market need, or because of your advertising flair or compelling copy.
A rule of thumb is that an average profit margin is 10 percent, a low margin is 5 percent, and an outstanding margin is 20 percent or higher. Some examples of products with tremendous margin sizes are toothpaste, or sodas at restaurants. Or, think about the mini bar at a nice hotel. A small bag of gummy bears suddenly costs a whole lot more! How can you create an experience, level of convenience, or a need that justifies a high price?
3. Identify a seasonal trend
Consider how your product can serve one season. Some think of ‘seasonal trends’ as holidays — such as Valentine’s Day — but think beyond one day. Identify a season like winter or summer and a product that could be used for either, such as a quirky inflatable pool toy idea for the summer months or an easy fire-pit maker for the fall months. One of the best examples of a seasonal product is skis and ski equipment for the winter ‘ski season.’
By identifying one of these trends, you can go hard on sales before and during that season, and spend the rest of the year improving products and adjusting advertising techniques – or, you could create another seasonal product that keeps you busy the rest of the months of the year! (Such as water skis for summer if you specialize in snow skis for winter).
The best way to know for sure if a product will sell is to simply get started. Take your product to market and see how it performs, then make adjustments as needed.