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I, like a lot of developers, would love to start developing my own range of products.

One thing I am wary of is building something that either has no market or where the market is so congested that I cannot be heard above the noise.

I think that finding the market is more important than product selection, so I want to find the market first before building the product. I am even considering development in a “cold” niche as opposed to a warm niche.

I have been using both the Google keyword tool and another tool to narrow my search and examine long tail possibilities.

Does anyone have any advice for:

  • Selecting a market this way?
  • What is too little and too large a search count score?
  • What Adwords cost too much to consider bidding on (or even if there is such a thing as too little)?
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Your long-term success is probably better determined by doing something you are interested in or something that solves your own problem - rather than looking for other people to tell you what you should build. – TimJ♦ Jan 22 '10 at 15:09
I was not expecting for people to tell me what to build. I wanted to know if people have any process for niche selection that might help. – dagda1 Jan 22 '10 at 18:07

4 Answers

up vote 4 down vote accepted

Building for Yourself or Other People

You can find success building for yourself or for other people, but the key is to have unfettered access to at least one person in the demographic you're looking to sell to. Niches where you know someone on the inside (what I call a "warm niche") will be dramatically easier to succeed in than something you pick out of a hat based on keyword demand.

The problem with building for yourself is that unless you have hobbies other than software development then you are typically entering an already crowded market since every developer wants to build software for other developers. In general I don't recommend building software for developers for a number of reasons including the competition and the fact that most developers expect things for free.

With that said, if you have hobbies or interests where you find a need for an app/website then you are in a good position to build something for a non-developer audience since you yourself are probably an expert in what needs to be built.

Keywords

In terms of keywords: there is no "right" value that you need to hit coming out of a keyword tool. Since traffic is only one-third of the equation (with the other two parts being conversion rate and sale price), your keyword numbers could come back at 300 searches per month and you could build a successful business if you have a high conversion rate and high sale price, or you might need 1500 searches per month if you have a lower conversion rate and sale price.

BTW - there is never a keyword score that's too high, but there is competition that is too high. To get an idea about competition do a search for a term you want to rank for and look at the top rankings - do they have a lot of backlinks and solid on-page SEO? Micro Niche Finder also provides a good SEO competition score in the column all the way on the right, the SOC column. The lower the better.

AdWords

Regarding AdWords, it depends on your conversion rate and price. In general I hesitate when I see AdWords bids above $3.50 because that means you need a high price point to make it work. If you consider a 1% conversion rate your price point needs to be $350 to break even.

Finally

In conclusion, remember that keywords data is only one way to assess a market. Other ways include:

  • Talking to real customers (which should be your next step after finding a niche using keyword info)
  • Putting up a test site and sending traffic to it to see how many people will provide their email address based on your description or screen shots of a product you are thinking of building. You should do this after keyword research and before writing a single line of code.

I hope that helps. Good luck.

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up vote 3 down vote

I have to agree with Tim in the previous comment. You are much more likely to succeed and be passionate about a startup if you start by doing something you are interested in. Don't think about where a market is, start with a problem you have and its very likely that many people out there have the same problem. Check out this article by Paul Graham : Making New Things Do What You Love

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I did start with the approach of making something I love but the market is saturated and I seriously doubt I would be heard in the noise. I might spend months developing something that nobody will buy. I want to be sure that there is a market for what I want to sell before developing it. – dagda1 Jan 22 '10 at 17:28
Heres an inspirational story. i just thought it was a cool idea readwriteweb.com/readwritestart/2010/01/… – Eric Amzalag Jan 23 '10 at 1:52
up vote 2 down vote

my suggestion is to just go ahead and build something great, something that you like, and even better something that you could use yourself.

Instead of using tools or Google... ask some real business owners around you... ask what part of their business is more painful to them to deal with and then just look at possible ways you could help by writing software to make things better, to save them time, etc...

Good luck!

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up vote 0 down vote

I'm responding directly to this:

One thing I am wary of is building something that either has no market or where the market is so congested that I cannot be heard above the noise.

I think that finding the market is more important than product selection, so I want to find the market first before building the product. I am even considering development in a “cold” niche as opposed to a warm niche.

It seems that every programmer that ever lived wants to create and sell their own text editor when they want to branch out with a product. Well, today, every programmer wants to clone Facebook, or do things just like YCombinator people are doing, it seems. Programmers are extremely "me too" types. You really have to fight that urge.

The way one "discovers a niche" (if you mean a business niche) is to be around non technical business people, learn different problems that occur in business, and study things until a solution that uses technology that you have mastered becomes apparent. That's the only way to find a unique set of problems that have not been exploited to death with solutions yet: get away from the fox hole of software development and learn what real people are doing and then what they may need.

Note that you want to be around NON TECHNICAL business owners. The more you hang out with people who can do what you do, the more competition for the same things that you find.

This process is serendipitous...uncertain and time consuming. It's almost like hunting wild game. You need to go where the actual users would be and study them at length.

A LOT of successful ISV owners I have worked with bootstrapped a successful business from a contract project where they did not sign a non compete. Example, a guy I know wrote a real estate program for a realtor in the mid 90s, and from that built a successful company that is a real estate niche systems provider.

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