The 6 steps to build an MVP and start getting profit right away

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We all know the tale — a business builds an innovative, cost-effective product and then can find no one to buy it. As a result, in 2020, US firms lost a good total of $260 billion on unsuccessful development projects, as reported by CISQ.

The situation is even worse for startups. According to Startup Genome, only 1 out of 10 new businesses survive.

The main reasons for failure are believed to be poor planning and management. However, when tapping into an unknown market, how can you predict what will work and what will not?

The answer is — you should build an MVP.

What is an MVP?

An MVP or a Minimum Viable Product is a limited version of a new product that allows its creators to collect the maximum amount of validated information about customers with the minimum effort spent.

The validated information is knowing whether or not the customers will buy the new product. Therefore, a good MVP is an experiment to test an assumption that the idea has real value to the target market. Moreover, it yields information on whether your idea is viable at a larger scale and what market wants your concept apart from the target one.

At the same time, an effective MVP is cheap and fast to build. It also doesn’t produce any negative impact from releasing a half-baked idea.

What is an MVP
A Minimum Viable Product concept

The purpose of building an MVP

Before you learn how to build a minimum viable product, you should understand why to do it. The main goal of MVP development is to learn about the product-market fit. It is a safety cushion that prevents you from investing in an inadequate product that doesn’t meet the market demand. 

By focusing on the core functionality before stretching your efforts on a complex product, you can:

  • Refine your idea. An MVP allows you to test the customers’ reaction to your product and learn how they feel about particular features and what you may have missed.
  • Attract clients and investors. An MVP is the perfect way to showcase your idea and get the required funding. 
  • Boost development efficiency. The feedback from the MVP will show what you should focus on and help allocate resources better.
  • Reduce time to market. An MVP can be a usable product that brings tangible value to its owner. Even when it doesn’t, it helps you polish out your full-scale product and better position it for your greatest profit.

Benefits of an MVP

An MVP in business can prevent many risks when launching a new product or expanding to a new market.

  • Saves costs. Around 40% of startups fail due to financial problems. With an MVP, you’ll know if your idea is worth the investment and what areas you should focus on. Also, you have a higher chance of attracting funding.
  • Saves time. For once, you will know the idea isn’t going to work, so you can use your energy for something better. Second, if the idea is viable, you can estimate how much time it will take to develop a complete product and create a strategy to ensure the best timing.
  • Prevents code bugs. Fully-fledged product development takes more time than an MVP. So, given the unstable market environment, you’ll have to tweak and pivot on the go. It, in turn, will lead to a technical debt that will impact your product’s performance and increases the quality assurance cost.
  • Boosts your confidence. We live in a result-driven world. Being not able to show your product for a while may evoke doubts in your supporters, team, and even yourself.
Benefits of MVP development
MVP development perks

Successful MVP examples 

Many world-famous businesses have leveraged the benefits of creating an MVP. For example, Stripe started with an HTML website aiming to verify the market demand for developer-focused payments API.

Instagram tested the waters with a social check-in app which didn’t perform well. So, they decided to focus on one feature: image posting. The idea got traction with designers and photographers and later gained wide popularity as they introduced filters and other features.

Syndicode has its list of successful MVPs its specialists put their hands on. For instance, Harvest Inn is a booking platform for campervan travelers in Australia that we developed from scratch. Our services included preliminary research determining how to build an MVP to get the best market fit. The resulting product fully met the client’s requirements and had been successfully landing early adopters.

HarvestInn case study
HarvestInn

An online education marketplace, Evrlearn, is another MVP project. Syndicode’s team developed the client’s idea, brainstormed the most efficient technical implementations, and provided technical consulting. The platform launched publicly in 9 months and gathered positive feedback. Currently, Evrlearn features over 3,000 courses from renowned universities and keeps growing its user base.

Evrlearn case study
Evrlearn

HLPRS is one more result of the coordinated work of our specialists. The client wanted to expand the target customer base but lacked the knowledge to prepare the product for the switch. Our software development company stepped in with market research, innovative suggestions, and implementation plans. In 10 months, the client started receiving orders from the target market.

HLPRS case study
HLPRS

Who does not need an MVP?

Not all new products need to go through an MVP development process. If you see any of the following signs, you might not benefit from launching a core version and should go with a full product:

  • Strong customer base;
  • Clear customer expectations;
  • Proven demand;
  • Established competition.

If the market for your product is established and competing products have a stack of features, a basic version will not likely satisfy customers. An exception is an innovative idea that taps into previously unmet needs or provides a solution in a way that makes old features redundant.

How to build an MVP?

Before finding out how to design an MVP, ensure you have a clear idea of what you’re trying to create.

MVP planning starts with answering these questions:

  • What problem will my project solve?
  • How will it be helpful for the end user?
  • Why would they want to use my MVP solution?

Besides, you might want to start engaging with investors. Likely, you won’t get any funding before you actually build something, but it won’t hurt to make some connections. Later, when the development is in full force, you won’t have much time to devote to investor search.

Step 1. Research the market

The lack of market need, harsh competition, and flawed business models are the second top reasons MVPs for startups fail. Although MVPs are expected to be fast to market, their success requires extensive research and thoughtful planning. That’s why many development teams hold discovery sessions at the project start. Below, we’ll review the main points to consider.

​​Validate the idea

First, every good product starts with discovering a consumer pain point. It would be best if you thought about how to build an MVP that alleviates the problem rather than entices someone. Investigate your target customers and create a detailed portrait.

Consumer profile for a bookkeeping solution
Customer profile example

Explore the competition to understand if there is a need for your product and what sits behind your target customers’ purchasing decisions. Analyze:

  • Customer reviews;
  • Services offered;
  • Business relationship type (B2B or B2C);
  • Product specifics;
  • Traffic channels used;
  • Prices;
  • Best selling products;
  • Monetization methods;
  • Best customers;
  • Specialization.

Next, identify the strengths and weaknesses of the existing products in your target market by performing a SWOT analysis.

Sample SWOT analysis for a grocery delivery app
SWOT analysis

Finally, use the collected information to describe your product vision. Specify:

  • Who is your MVP for?
  • What problem does it solve?
  • What category does your product belong to?
  • What benefits does it deliver?
  • How is it different from your primary competitors?
  • What is your USP?
Google's product vision
Product vision example

Keep an eye on competitors

Performing a simple Google search for a product similar to yours will reveal your direct and potential competitors. Analyze:

  • Their monthly traffic (to know how many people use their products);
  • Traffic sources (to know which brings the most traffic);
  • Where they are the most popular (to know the geographic locations of your target customers);
  • How their products rank locally or globally.

This research will also reveal the metrics you should monitor to evaluate the success of your product.

Think of keywords that your customers can potentially use to search for your product and use them to identify your indirect competitors. Then, look at their advertising strategy and analyze the efficiency of their channels and efforts.

Finally, research the problem you are trying to solve with your product. It will show your future or replacement competitors with their marketing strategies to analyze.

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Step 2. Define features

A minimal viable product strategy is founded on offering only the features necessary to provide value to the market. Moreover, the fewer features the product has, the faster you can get it to the market and adjust to changes.

At the same time, an MVP is not an unfinished product version. It must be wholly usable and create a positive impression to provide you with the correct user data. Therefore, you shouldn’t rely on sole intuition when determining how to build your MVP.

The right way to do an MVP
How to build an MVP

Consider your business objectives

Think about the intended product features that best align with your strategic goals. Are you working towards getting a specified number in revenue by the end of the year? Do you have to attract a specific amount of visitors with limited resources?

Also, look for additional purposes an MVP may serve. For example, it may attract customers from an adjacent market and widen the user base for your existing products. However, if your priority is to keep the focus on your core offers, this MVP plan is not viable.

Instead, you might want to focus on offering new functionality to complement your existing products.

Keep the costs in mind

More often than not, teams and business owners are limited in the budget for developing an MVP. Still, your MVP should be attractive to target users to convince them to try it out. Hence, we recommend sticking with the Pareto principle and determining how to build an MVP in which 20% of all the desirable features will meet 80% of your users’ needs.

To help with it, you can use the priority matrix as shown below. Go over your feature list and answer two questions for each:

  • Is it simple or difficult to implement?
  • Is it essential or good to have for the user?
A method to prioritise features
Priority matrix example

Another effective way of deciding how to build MVP features is the RICE (Reach, Influence, Confidence, Effort) formula. Again, consider each feature in your list and use real data from your research to calculate:

  • Reach – how many users’ lives will it improve over a specific time?
  • Influence – how much will it improve the users’ lives? (Vastly – multiple Reach by 3, significantly – 2x, somewhat – 1x, not much – 0,5 x, a little – 0.25x);
  • Confidence – how sure are you that this feature will take off? (High confidence – multiply the previous number by 100%, average confidence – 80%, in doubt – 50%);
  • Effort – how many person-hours the MVP implementation will take? (Divide the number you have from the previous step by Effort).

RICE score=(Reach x Influence x Confidence)/Effort

Finally, estimate the cost of developing the essential features. If it doesn’t match your expected budget, review the prioritization process or consider attracting more funding.

Step 3. Create UI/UX design

Despite the word “minimal” in the MVP name, its task is to make the best possible impression on the potential audience. Therefore, UI/UX design is crucial to the MVP’s success. A well-thought-out visual experience will help the user understand what your product can do and how to use it.

Components of a Minimum viable product
MVP components

Map out user flow

To ensure the MVP is convenient, you should put yourself in the potential customer’s shoes and think through the flow from opening the app or website to completing the goal (purchase or delivery).

In addition, planning the user flow will help develop your MVP with customer satisfaction in mind and ensure nothing is missing. When creating a user flow, keep in mind these things:

  • Who is your user? There might be several categories of them;
  • What are the actions the user needs to take to achieve their goal?
  • How will the flow end?

Keep it minimal

There are several principles to follow when deciding how to build MVP design to provide good UX and remain on a budget:

  • Aesthetic usability. This effect implies that visually attractive things look easier to use. If your MVP’s interface looks beautiful, the users will automatically assume it is more comfortable than any similar but less appealing solution.
  • Form follows function. The MVP product’s design should relate to its function and have no extra details. In other words, if you take something out of it, the picture shall lose its purpose for the target audience.
  • Limited CTAs. When designing an MVP, you should be as precise as possible when telling the user what to do. Therefore, reduce the number of CTA options to an essential minimum.
  • Signal-to-noise ratio. The best UX for an MVP sends a clear signal through precise and understandable texts, graphics, icons, etc., with little to no distracting noise. The latter includes graphic elements that cannot be interacted with or have a simpler alternative.
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Step 4. Develop an MVP

Now that you have the essential ingredients sorted out — the target market, the features, functionalities, and UI/UX design — you can start creating a software product. First, you should decide on the tools and hands to create an MVP. Moreover, don’t underestimate the importance of quality assurance to mitigate the risk of launching a buggy solution.

Find a development team

You have three ways to go about this:

  • Hire your talent to build an MVP

This option gives you complete control over your team’s composition and the way they work. Also, communication is faster, which is good for quick fixes and change handling.

However, in-house development takes more time and money since you must find and hand-pick professionals, set up the IT infrastructure, provide office space, pay overheads, etc. Therefore, it isn’t well-suited for a first-time project.

In addition, you must know how to build an MVP from the technical side to manage development tasks properly. On the other hand, you can get on-demand IT consulting services to help you out.

  • Outstaffing

This engagement model involves hiring temporary employees from an external vendor. Sometimes it goes under the “dedicated team” name. The oustaffed specialists work under your management and allow you to arbitrate costs by being fully remote.

Furthermore, a dedicated development team gives you access to a wider talent base. You also become more flexible in scaling your team or replacing an employee.

Yet, be careful when selecting an outstaffing vendor to avoid miscommunication and motivation problems within the team. Besides, this model implies your full responsibility for the project’s outcomes.

  • Outsourcing

Outsourcing is the practice of farming out the development to a third party. Similarly to outstaffing, this is a remote model where you may choose to outsource within your country, nearshore, or offshore.

The benefits of outsourcing include lower costs, access to a wide assortment of skills and innovations, and increased flexibility. You can better focus on strategy or your core competencies since the management usually occurs on the vendor’s side. It, in turn, makes outsourcing a preferable option for startups and first-time entrepreneurs.

On the contrary, there is a risk of lacking control since you are not actively involved in developing the MVP.

ModelIn-houseOutstaffingOutsourcing
ProsFull control over the project
Enhanced security
Flexibility in team size
Reduced cost
Rapid response to project changes
Reduced cost
Specialized skills/knowledge
Turnkey delivery
ConsTime and cost investment
Possible skill gaps
Risk of limited vision
Culturally diverse team
Possible performance issues
Language/cultural barriers
Possible lack of control
When to useFor long-term development and security-sensitive projectsFor large or continuous projectsFor small and one-time projects

Decide on a tech stack

There is no one right answer regarding how to build an MVP and what tools to use. When choosing a tech stack for an MVP, consider the following:

  • Time constraints;
  • Budget;
  • Talent pool;
  • Maintenance and scalability;
  • Security.

In the table below, you can see the top popular tech stacks used to build an MVP.

Analysis of tech stacks for MVP
MVP tech stack

Iterate

Regardless of how much money and effort you invested in making an MVP, it may fail. Yet, many entrepreneurs increase their chance of success using lean software development practices, namely the Build-Measure-Learn (BML) principle.

The principle entails minimizing the time spent working behind closed doors and bringing something to the public to test as soon as possible. It helps identify mistakes early and pivot to meet customer needs without much rework.

Thus, following the BML principle, you may first build a prototype which can be anything from a spreadsheet to a front stage with a 100% manual backend. Then you should test it with a real audience, collect and measure feedback, and decide how to build an MVP with more complex features in the next round.

How to Build-Measure-Learn
Build-Measure-Learn principle
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Step 5. Launch, monitor, and improve

As you’re ready to place your MVP on the market for the first customers to try, you may take one of the several approaches:

  • Soft launch. It is a product release to a limited number of users to reduce financial risks, identify bugs, and test the monetization strategy;
  • Hard launch. It is a release with massive marketing activities to attract a wide audience. Not many MVPs go hard launch unless there is a predictable audience;
  • Dark launch means releasing a product in versions and introducing each new feature to a small number of users to test. This approach is based on continuous delivery.

Metrics to monitor

To measure the success of your MVP, you should be able to evaluate its attractiveness to a viable pool of customers and its value in solving the target user’s problem. The metrics that can help answer both questions are:

  • Acquisition rate – the number of potential buyers who came across your MVP within a specific period;
  • Conversion rate – the percentage of visitors who became paying customers;
  • Return on investment (ROI) – the value created by the MVP against its costs;
  • Referral rate – the number of unique referrals made by existing customers;
  • Retention rate – the proportion of existing customers who continue to use your product after a specific period;
  • Churn rate – the number of users who stopped using your product;
  • Customer satisfaction score (CSAT) – the percentage of satisfied customers.

Get feedback

User feedback is essential to improve your MVP and pave the road for full-fledged product development. The most popular ways to collect MVP feedback are:

  • Surveys;
  • Landing pages;
  • A/B testing;
  • Focus groups;
  • Interviews;
  • Crowdfunding campaigns.

In-app surveys work great for assessing CSAT by asking users to rate the product or a specific feature after using it. You can also survey users to see if they will likely recommend your MVP to friends and measure the NPS score.

A landing page is a way to get sign-ups, determine what information users see as the most important by measuring clicks, and assess your pricing adequacy.

A/B testing allows you to see what users think about different versions of your product from their interactions.

Focus groups and interviews are possible from the contact information gathered on sign-up. Then, you can get in touch with customers and ask them open questions about your MVP. This way, you can get deeper insights, although these methods are relatively time-consuming.

Crowdfunding is an excellent way to learn if people are interested in your idea. This is pretty straightforward: if you get contributions, you have the audience’s interest. You can also use forms to collect more in-depth data about your customers and their wants.

Step 6. Start marketing

To collect feedback effectively, your MVP needs an audience. However, MVP marketing differs from traditional in that it often has no brand to rely on, no track data, and you don’t know what can possibly go wrong.

Furthermore, an MVP is not a final product, so it doesn’t need customers but pilot users willing to drive the development. So, an MVP’s communication strategy should base on finding the right people and persuading them to pay for the privilege of being early adopters.

Here are some tips to attract traction and form the basis of future sales:

  • Use digital sources. Find people confident experimenting with new products; they are most active on digital channels. Perform keyword research and use content optimization and social listening tools.
  • Explain your MVP. Decide what kind of content is the most convincing and create a strategy to tell about your product. Support your arguments with credible facts.
  • Create a buzz. You want as many people as possible to know about your product. To achieve this, you can create a blog and use it to get backlinks and build domain authority. Then, you can build relationships with publications and influencers. Affiliate programs are also a great way to get in sales conversions.

Common challenges of building an MVP

Although building an MVP is a great way to test the market, it comes with many risks and requires knowledge to bring the expected value. Often, entrepreneurs fall prey to misunderstanding the real purpose of launching an MVP, leading to the following pitfalls.

Lack of market need

If, despite all the research and planning, you realize that no one wants your product, chances are your entire product strategy was wrong. Usually, it derives from trying to solve an irrelevant problem, uncertain marketing, and sales (when you don’t know your target users and where to meet them), or the inability to define your core differentiator.

What to do:

  • Reach out to your target audience with questions about problems they face. It can provide you with insights on how to build your MVP to bring value;
  • Reconsider your marketing and sales activities. You may have to hire a specialist or outsource this part;
  • Clarify your vision by going through redetermining your product’s purpose, core values, and unique features.

Missed deadlines

Unprofessional management and poor development team skills are the most widespread reasons for projects falling behind the due dates. Unskilled members work slowly, make mistakes, and can’t effectively manage their workload. They also struggle with bugs and improving the MVP after receiving feedback.

What to do:

  • Delegate. If you used to do all the management, chances are you have too much on your plate. Designate a responsible person to ensure the tasks are on schedule and report to you on the milestones;
  • Refine requirements regularly. Every couple of sprints, hold a product discovery workshop to keep everyone updated about the project status, measure employee workload, and define recruitment solutions;
  • Get professional support by hiring on-demand specialists to solve tasks in which your core team lacks experience.

Hard to pivot after negative feedback

Often, entrepreneurs face issues deciding what features to include in the MVP, especially when the previous set wasn’t successful. It may indicate that you expect to see a full-functioning product rather than a testing tool and inadvertently overload your MVP.

On the other hand, many MVPs turn out too hasty and undertested. It results in poor design and buggy performance which diverts users.

Finally, the feedback may be simply misleading due to coming from non-target users or its large volume.

What to do:

  • Start with a prototype. Building something straightforward will help you define the vital features and visualize the user experience, which you can later transfer into an MVP;
  • Use the Goldilocks effect. First, select a set of features that best reflect your product’s value. Then create a premium version with more features and slightly better functionality at a higher price. Finally, add a somewhat cheaper option with fewer features or a not-so-well-made design. Offer the three versions to the target users and measure feedback. You should be able to identify several buyer groups with different budgets and expectations for your product.
  • If feedback is the suspect, try to differentiate users who suit your ideal profile and consider their input only. You can also divide feedback into categories and prioritize them according to value or, say, a type of bug.
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The cost of building an MVP

A quick Google search for custom MVP development cost will give you numbers ranging from $45K to over $200K. It depends on several factors, including the selected tech stack and your development team’s proficiency. That’s why asking for quotes from different development agencies will probably give you different numbers.

We have covered this matter in detail in our earlier blog post about custom software development costs. Now, let’s go briefly through the major cost factors.

MVP size and complexity

The more user types the software serves or the more data pieces it has to process, the more time it takes to complete. Sometimes the software size is estimated by summarizing the number of actions the user can perform before they achieve their goal.

Additionally, most workflows can be infinitely complexified, affecting the development time and price. Moreover, enabling users to set their preferences in the system is another expense item.

Customization effect on the price
Feature complexity to price ratio

Platforms

When building an MVP for a mobile application, the number of platforms you target can add up a substantial amount to the final price tag. Thus, native iOS development usually turns out cheaper than building for Android. A cross-platform MVP is the most expensive option.

At the same time, web development is the most budget-friendly, but a desktop-only version will limit your reach. So, you might want to create an MVP web app to maximize your presence while remaining on a budget.

Integrations

The more sources you want your MVP product to connect to receive real-time data, the longer it takes. In addition, every external system has data inputting and updating processes that should be tailored to fit your software.

Moreover, ensuring data coherence takes much effort due to data silos when information is isolated from specific departments. Finally, data can bury each other at a certain volume, so a developer should ensure its proper organization within the system.

All these challenges take time to handle and increase the cost of making an MVP.

Engagement model

An engagement model defines your relationship with the development team, areas of responsibility, timelines, payment terms, etc. There are two engagement models in MVP software development: Fixed-price and Time & Material. Each is better suited for specific cases and can slow down the MVP process for others, making the costs skyrocket.

Thus, the Fixed-price model requires predefined requirements, fixed timeframes, and fixed costs. It is effective when the idea is clear, specifications are known, and there is little chance of changes. However, making changes will be costly since it involves much rework.

The Time & Material model involves billing for the actual scope of work based on the hourly rates of the team members. Contrary to the fixed-price model, it allows you to adjust needs, change direction and features, and get the product to the market quickly. On the other hand, it is hard to tell the exact cost of the product before the development starts since the scope is unclear.

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Summary: launching a new software product

It is all there is to know about how to build a minimum viable product. So let’s summarize the key points.

MVP software development is a simple and quick way to present your product to the target users and see if you can deliver any value and not waste many resources. Since it is not free to build, it won’t hurt to do some research first. 

Talk to the people who you know have the problem your product solves to tell if it potentially works for them, search for similar offers in the market and analyze their strengths and weaknesses. Then, use this information to equip your MVP with essential and unique features.

Next, your MVP should be likable for users to want to try it out. So, find out what your target users think is beautiful and invest in UI/UX design. Keep it minimal, but ensure it looks nice.

When it comes to the development stage, timebox your specification to things you can really build within the set timeframe. You will launch fast and get feedback to work on sooner. Then, iterate and continue improving your MVP solution until it effectively solves the problem.

Hopefully, this guide will help you build a valuable and profitable product and avoid some costly mistakes. And if you need a consultation or a responsible team to work on your MVP project, Syndicode is here for you.

FAQ

  • The MVP software development timeframe depends on how you build an MVP and what exactly you build. The main factors influencing the project length are the number of features, design complexity, and human resources. However, the first release is usually 3-6 months from the development start.

  • No, that’s a misconception. Businesses with established products can build MVPs to expand to a new market, quickly test a new feature, or collect data to decide whether they should implement some innovative idea.

  • What is a good MVP? A successful MVP must be able to test an idea in a small-scale way and limit the negative impact that may result from releasing a raw product. It also should be fast to make and bring you the necessary information at the same pace as the changing market conditions. To build such an MVP, you should do basic market research to ensure your idea has any chance of survival. Next, identify your idea’s value to users and why they should pay for it. Further, you want to create a visual design and ensure the MVP’s attractiveness and convenience. Finally, you should collect feedback after launching the MVP and improve it in the next iteration.

  • When transitioning from an MVP to a fully-featured product, use the feedback collected during the MVP process to improve, add, or drop features. Don’t forget about the negative feedback, as it points out the problems you can fix in your full product. Next, stop safeguarding against failure and prepare for scaling. You’ll need staff, infrastructure, and inventory to handle an influx of orders. Finally, invest more in marketing. One more thing, though, do not stop tracking all the metrics you did with the MVP. They will help you constantly improve your user journey and convert more leads.

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