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Why should you calculate market potential of a product?

Do you have an idea for a new product? It doesn't matter if you're going to take the product to market or if you would like to patent the idea so that other people can't use it, it is important for you to understand market potential. Properly calculating market potential can show you the benefits of taking the product to market and what you can expect to earn, once it is available. There are a number of ways for you to calculate the market potential, including inventor applications, which can be used on your mobile device (Source: http://www.innovate-design.com/invention-calculator).

calculating market potential
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Of course, as is the case with any product or service that may be offered, there are going to be variations in how much the actual product is worth, once it is on the market. That being said, there are also certain factors which will make a difference in how much the product is worth in advance of taking it to market. On a basic level, you need to keep a few options in mind in order to determine market potential. These would include the population that would be exposed to your product, the awareness of the product after one year, the availability of the product and the amount of people who will actually try it.

Now that you understand the basics of market potential, why is it necessary for you to calculate this number? There are actually a few benefits that are available when doing so which can make a difference when deciding whether to take it to market. Here are a few that can be considered.

Market Potential Means Profitability - One of the most important reasons for you to calculate the potential of a product is to determine the potential for profitability (Source: http://www.wisegeek.com/what-is-profitability.htm). If it is going to be of interest to a wide variety of people, it does have the potential for generating a considerable amount of profit. At the same time, if the product is going to be of interest to a small group of people but they are a group of buyers, it also has a considerable amount of potential. If the product is one that has the potential for being profitable, you can justify patenting it or taking it to market.

Selling the Idea - Along with actually taking the product to market, you may also be able to sell the idea directly. If you calculate the market potential in advance and find that it has a high degree of profitability, it is more likely that is going to be attractive to an active buyer. Of course, you would want to patent the idea to protect it during the time that you are selling it.

You can save yourself a considerable amount of time by determining the potential of a product before you pursue it further. It is one of the first things that should be done before you take a product to market or consider having it patented in order to protect your investment.