How to Build a Minimum Viable Product (MVP) for Startups: The Ultimate Guide
An MVP, or minimum viable product, is a common business and startup term familiar even to those not engaged in product development. Using an MVP is a successful strategy, as it gives every startup a chance to present itself to the public and win over an audience; besides, it helps cut expenses and attract investors to the project.
According to statistics, up to 90% of startups collapse. About 10% quit during their first year, and up to 70% would not survive between their 2nd and 5th years. The most common causes for this are as follows:
- misunderstood or under-studied market needs (about 40%);
- ending budget (30%);
- the competitors who succeed more (20%);
- marketing, pricing, and design issues (10%).
MVP development is a good way for startups to avoid these dangers and bring the project to fruition. On this page, we'll help you figure out what a minimum viable product is and how to build an MVP that rocks so you'll better understand the MVP product development behind the scenes.
The MVP meaning can be briefly described as follows: this is a product's test version that includes a few critical features that prove attractive for an end-user. An MVP can take the shape of a web or landing page, a custom web application, a program, or even a physical form.
The MVP development process is usually split into several stages and can be performed using diverse software development methodologies and techniques. The final aim of MVP development for startups is:
- verifying the product's viability;
- noting its strong and weak features;
- and examining the reaction of the intended audience to the product.
What's the primary value of building an MVP for startups? It allows for leading the product toward prosperity by lowering costs, accelerating development, and considering real consumers' feedback when making improvements.
An MVP is a powerful tool at the beginning of a product development process. Creating a minimum viable product at the start of a product development life cycle will show you whether your idea is as worthwhile as it seemed and what direction is safe to move further as you try to find product-market fit.
Plus, MVP development is the key to establishing connections with the target audience at lower costs and speeding up product delivery.
As a rule, a product, whether an app, tool, or service, is intended to meet the consumers' demand. It's supposed to solve some user problems or improve their everyday lives using this particular product. If that's how the product turns out to be, users will discover its value on their own, meaning it may become a "self-seller" with a steady influx of new users who found out about the product via word of mouth. Basically, that's what product-led growth is about, and this is what you should strive for even when you're just starting to build an MVP.
The feasibility of the MVP approach has been well-proven by giants such as Spotify, Amazon, and Airbnb. Moreover, it helped many other large and small startups with good product ideas that were developed into bestsellers by choosing a strategy that paid off.
The MVP benefits are closely linked to the main purpose it serves, as well as its main goals and features. We'll consider them in detail and state how an MVP for startups can bring value and positively affect a project.
- Detailed analysis of your product based on customer experience. Customer feedback is priceless during the MVP creation process, as it gives you an opportunity to identify the most and least appealing parts of your product or service, giving you a chance to make it stand out, serve user needs, and be competitive.
- Possibility to attract investors. Having a working MVP to demonstrate increases your chances of appealing to potential investors, and it's among the best practices for pitch deck creation too. Investors are likelier to be involved in a project that is already "touchable" than a concept detached from any action.
- Testing stage. Reversibility is also a key factor determining the popularity of MVP development for a startup. I.e., it is much easier to eliminate the functions that prove to be unnecessary, fix the bugs, or add new features while testing the product's usability. This flexibility helps to implement updates smoothly and bring the release closer.
- Cost-effectiveness. A lot of startups have been damaged by inefficient financial planning. MVP product development helps to reduce costs, redistribute the funds if necessary, and eventually minimize the expenses of a final product to save the startup budget.
The MVP development process is deeply structured and split into visible milestones. To help you shift to the practical part, we'll dwell on each stage in detail and provide you with tips or examples to fall back on.
Step 1: Do the Market Research
The very first and extremely significant stage of MVP development is analyzing the market you want to enter. You must examine the following data:
- the audience's needs and customer behavior;
- main market tendencies;
- price level and rate of return;
- advertising and promotion.
Begin by going through a proof of concept (POC) step to decide how your product will stand out among the others. This will help you provide a valuable solution that'll meet user expectations. You will then move on from POC to prototype to MVP creation.
Step 2: Narrow Down Your Key Audience
Yes, this is true: instead of trying to cover most of the population, you should try to minimize and break down your target groups. When you build an MVP, your desire to make the end product popular among 100% of humanity is quite understandable. But this is not a viable option which might ruin the whole project with inevitable financial losses and burnout of you as a project owner.
So concentrate mainly on those people who will be eager to purchase and use your product because they need it. At this and the next stage, you will need to deeply analyze the target audience; it will be helpful both in the MVP creation and during the promotional campaign.
When defining who your potential clients are, stick to the main points:
- their age, sex, place of living, marital status, occupation;
- their paying capacity;
- the type of gadgets they prefer;
- how the problem your minimum viable product will be solving correlates with them.
In the end, you will get a portrait of your average product consumer.
Step 3: Think of Your USP
To meet consumer demands, your minimum viable product should fix some problems or take their current experience to a new level. Define which solution the MVP will offer to the target audience and how it will hook the clients.
You need a great unique selling point (USP) that solves a real problem. For instance, an audiobook player can have the following selling points:
- support different file formats;
- synchronization between the user's various devices;
- timer and night mode settings.
Think of what makes it unique or way ahead of the benchmarks and concentrate on this feature set that'll bring users value (this will also be helpful during product promotion). Make sure all the useful insights are carefully documented so that in the future you can understand where the concept stemmed from.
Step 4: Monitor Your Rivals
Even though each product is special in its own way, it's possible that there may be analogous or similar solutions out there. Either way, there will always be competitors wishing for their piece of the pie. Analyze your future competitors and keep the collected data organized (at least in a spreadsheet).
What do you need to know about your competitors? Make sure you have checked for the following:
- their website;
- their social network pages;
- their activities in the mass media;
- their participation in professional exhibitions, etc.
This will help estimate your product compatibility and avoid exaggerated expectations.
Step 5: Shortlist Your MVP Features
Before moving on to actual development, pick several main features that will become the core of your minimum viable product. Set up the list of must-haves and work on feature prioritization.
As a rule, a minimum viable product usually includes a limited amount of only the most necessary functions. It's the backbone of MVP development for a startup. Define them and complement them with a list of additional features for later.
Giving you a specific example, here's a small part of the product feature list we have for one of Upsilon's products called OrgaNice.
Step 6: Document Your Project Vision
Taking the right MVP development course right from the start is very important. Do your best to conduct one or several meetings to discuss all the major principles of the project. It'll help you create a detailed action plan to facilitate your MVP development process. Here are some tips:
- Stay focused on the costs and devise your own strategy of using a reasonable quantity of time, effort, and funds. Remember that the startup funding process isn't easy, and you wouldn't want to drain your budget inadvertently.
- Stick to the key features of the minimum viable product and direct most of your resources to their development.
- Mind that client feedback will impact your end product. Prepare to collect it in advance and make sure all the necessary channels of communication are defined and set up.
- Think of promotion methods that will push the newborn product ahead. Landing pages, social networks, and contextual advertising will significantly assist with this. You may even consider organizing a fundraising activity on a platform like Kickstarter.
While discussing the future minimum viable product, ensure each of your responsible team members is involved in the discussion and has shared their vision of the product, top priorities, and funds distribution. A varied web development team can bring in many expert insights.
Step 7: Map Out User Flow and Design the MVP
You need to anticipate the user experience with the product and help them interact with the MVP effectively. To ensure a seamless journey, create a user path map or build a User Flow Diagram that will let you analyze:
- whether your interface is intuitive enough for clients;
- how they reach the needed information or features;
- and if your and your clients' vision of the product match.
Furthermore, a User Story map will help you plan and describe the journey a user takes. For instance, here's an example of a User Story that we use for our product OrgaNice.
As for the MVP design, there is no need to make it perfectly polished. At this point, the UI/UX design must conform to the core features of the MVP and be simple and intuitive.
Use a click-through prototype that will demonstrate what the final product will be like. Here's a graph we used for OrgaNice, depicting the expected user actions. It was used as a referral during the prototype creation process.
Step 8: Plan the Work Ahead
Investing time in building a detailed product development roadmap is a perfect way to keep the team organized and on the same page at all times. Indicate which work you have ahead, split it into milestones, and jot down the possible assignees. Here each step should be defined with relevant tasks assigned to the team members.
Generally, development goes much smoother when you have a structured plan. Plus, it allows you to dynamically make changes to the plan and see the iterations. There are various startup tools that you can use for making a plan, assigning tasks, and monitoring the progress.
Step 9: Develop and Test
As soon as all the possible information has been collected and deeply analyzed, it is time to start the MVP development process. Once you've started building the solution, keep in mind several things:
- look into the strong and weak sides of your minimum viable product, along with the ways to improve them;
- choose your management and development technique and proceed with QA testing;
- pay attention to risks, both internal and external.
Step 10: Launch the Solution and Work on Feedback
After MVP release, it is essential to continue with further MVP testing and analyze the reviews received from users. Mind those mentioning the interface and usability, the list of features, design, and the overall customer experience.
- Did they enjoy using the product?
- Are they likely to recommend it to their friends, colleagues, etc.?
- Is it worth its price?
- Which features should be added/removed?
These are all notable product development questions, and opinions on them can be diverse. So it is better to concentrate on some recurring issues and improve the product based on them.
Challenges When Building an MVP
Regretfully, not all MVPs succeed. The list of reasons why some MVPs fail can be large. Sometimes even small factors matter greatly.
It's practically impossible to build a product without the necessity to overcome roadblocks, solve occurring problems, or face unforeseen circumstances. So what are the possible challenges? Here is a brief overview of the most typical and crucial mistakes startups make during MVP development.
The Desire to Make the Product Picture Perfect
Incredible perfectionism can actually backpedal the solution's release. Of course, your MVP must be well-balanced, well-tested, glitch-free, and attractive to users. But spending too much time on polishing the product or adding intricate features can do you harm.
Remember, you're working on a minimal version of your future product, so it makes sense to choose the optimal MVP types and let the minor imperfections slide sometimes. After all, testing the product out in the real world is ultimately more important.
Lack of Feedback
Generating hypotheses is inevitable in business. However, basing your decisions solely on assumptions isn't reasonable. Customer experience must be the primary guidance when building an MVP for startups. If it is neglected, you will fail to meet the clients' needs. Hence, getting enough feedback, analyzing it, and taking action is the right way to go. If you want to succeed, listen to your teammates, and don't take client feedback for granted.
Feedback is vital for a minimum viable product, keep this in mind at all times. Urge your clients to speak up: conduct research, segment your target groups, and identify their needs. The more good questions you ask, the better answers you'll receive.
Similarly, a lack of analysis is another surefire way to harm your product. Do not underestimate the power of startup analytics, seriously. The number of downloads, purchases, the amount, and the mood of reviews reflect the clients' opinions on the product and its market position. If it looks bad, it is time to take action before it is irreparable.
Selecting the right set of metrics and getting enough data to act on are two other points right on the flip side. Make sure you're not monitoring worthless data that might make you feel good and, at the same time, that you're not making fast-track and impulse decisions without enough information to back your opinion.
This is a tough one. The MVP development process can take 3 to 6 months, and it depends from project to project. Nonetheless, releases that occur too early or late can spoil the result. Hence the terms should be reasonable.
For instance, rushing with Product Hunt launch without due preparation can make things very hard in the long run. So, the best advice for those running MVP startups is to try to find a balance. Be well-prepared, yet, mind that less may be more when it comes to MVPs.
More Tips on Developing an MVP
No matter which startup MVP development path you choose, there are some guiding lights that can simplify the process a bit and provide you with the basis for further work on the product and its expansion. Here are some tips for a startup's smooth MVP development.
Conduct A/B Testing
A/B testing is a smart tool that will help to choose the most reliable MVP features and assets. Equip your product with two options of similar items, e.g., buttons, pop-ups, etc., compare them, and pick the most preferable one. Such testing makes it possible to find the wording, colors, element placement, and other things that work best for your target audience. There are multiple MVP tools that can assist you with that.
Select an Appropriate Platform
Choosing the right tech stack and finalizing your platform decision is an important step when building an MVP for startups. After all, migration could be tough in the future. As such, if you're planning a mobile application, creating an MVP available both on Android and IOS platforms would be wise. Hence, consider various app types and opt for the one that would make the most sense in your case.
A small landing page would be helpful, too. It won't require much effort or money to create but will let your clients examine your MVP and understand it better.
Choose the Optimal Set of KPIs and Metrics
How should you assess MVP success? You need to find the right set of KPIs to track and keep an eye on such product performance metrics as:
- Activations. Pay close attention to how many clients picked your MVP (for instance, signed up for your product or downloaded your app). This will let you measure your product recognition and prepare an outline for further activities.
- Active Users. These are the people who use the product during a particular period of time (that's why they are divided into daily, weekly, and monthly active users). Knowing the number of active users will enable you to calculate your profit correctly and measure the effectiveness of your promotional campaign. Other key metrics are also strongly connected with this attribute.
- Customer Acquisition Cost. Learn how much funds are spent to attract a single client to your creation and calculate the actual ROI. The resulting numbers will enable you to cut off unnecessary expenses and prioritize your marketing and sales efforts.
- Engagement. This metric can help you measure not only your product's current value but also forecast future value. It also enables a startup to improve the user experience based on customer feedback.
MVP Development Cost
Now that we've explored how to build an MVP in detail, it is time to estimate the price and timing of creating a minimum viable product. Our team at Upsilon provides various solutions for clients in different domains, e-commerce is one of them. So, we decided to answer the question "How much does MVP development cost?" using the example of marketplace development.
Please keep in mind that all estimates are rough. MVP development cost and timing may vary depending on the unique requirements of every solution, even in cases when the features are similar. If you want to get a specific estimation of your future project, feel free to use our MVP cost calculator or reach out to our business development specialists for a consultation.
How do we estimate projects? In short, we prefer using the PERT method (Program Evaluation and Review Technique). It includes three estimation points: Pessimistic, Realistic (it can also be called the most likely case estimate), and Optimistic. The average expected estimate is calculated by taking a weighted average of these three points using the following formula:
(optimistic + pessimistic + (4 x realistic))/6 = expected estimate
For our marketplace estimations, we defined the essential MVP features and calculated the MVP agile development time based on the PERT method, here's the result.
*FE - front-end, BE - back-end
The approximate duration of the project from the discovery phase till release is 6 months, considering one back-end and one front-end developer.
We also included a QA engineer, UI/UX designer, and project manager in our estimations, and we highly recommend not skimping on these specialists. QA engineers guarantee product quality during the whole development lifecycle, and project managers support the steady day-to-day work on the project, making sure that communication between the client and the team is going smoothly. With a well-formed team, the questions on how to build a minimum viable product and how to make it effective will be solved.
Thus, based on the sample workflow details and team composition given above, the rough MVP development cost will be around $80,000 for a marketplace. What’s for custom software development services, we can also guarantee on-time delivery and the high quality of the built product.
Minimum viable products have been the initial part of multiple successful startups. We have compiled the most remarkable cases so you can realize the huge potential of MVP implementation.
Back in 1999, Nick Swinmurn, the founder of Zappos, was enlightened with the idea of launching an online shoe store. As there was no certainty that the startup would pay off, he decided to begin with no inventory at all.
He had no shoes in stock physically, yet he placed pictures of them on the website. As soon as someone made an order, he purchased the needed pair of shoes and shipped them to the customer. As simple as that! By doing so, Nick Swinmurn minimized his financial risks in case the shoes would not sell well and had a nice opportunity to test his MVP.
This particular case can be marked as an official start of what we consider an MVP today. Zappos was eventually acquired by Amazon for $1.2 billion and is continuing its work as an Amazon subsidiary.
Back in 2008, a couple of enthusiasts were not satisfied with the cab situation in San Francisco. The price per trip was high, and no alternatives affected the cost.
Garrett Camp and Travis Kalanick, the inventors of Uber, launched an MVP app that was available only in San Francisco and had very limited functionality. But this was already enough to prove that the idea was brilliant. Today Uber is a widely-known prosperous company that has provided lots of people with a profound cab service.
It may be hard to believe, but such a media giant as Facebook originally started as a small project. Two former Harvard students decided to create a website where people could join interest groups and exchange their thoughts with each other.
Mark Zuckerberg and Eduardo Saverin considered all the social media network inefficiencies and provided users with what they really needed. The necessity to reduce risks and development costs was obvious, thus, Facebook was initially launched as a small website available for students but quickly made it to the top, where it still stands today.
Other Successful MVP Examples
Do any of the names below sound familiar? We bet they do! And all of these minimum viable product examples represent the central concept of MVP development for a startup: you can launch your project having only your idea and a limited temporary set of features without spending a fortune. If it is what your target audience really wants, you will succeed. However, it's usually not as easy as it seems.
How Upsilon Can Help You Build an MVP
Our agile team has built numerous successful products for our product studio and clients.
Approaching MVP web development may be intimidating for startups, especially if you don't have previous experience or lack a team to make it happen. Upsilon can be the MVP development company you were looking for that can help you create a product within three months. In fact, some of our clients' products have turned into 6-digit businesses, so we'll be happy to provide you with a tailored team of versatile specialists and advise you on the optimal path to take based on our years of expertise!
Bringing a new product to life can be a tough challenge with the abundance of competitors, lack of time, money, and knowledge of the possible results. A minimum viable product is the right solution that will let you avoid risks, minimize your expenses, and conquer your audience by adapting to their demands.
Surely, MVP creation is a complex process that should be carefully planned and divided into significant stages. Stick to them using our tips for successful MVP implementation, avoid others' mistakes, and you will receive a most positive MVP product development experience.
Upsilon has been providing MVP development services for startups for quite a while now and helped many companies grow. We're agile, use sprint-based pricing, and even have special discount rates for startups. So if you have any additional questions, feel free to contact us, we'll be glad to help!