Target Market: What Is The Potential Market Size?

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1. What Is The Potential Market Size?
Choose a product and niche with a small but sufficient market size. Avoid niches that are too small with low keyword searches. For example, a product that caters to pregnant females between 25-40 years old is probably good. But a product that caters to pregnant females between 25-40 years old who like punk rock music will likely be too narrow. It will be harder to find customers, more expensive to acquire them and the small market size will limit your potential growth substantially.

Example: Shopify store Daneson sells luxury toothpicks. You can probably imagine that the market for luxury toothpicks isn’t massive. Being in a small niche like luxury toothpicks can be both a good and bad thing. The small market size will likely limit revenues, but if they do a great job of defining their …show more content…

6. What Is Your Markup?

It is vitally important to take markup for a specific product into consideration before going too far into the process. This is important as there will be lots of other small fees associated selling your product that will eat away at your margins. Having a strong initial markup will provide you with the necessary cushion to absorb these variable costs.

Example: Lets look at an actual product to get a better understanding of why initial markup is so important. We will work with a Pet Pedometer - a little device you connect to your dogs collar to count how many steps they take.

This might be an interesting little niche - people are always willing to spend money on their dogs. But can you sell this product profitably?

I chose a potential selling price of $24.99 and got a cost per unit of $2 from a manufacturer on Alibaba. I added all the other approximate costs associated with selling the product into the spreadsheet

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