Quick and Dirty Market Research for a Salable Product

You’ve got an idea, and you want to know if it will fly. Or you have heard that you can make money doing something, and you want to find out whether you actually CAN make money at it. This is the quick and dirty method of researching a market to find out of people are buying at a price from which you can make a profit.

1. Go to eBay, and do a search for your product. IMPORTANT… search Completed Auctions (under Advanced Search). That way you know what SOLD, not what people were dreaming it would sell for (either high, or low!). This tells you when a thing is so hot people want it at any price, and when a market is so overloaded that 90% of the auctions are unsold, and the other 10% are selling well below cost. eBay won’t work for everything – it is a flop for services so you can’t research them that way. They also forbid the sale of many things, so you’ll have to look elsewhere if they forbid the sale of the thing you need to research.

2. If you hit on a winner, where things are either selling well, or at least not selling badly, then do some more research. Go to Google, and find out what people are selling it for off eBay. eBay typically offers a skewed vision of the marketplace – ultra low prices for saturated markets, ultra high prices for hard to get items. Neither is a good guideline for how YOU should price your items. So find out the range that real people are selling the item for. This will also tell you how saturated the ordinary marketplace happens to be – if you have tons of shops out there, and the first page is littered with Amazon.com ads, then the item is well supplied online – which means you’ll have a lot of competition (not a reason not to dive in, but it will be potentially more difficult to get rolling). Get a good idea of the price range, and aim somewhere for the middle, or high middle – but make sure you can justify your price! If you charge high, make sure you’ve got a selling point that is wanted so bad that people feel it is worth the extra money.

Now, once you’ve done that, you have some numbers to work with. You have some important data that you can take to the calculator.

Figure the cost of materials or wholesale cost of the item.

Estimate or average the time it takes for you to produce an item you make yourself.

Do some math to figure profit per item, and see whether you can make enough to justify the time you put in.

Do two sets of calculations: One for eBay “liquidations” (to move product fast if you get in a situation where you need to move some out), and one for regular every day sales from a non-auction online presence. It is important that you do both of these, so you know whether you can move surplus through eBay or not, and how much it will cost you if you do. Remember that eBay does have some fees involved, so don’t forget to estimate that as well.

For some types of businesses, you need a customer when the product is ready. This is true of many perishable or live items. eBay may be a way to move some of them when you don’t have an established customer base, but you’ll usually get a lower price (often 50% or less).

If you are examining ways to make money, a little research before you dive in can tell you whether you are getting good info from someone who genuinely knows their stuff and really wants to help people earn, or whether you are just hearing hype and empty get rich quick promises from someone who is either unethical or ignorant (and the marketplace is DEFINITELY saturated with both of those!).

A little bit of homework can save you a lot of grief.

Best wishes as you venture forth!

Our company is now offering Cottage Industry Consulting, and a variety of market and marketing assessment services.