What Is Product Market Fit? 2024 Guide

Product market fit measures the size of the market demand for your product, how customers respond to it, and the gap it fills in the current market. Understanding how your product fits into the market helps you grow organically, scale your business with more product offerings, and improve your products to better serve customer needs.

Achieving the right product market fit differs for every product, depending on who your customers are and what matters to them. By exploring product fit, you’ll learn how to achieve the right product market fit for your idea and gain insight into which metrics to pay attention to for success. 

What does product market fit mean?

Product market fit describes whether or not your item will fill a demand for target customers. When a product “fits” the market, it answers the needs and wants of target customers. A product with a good market fit will operate or function how a customer expects it to, provide the benefits promised by marketing, and be cost-effective enough to attract a large enough demand. 

Another aspect of market fit is the market size for your product. If your product is too niche, it may be challenging to find enough people to purchase your item or evolve as customer needs evolve. 

Learn more: What Is Product Marketing? (Strategy, Skills, and Careers)

Why is product market fit important? 

To adapt to the market, look for new growth opportunities, gather feedback from important user groups, and ultimately sell more items, you must have a solid understanding of how your product fits into the market. For example, while Netflix started as a DVD subscription service, the business model changed as the market did. As DVDs became less popular, Netflix pivoted to offer online movie rentals and streaming, staying ahead of customer demands. 

When you have a good product market fit, and customers love your product, they are more likely to become brand evangelists and spread the word to friends and family about how great your product is, which helps you create organic growth. Organic growth is so attractive because it costs very little to gain new customers when your current customers are so energized by your brand that they go out and get new customers for you. 

Product market fit is also essential for practicing understanding what your customers need. The better you hone this skill, the easier it will be to scale your company larger, release new products, and build on the systems you’ve already perfected. 

How to achieve product market fit

Finding a good product market fit is vital for any product. It’s a good idea to measure product market fit early in releasing new products while you still have time to adapt and course-correct based on customer feedback.  Getting feedback as early as possible about the customer experience with your product and whether customers prefer it to competitor products is also critical. To measure your product market fit, consider the following steps. 

• Understand your value proposition. A product’s value proposition is the pitch you make to customers about the value your product will add to their lives, such as a problem your product will solve or a way it will make your customers' lives easier. The first step to achieving product market fit is understanding exactly what value your product will add to customers’ lives. 

• Identify your target market and understand their needs. Once you understand the benefits your product offers, it’s time to determine which customers will benefit from it. Who are your customers, and what do they care about? How much are they willing to pay for a product like yours? This information lets you center your design squarely on the people you hope to entice with your product. 

• Put your product in potential customers' hands early in the process. This will allow you to ensure you’re on the right track before investing tons of energy—and cost—in developing it. Ideally, customers will test and offer feedback on a prototype of your product before you’ve fully finalized the design. 

• Fuel improvements with customer feedback. Take what you learn from early testing and adapt your product as needed. You may find that you’ve invested time and energy into features your customers don’t care about as much as other options. You might discover innovations in your product that make a big difference to your target market. Either way, customer feedback provides valuable information about how you can improve and better market your offering to customers. 

• Use what you’ve learned to position yourself in the market correctly. In addition to making your product even better, customer feedback helps you position yourself in the market by uncovering the most compelling features of your product. You may also discover new opportunities through testing, such as products designed to solve one problem that users can employ in other applications. 

How to measure product market fit

You have many options when it comes to the best metrics for measuring product market fit. Depending on your product or the customers you’re trying to reach, it may be more appropriate to use one method or another to measure how well people will respond to your product. For a comprehensive view, you’ll want to look at several metrics. A few to check out include:  

• Cohort retention rate: The cohort retention rate refers to the percentage of people who will continue to use your product after a period of time, such as several weeks or months. Focusing your attention on your cohort—the people who will still be around after that period of time—can help you better understand your core audience. 

• Net promoter score: This metric focuses on how likely people are to promote your product to others. The percentage of people who rate your product with a low score is subtracted from the percentage of people who rate your product highly, leaving you with a ratio you can use to track how people respond to your product over time. 

• The rule of 40: This rule focuses on measuring market fit through revenue growth and profit margin, advising that the sum of those two figures should be 40 percent—for example, a 25 percent profit margin with a 15 percent revenue growth rate. 

Who uses product market fit?

Product market fit is essential for anyone involved with bringing a product to market, such as design, marketing, production, and sales teams. Explore three potential jobs that rely on product market fit:

1. Product managers

Average base salary: $123,104 [1]

Job outlook (projected growth from 2022-2032): 6 percent [2]

Education requirements: Product managers typically earn a bachelor’s degree, typically in business, but other areas of study include marketing and computer science. 

As a product manager, you will oversee a product's development, production, marketing, and sales strategies. You will work to understand the product's value proposition and target market and communicate between teams and leadership throughout bringing your product to market. 

Read more: What Does a Product Manager Do? And How to Become One

2. Marketing managers

Average base salary: $80,938 [3]

Job outlook (projected growth from 2022-2032): 6 percent [2]

Education requirements: A marketing manager's most common education requirement is a bachelor’s degree, typically in business or marketing. 

As a marketing manager, you will oversee the strategies for marketing a company and its offerings, ultimately making more sales. You will identify trends and look for new opportunities to grow your market or reach a larger audience. In this role, you’ll coordinate with other members of the marketing team to develop a cross-platform marketing strategy. 

Read more: How to Become a Marketing Manager

3. Product developer

Average base salary: $102,782 [4]

Job outlook (projected growth from 2022-2032): 6 percent [2]

Education requirements: You'll typically need a bachelor's degree to become a product developer, ideally in the industry you plan to work in, such as industrial design, mechanical engineering, or food chemistry.

As a product developer, you will oversee designing a product and bringing it to market or improving on existing products to add more value to customers. You will collaborate with marketing and production teams to create a new or improved product and position yourself in the market accordingly. 

Read more: A Guide to Product Development Jobs: Roles, Skills, Salaries

Learn more about product market fit 

Your product market fit refers to the market demand for what you’re selling, including the value it brings to customers and whether customers will buy your product. It is an integral part of a successful business plan, directly relating to your scalability and organic marketing success over time.

To keep learning about product market fit or to start a career in the field, consider completing the Product Ideation, Design, and Management Specialization offered by the University of Maryland on Coursera. This five-course series takes about five months to finish and can help you learn product development, management, design, and innovation skills.