Market research for SaaS: how to spot a winning niche before building
Let’s face it—building a SaaS product without understanding your market is like baking a cake without checking if anyone likes chocolate. You might think you’ve got a great idea, but if there’s no real demand, you’ll end up with a messy kitchen and no customers. The good news? With the right market research, you can spot winning SaaS niches before writing a single line of code. Here’s how to do it, step by step.
Why market research matters (Spoiler: It’s not optional)
Did you know 42% of SaaS startups fail because nobody wants their product?7 That’s almost half of all ideas crashing and burning simply because founders skipped the research phase. Market research isn’t just about avoiding failure, though—it’s about finding opportunities everyone else missed.
Think of it like treasure hunting. Instead of digging randomly, you’re using a map (data) to find hidden gold (untapped niches). For example, the SaaS market is booming—it’s expected to hit $819 billion by 20304—but only those who research well will grab a slice of that pie.
Step 1: find the pain point everyone’s ignoring
Great SaaS products solve real problems. Start by asking:
- What tasks do people hate doing manually?
- Where are existing tools falling short?
Pro tip: Dive into online communities like Reddit or Twitter. Use tools like Gummysearch to scan forums for phrases like “I wish there was a tool for…” or “Why does [X software] suck at…”1. For instance, OneShot.ai grew 24,945% by focusing on a niche problem others overlooked.
Step 2: spy on your competitors (It’s legal, promise)
Check platforms like Crunchbase or LinkedIn to see what others are doing13. Ask:
- How many competitors are in this space?
- What features do they offer?
- Where are their customers complaining?
If you find a market with 2-3 competitors and lots of unhappy users, that’s a golden opportunity. For example, the CRM niche has ~17,000 tools, but Complyt carved out space by automating compliance—a pain point others ignored.
Step 3: validate with real humans (Not just your mom)
Your friends will say your idea is genius. Strangers won’t lie. Here’s how to test demand:
Build a waitlist: Create a landing page explaining your solution. If 100+ people sign up, you’ve got traction.
Run surveys: Ask target users what they’d pay for your solution. Tools like Typeform make this easy.
Offer a beta: Let early users test a basic version. Their feedback will show if you’re on the right track.
Litespace, for example, grew 10,509% with just $50k funding by validating their idea first.
Step 4: Follow the Money (is the niche profitable?)
A niche might seem cool, but does it make financial sense? Look for:
- Recurring revenue potential: SaaS thrives on subscriptions. Can customers pay monthly/yearly?
- Low customer acquisition cost (CAC): If ads or outreach are too pricey, rethink your strategy.
- Scalability: Can you serve 1,000+ users without hiring 50 support staff?
Micro-SaaS products—like niche tools for freelancers or small teams—are booming because they’re cheap to build and scale.
Step 5: ride trends (But don’t chase fads)
Trends show where the market is heading. Use tools like Google Trends or industry reports from Gartner/IDC to spot shifts. Right now:
- AI automation is hot (think tools that write emails or analyze data).
- Remote work solutions still dominate (project management, time tracking).
- Industry-specific SaaS is rising (e.g., healthcare compliance tools).
But avoid “shiny object” trends. For example, metaverse SaaS tools might sound fun, but demand is still fuzzy.
Step 6: Think small to win big
The best niches are specific. Instead of “marketing software,” target “Instagram analytics for vegan influencers.” Narrow focus = less competition and happier users.
Case in point: Monday.com’s success came from hyper-customizable workflows, not generic project management.
Step 7: Test your assumptions (Before quitting your job)
Before fully committing, run cheap tests:
- Ad campaigns: Spend $100 on Facebook/Google ads. If clicks convert, you’ve got interest.
- Pre-sales: Offer lifetime deals or early-bird pricing.
- Prototypes: Use no-code tools like Bubble to mock up your idea.
Red flags to avoid
Not all niches are winners. Watch out for:
- Too many competitors: If the top players own 80% of the market, skip it.
- Low budgets: If your target audience can’t afford $10/month, rethink pricing.
- Complicated regulations: Healthcare or finance niches often require legal hoops.
Final thoughts: your niche is out there
Market research isn’t about fancy reports—it’s about listening. Listen to complaints, listen to trends, and listen to what people aren’t saying. The next big SaaS niche could be hiding in a Reddit thread, a bad review of a competitor, or a coffee shop rant.
Remember: Build what people need, not what you think is cool. Validate early, stay lean, and double down when the data says “go.” Now grab that shovel—your treasure’s waiting. 😉
