Great products need great business models. Get the Business Model Patterns card deck
Discover tested strategies to build a sustainable business model that works.
Get your deck!Every product team faces a pivotal moment—the point where they must decide whether their product idea is not just viable, but also sustainable. Even if you solve a significant problem for a group of users, how do you ensure that your idea can be monetized and scaled? Many teams assume revenue will follow naturally once they build a product that people love—only to discover too late that the market will not pay, or that operational costs erode profits. This assumption can be fatal.
So, when should you start thinking about testing business models? The answer: much earlier than you think.
Imagine investing months or years perfecting a product, validating its problem space, and gaining user enthusiasm—only to learn that no one will pay for it. Even worse is discovering that your acquisition costs outweigh revenue potential. Many startups and product teams focus on building and scaling before tackling their most critical assumption: Does this business model work?
Too many startups and product teams fall into this trap. They focus on building, iterating, and scaling before validating the most critical assumption of all: Does this business model work?
Five critical steps to a validated business model
Product validation and product-market fit are often discussed together. Product validation ensures you solve a true problem; product-market fit confirms that enough people value the solution. However, true sustainability requires validating whether the entire business model can work at scale.
Below is a structured sequence to guide your team:
- Validate the Problem – Confirm it is real, significant, and worth solving.
- Validate the Market – Ensure a large enough audience exists to justify a business.
- Validate the Product – Prove that people adopt and value your solution.
- Validate Willingness to Pay – Confirm users will pay the price you need to be profitable.
- Validate the Full Business Model – Check that scaling remains profitable and operationally feasible.
Let’s examine each stage.
1. Validating the Problem
Before building anything, you need to confirm that the problem you’re addressing is real and significant. If the problem isn’t painful enough for users, they won’t care about your solution.
Common problem assumptions to test:
- The problem exists for a sizable group of people.
- Users feel enough frustration to actively seek new solutions.
- The problem occurs frequently or intensely enough to justify solving.
Try Find the Watering Hole to locate where users talk about this issue (online forums, meetups, social media). Conduct Customer Interviews to understand how users describe their pain points and current workarounds. Use Social Media Listening to spot recurring complaints or questions. Employ Comprehension Tests to see if potential users immediately relate to a simplified problem statement. Leverage Cultural Probes, where participants document their experiences (diaries, photos, videos) to show how deeply the issue affects them.
Try Find the Watering Hole to locate where users talk about this issue — whether it is in online forums, social media groups, or industry meetups. Conduct Customer Interviews to get first-hand qualitative insights into how users describe their challenges and how they currently attempt to solve them. Use Social Media Listening to track recurring complaints, questions, or discussions related to the problem on platforms like Twitter, Reddit, or LinkedIn. Employ Comprehension Tests to see if potential users can relate to and understand the problem statement as you know how to express it. Finally, leverage Cultural Probes, where participants document their experiences and frustrations over time through diaries, photos, or videos, offering rich context on how the problem affects their daily lives.
If users don’t think this is a major problem, your solution won’t be appealing. When a significant number of users describe the problem in similar terms, express frustration or a strong need for a solution, or have implemented manual implementations or automations to get around the problem, you generally have strong proof that the problem is real. If not, you may need to get back at it to refine or even pivot.
Once you confirm a real problem, the next step is confirming a large enough market to build a sustainable business.
2. Validating the Market
A problem alone isn’t enough. Some users might agree that the problem you’ve address is worth solving, but the next question is: are there enough of them to make up a market for your product?
Common market assumptions to test:
- Customers are actively searching for or experimenting with solutions.
- The problem happens for enough potential customers and with a high enough frequency to support a sustainable business.
- The people experiencing this problem represent that is willing to pay for solving it.
Run a Discovery Survey to gauge potential customers’ level of interest and determine how prevalent the problem is in a given market segment. Conduct a Competitive Analysis to see whether similar solutions exist and, if so, how they are performing in the market. Implement Fake Door Testing by advertising a feature, product, or service before it exists and measuring the click-through rate or sign-ups to gauge demand. Use Classified Posting to list a conceptual version of your product or service in relevant online communities and observe how much interest it generates. Finally, send out a Product-Market Fit Survey using frameworks like the Sean Ellis test, asking early adopters how disappointed they would be if your product disappeared.
If data shows strong market demand—via sign-ups, pre-sales, or evidence of competitors serving the same segment—it’s time to move forward. If demand is weak, you may need to rethink your market positioning.
You’ve identified a problem and a viable market, but can your product actually solve the problem effectively?
3. Validating the Product
The problem might exist and the market might be there, but does your product actually solve it? Your product must provide real value to customers. If users try it only to abandon it soon after, you don’t have product-market fit.
Common product assumptions to test:
- Users will engage with and adopt the product.
- The product actually solves the problem.
- Customers see measurable benefits from using the product.
- Customers see clear benefits and return to use it.
Perform a Beta Launch with a limited user group to see how they interact with your product. Run A/B Testing** by experimenting with different versions of key features or messaging to determine what drives higher engagement and retention. Use the Wizard of Oz method, where certain product features appear automated but are actually manually operated behind the scenes, allowing you to test demand without building complex systems. Develop a Clickable Prototype to simulate user interactions and gather early usability feedback before writing a single line of code. Leverage Remote User Testing, where participants use your product in their own environment while sharing their thoughts, helping you uncover usability issues. Engage in Guerilla User Testing** by conducting spontaneous, informal tests with potential users in public spaces or co-working areas to get quick, unfiltered feedback.
If early users show high engagement, retention, and express satisfaction with the solution, you might have problem-product fit. If they churn or remain indifferent, adjustments are needed.
Let’s say your product works, but are users willing to pay for it?
4. Validating Willingness to Pay
Are people actually be willing to reach into their wallets and pay the product you come up with? Many great products fail simply because users won’t pay for them. You need to validate revenue assumptions early.
Common assumptions around willingness to pay to test:
- Users are willing to pay for the solution.
- The business model can work at scale.
- The pricing structure aligns with perceived value.
Encourage potential users to commit by offering Pre-orders, which test both demand and price sensitivity before full development. Launch a Crowdfunding campaign on platforms like Kickstarter or Indiegogo to validate whether users will invest in your idea with real money. Experiment with High Hurdle Pricing, setting a deliberately high price point to see if customers are still willing to pay—if they are, you can always lower it later. Secure a Letter of Intent from interested buyers, proving that organizations or individuals are ready to purchase once the product is available. Implement a Referral Program to gauge how much customers value your product based on their willingness to recommend it to others. Conduct Conjoint Analysis, where you present different pricing and feature combinations to users to understand which aspects they value most.
If users demonstrate willingness to pay by pre-ordering, subscribing, or making an initial purchase, you have validated your business model. If not, you need to refine pricing, value perception, or explore alternative monetization strategies.
The next step is to confirm your entire operation can scale and remain profitable.
5. Validating the full operating Business Model
Some teams validate market demand and pricing but fail because operational costs and complexity outweigh revenue. True Business Model Fit involves front-stage elements (customer-facing) and back-stage elements (operations, partnerships, infrastructure) working smoothly together. Having a Business Model Fit differs from Product-Market Fit:
- Product-Market Fit focuses on whether a product solves a real problem for a clearly defined market.
- Business Model Fit looks beyond customer satisfaction. It ensures the entire operation—production, delivery, partnerships, and costs—can scale without making margins unsustainable.
Making sure the full operating business model is a fit for your not only your product but also the business around it is the next critical step to address. Will your business model help you scale profitably, delivering value efficiently while maintaining strong financial health.
Common business model operating assumptions to test:
- Revenue will scale proportionally with customer growth.
- Cost structures remain sustainable at scale.
- Key partnerships, supply chains, or infrastructure won’t become bottlenecks.
- Operational complexity won’t erode margins or introduce unmanageable risks.
Conduct Partner & Supplier Interviews to ensure the key components of your business model, like manufacturing, fulfillment, or distribution, can scale without breaking. Model your cost structures to analyze the impact of scaling on fixed and variable costs, identifying potential inefficiencies. And leverage Data Mining to uncover hidden operational risks or dependencies that might not be obvious in early-stage validation.
If your projections show profitable scalability and your cost structures remain manageable as you grow, you might have a strong Business Model fit. If not, you may need to refine pricing, explore automation, or reconsider key partnerships. But no matter what, you don’t have proof yet. You will only know when you start making it happen. Consider doing Concierge or Wizard of Oz testing to test specific parts of your value chain.
Now that you’ve validated not only willingness to pay but also the operational feasibility of scaling, you’re ready to transition into sustained growth and expansion.
Experiment smarter, validate faster
If you’re serious about testing business models effectively, I’ve designed two tools to make this process easier:
- Business Model Patterns Card Deck – A collection of 75 proven business models to inspire and guide innovation teams.
- Validation Patterns Card Deck – A collection of lean product experiments to systematically test your riskiest assumptions.
Don’t leave your business model to chance. Start testing today and build a product that not only works but thrives in the market.
- Business Model Patterns card deck by Anders Toxboe
- Validation Patterns card deck by Anders Toxboe
- Ries, E. (2011). The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Crown Business.
- Bland, D., & Osterwalder, A. (2020). Testing Business Ideas: A Field Guide for Rapid Experimentation. Wiley.
- Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A. (2014). Value Proposition Design: How to Create Products and Services Customers Want. Wiley.
- Fitzpatrick, R. (2013). The Mom Test: How to Talk to Customers & Learn If Your Business is a Good Idea When Everyone is Lying to You.
