You may have a great idea for a product but no money to actually produce it. You could attempt to raise funding from investors, but then you’ll have to give up a significant portion of what you might earn from your product (and control). Offering your customers a chance to fund the production of what you’re selling can help you get your product out into the world, and still make some money in the process. Even better, a pre-order can effectively show you if there’s a demand for what you want to build. If not enough people are prepared to pre-order your product, you can cancel the project and move on to something that makes more sense.
In that way, a pre-order shares some characteristics with a minimum viable product. Both will help you establish the long-term viability of a product, before you invest too much effort in building it.
Pre-Orders Are Easy to Do
You can start a pre-order for a product with nothing more than a landing page and a payment processor. And you don’t have to have technical skills to set up either: crowd-funding platforms are essentially generators for pre-order pages. Sites like Kickstarter and Indiegogo are a great way to sell a product before it’s actually created, especially since most sites prefer campaigns for products where production is the only step left to complete.
The downside to pre-orders is that your potential customers have to trust that you’ll be able to follow through on what you’ve promised. Even on big crowd-funding sites, where projects are vetted thoroughly, there have been plenty of situations where companies just weren’t able to deliver on what they promised during the fundraising process.
Why an MVP Still Makes Sense
The real concern with offering a pre-order, rather than a minimum viable product, is that you can’t easily prove that you can build the product you’re offering. A minimum viable product shows your customers that you can put together exactly what you’re offering — as well as proving to you that your approach to putting together your larger product will most likely work.
If you know exactly what you’re doing and the only factor you want to test is whether there is a market for what you’re offering, a pre-order makes a lot of sense. Otherwise, a minimum viable product may be a better approach, even if it does require more investment of your time upfront.