What Is Product Market Fit? 2026 Guide

Key takeaways

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.

• The median total pay for product managers, who help bring products to market, is $148,000 [1]. 

• Use customer feedback, prototyping, and research to define how your product fits in your market. 

• You can use performance indicators like cohort retention rate, net promoter score, and the rule of 40. 

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. If you’re ready to learn how to bring your products to life, try the Product Ideation, Design, and Management Specialization from the University of Maryland to identify product ideas, target your customers, and create minimum viable products. 

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 as 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 find 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. 

What are the 4 levels of PMF?

The four levels of product market fit are: 

1. Nascent: Small market with a few customers

2. Developing: More customers, need to focus on driving demand

3. Strong: Lots of demand, need to focus on creating an efficient flow to meet it

4. Extreme: Consistently meeting customer demand and meeting their needs

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: $148,000 [1]

Job outlook (projected growth from 2024 to 2034): 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. 

2. Marketing managers

Average base salary: $107,000 [3]

Job outlook (projected growth from 2024 to 2034): 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. 

3. Product developer

Average base salary: $94,000 [4]

Job outlook (projected growth from 2024 to 2034): 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 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. 

Explore our free resources for product managers

Subscribe to our Career Chat newsletter to follow industry trends, career path resources, and find networking opportunities. Then, explore our free resources for product managers:

• Hear from an expert: Marketing Career Path: How I Became a Brand Marketing Manager at Coursera 

• Study terms: Product Management Terminology | Coursera 

• Watch on YouTube: Career Spotlight: Product Marketing Manager 

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