Startup Product Development: A Complete Guide to a New Idea

774 07.07.2023
Vasyl Polych

Founder & CEO at Northell


Table of contents

As a business founder, product owner, or CEO, you may wonder how to properly bring your digital startup idea to life and achieve your fundamental business goals. That’s why exploring the startup product development process from top to bottom is crucial to direct resources and efforts right from the start. However, the process of developing a successful product that will stay commercially viable and competitive in the long run can be complex and challenging and requires careful planning, strategy, and execution.

As an experienced software development agency, Northell aims to help you quickly navigate and support you throughout your startup journey to ensure market and business success.

In this guide, we go over a full-cycle startup product development that covers everything it takes to convert your innovative idea into a competitive and sustainable product.


What is startup product development?

It is an iterative process of developing and bringing new products to the market that solve a problem or meet a specific need of the target audience. Startup product development includes:

  • Ideation
  • Market research
  • Product development strategy definition
  • Planning
  • Design
  • Development
  • Testing
  • Release
  • Post-launch support


Startups need to go over all stages of product development to develop an innovative product that will help a company stand out in a crowded market, appeal to potential customers, and generate revenue in the long run. The process of product development should be well-optimized, adequately organized, and managed by a reliable dedicated development team. By doing so, startups can quickly understand what best works for their products, what is necessary to adopt, and how to grow a new business over the long term.

Read Also: How Much Does It Cost To Outsource Website Development?


Importance of startup product development for the business success

According to a recent study, 42% of startups fail due to a lack of market need for their product or service. This highlights the importance of conducting thorough market research and focusing on user-centric product development. Moreover, according to the same research findings, 29% of startups fail because they run out of money. This emphasizes the need for a lean and agile startup approach to product development to avoid wasting resources and business failure.

Startup product development can lead to significant business success only if done correctly. For example, Dropbox started out as a small startup, but by focusing on the user-centric product development process, it has grown into a multi-billion dollar company with millions of users. Similarly, Airbnb, which started as a small startup in 2008, is now valued at over $100 billion thanks to its innovative product development strategy that has revolutionized the hospitality industry.

The opposite example shows that startup product development can lead to business failure if not conducted properly. For example, startup Juicero, which developed a $400 juicing machine, failed to attract customers due to its high price and the fact that users could simply squeeze the juice out of a Juicero pack with their hands. As a result, just two years after the launch, the company closed.

To avoid negative consequences for a startup, we recommend following a clear and well-structured product development process. Below, we discuss how to win your place in the sun in more detail!


10 stages of startup product development

Together with our team, let’s take a closer look at how we map out steps toward complete startup success.

stages of startup product development

1. Ideation and screening

Together with your technical team, idea generation and screening is the first step towards successful product development for stratus. Many techniques are used to generate a best-fit idea for your project: brainstorming, thorough market research, and SWOT analysis. Depending on your needs and time availability, we can move further with a specific technique or all at once. Each technique helps us develop a project idea that best suits you.

For example, market research helps us to collect and analyze information about similar types of products that exist in the market, understand what features they offer, what they lack, and what works and what doesn’t.

By completing a SWOT analysis, we create a table with four fields, where each one stands for Strengths, Weaknesses, Opportunities, and Threats. For each section, we list the attributes that characterize the business itself. We use this map to understand how to turn weaknesses into strengths, how to avoid risks, and consider business opportunities as a whole.

At Northell, we first collect all requirements and needs from our customers during discovery workshops. We gather a team of professional experts with prior experience creating products for a related market. Typically, we organize brainstorming sessions to screen the different ideas from a technical and business perspective and see which idea works best, if there are potential technical barriers or scalability requirements, and if the business idea is generally viable.

2. Target market research

Once we have captured a single product vision, we can build an effective product strategy for realizing your vision. The first step in creating a feasible product strategy is target market research. During this research, we explore the current market needs and requirements, analyze competitors’ strengths and weaknesses, and analyze your target audience factors, needs, and preferences to portray your end customer. During this step, we also consider how your product will solve your target audience’s problems and clarify key characteristics (unique value proposition) that will make your product competitive.

For example, when we worked on building an advanced mentoring platform for aspiring entrepreneurs, our Customer reached out to us with a raw idea. So, we needed to conduct in-depth market research to understand the platform’s primary goal, research the target market and find proven ways to implement the product idea into life.

3. Business model generation

The next step in creating a successful product strategy is creating a business model based on the research findings. To perform this task, we usually use a Lean Canvas business model. This effective tool helps us determine all the essential product’s operational flow and business aspects. A Lean Canvas business model consists of ten sections, where we outline key business and project aspects, such as:

  • Problem – Indicates the main problems of your end users we aim to solve.
  • Solution – Demonstrates the way your product will solve user problems.
  • Unique value proposition – Demonstrates how your product will solve the user’s pain points and fulfills customer needs.
  • Unfair advantage – Illustrates a significant competitive advantage above your direct competitors.
  • Customer segments – Showcase your customers, who you target with your product, and their demographics, social characteristics, and personality traits.
  • Key metrics – List a set of metrics and KPIs to help you assess each component of the product launch and understand how well your business performs
  • Competitors – Show your direct competitors and their product’s weak and strong sides.
  • Channels – Specify the channels to reach your customers with your product.
  • Cost structure – Indicates your project budget, resources, and costs required for your business operation.
  • Revenue streams – Specify your product’s monetization model and show how you will generate revenue.

top benefites key features

By filling out all these fields, you will have a clear overview of your business and overall startup product development strategy to follow further.

4. Concept validation

The last task before product development strategy implementation is concept validation. The end goal of this iteration is to check the feasibility of your business model and come up with a single valid idea to move further.

At Northell, we typically conduct  in-depth interviews with potential customers of your product. During the interview, we analyze whether your target audience likes the product idea, their attitude towards the product, and the solution we offer to solve their main pain points and problems.

The results of in-depth interviews usually show whether the business model and startup product idea are valid, and we can proceed with the following development iterations. Otherwise, we will have to return to the previous stages of ideation and repeat the procedure until we find a valid product concept.

5. Selection and prioritization of product features

The results of the customer research surveys and in-depth interviews serve as a valuable resource of information we can use to decide what functionality your target audience expects most.

At Northell, we first highlight all the features that would be great to build for your product. Then, we apply various prioritization techniques to determine what features to build first and what are nice to have. We categorize all these features based on priority (high, medium, and low priority). We use the Story Mapping technique representing a horizontal row showing the primary process stages of our user flow. Below each stage, we list the must-have, nice-to-have, and lowest-priority features.

As a result, our team understands what features to roll out first and what are nice to implement after the first customer feedback.

6. Project scope and budget planning

The next important step of startup product development is planning the scope of work, project timelines, required team composition, and resources and budget needed.

At Northell, we decompose the features required to implement tasks and scope of work into sprints that last 2-4 weeks. We also calculate the resources, money, and equipment needed for the project. Depending on the project scale, we assign 2-4 UI/UX designers, 1-2 QA engineers, and 2-4 experienced programmers to work on your project tasks. Each task is estimated in hours and assigned to a specific expert. At the end of each sprint, we report on the work done, discuss possible bottlenecks, and map out further development steps.

7. UI/UX design

This process is one of the most critical stages of product development for startups to understand a clear picture of their product and resolve any inconsistencies before the development begins. A well-executed UI/UX design process helps startups create customer-centered products that increase user engagement and drive maximum business profits.

UI/UX design process steps

In this step, at Northell, we visualize how your product will look and work and how your users will interact with your product. The UI/UX design process steps we undertake are as follows:

  1. User research: We research to study the target audience, their needs, and their pain points to develop a product that meets their requirements.
  2. User flows and customer journey mapping: Our designers identify user flows and create customer journey maps to visualize how your users will engage with your product and reach their primary goal.
  3. Wireframing: Our designers create a low-fidelity product layout to test the structure, user flow, and product navigation.
  4. Prototyping: We create a working model of the product to test and validate its features and design. This phase is an iterative process where we test the product to ensure it is user-friendly.
  5. Visual Design: We can create mood boards, UI kits, and design systems that include color palettes, logos, animations, typography, and graphic elements such as icons and images. These guidelines are so-called roadmaps for our designers to follow when creating a visual product design. As a result, the product design is made in a consistent style that aligns with the brand identity and delivers an exceptional user experience.
  6. User testing: We conduct usability testing to understand how users interact with the product and make necessary improvements to optimize the user experience. Northell has its own in-house UX Lab, where we use the Eye Tracker tool to track user behavior patterns and decide how to close usability gaps and increase conversions.
  7. Development handoff: We deliver the final design assets and specifications to the development team for further implementation.


Looking for professional design help?

Use our digital design services to turn your idea into stunning product interfaces and unforgettable user experiences!

8. MVP development

Before investing too much time and money into building a full-fledged product right from the start, we recommend developing an MVP first.

By providing MVP development services to startups, we can help you validate the market demand for your products, get responses from early adopters with limited functionality, and minimize risks to your project. Given the statistics we mentioned earlier, the feedback may change the project plan and shift your focus. Otherwise, the mistakes made during early iterations may lead to overall budget overruns and startup bankruptcy. That’s why companies don’t have to invest in full-scale production unless they know what their potential buyers want, what features they use, and what they complain about.

At Northell, the process is simple: we develop must-have product features first with a simple UI/UX design, test the app, collect feedback, and continue full-fledged startup product development once we know how the product is accepted on the market.

During user feedback analysis, we implement updates to the design and features of your product and implement architecture corrections if needed to suit the target audience’s interests most.

Recommended reading: 

How To Create a Minimum Viable Product (MVP)? [Startup Case Studies]

MVP Development for Startups: Why You Need It Before Software Custom Development 

9. Full-fledged product development for startups and testing

Once an MVP stage is over and you finally get a well-tested version of your product on target users, you can go to full-fledged product development. The valuable insights from all the tests and analyses can further serve you as a valuable resource of information on how to make your product viable in the long run and plan its future.

With your software development partner, you can add new features, refine the design concepts, change the architecture, and scale your product.

Full-fledged product development for startups and testing

Typical tasks we do during full-fledged product development for startups and testing are:

  1. Technical documentation: We compile technical documentation that includes technical specifications, selected technical stacks, and tools required for the features’ implementation.
  2. Architecture plan development: Our software specialists create a detailed architecture plan to provide a helicopter view of your project’s technical parts. It entails: choosing the type of architecture (e.g., monolithic, microservices, serverless), the controllers, and APIs for the back end; for the front end, we define how the business will interact with the product concept, objects, and user personas.
  3. Infrastructure setup + CI/CD: We set up the entire product’s infrastructure by defining databases, security measures, and hosting providers.
  4. Front-end and back-end development: Our front-end and back-end developers write code for the product’s server and client sides.
  5. QA and testing: We conduct thorough testing to ensure your product has minimum bugs in the product launch and meets the necessary standards and specifications. That may involve manual testing or automated testing, or a combination of both. We aim to check the product’s functionality, performance, security, usability, and acceptability. The types of tests include unit, regression, integration, and end-to-end testing.
  6. Bug fixing: Our testers create detailed bug reports and hand them to developers for rework.

10. Launch and product promotion

After fine-tuning the functionality, we are ready to introduce the final product to the market. The following steps will focus on long-term product promotion and сommercialization. That will require you to consider the distribution channels, advertising, marketing, and branding strategy of the solution you created for the customers. So, this stage involves:

  • Marketing your product to your end users
  • Continuously monitoring the product’s performance
  • Gathering user feedback
  • Analyzing user data
  • Identifying areas for improvement


Creating an online presence and building a market reputation for your product requires time and patience. However, you can outsource your project to an experienced software development company to tackle all the technical and post-launch challenges on the go.

Read our guide on How to Hire a Dedicated Software Development Team? 

Our experience in product development for startups

Northell helps startup entrepreneurs and business owners turn their raw ideas into successful digital products. We start our collaboration through ideation and concept validation and decide whether your idea is technically feasible, viable in the market, and beneficial to your business. Below, we’d like to share a few examples from our development portfolio of how we’ve helped startups turn their ideas into successful digital products.

Educational mentoring tool

Northell worked with the Customer on an educational mentoring tool for expert mentors and aspiring entrepreneurs. The main goal of this platform is to provide entrepreneurs with valuable advice on business development from experts in the related field. Since our Customer has only an idea of such a platform, the startup product development started with product discovery, ideas screening, and concept validation.

Once all project stakeholders approved the application concept and its design, we set up the product development workflow to build an advanced mentoring platform from scratch. We carefully analyzed all the requirements of our Customer and identified the main challenges that we needed to solve throughout the project:

  • Conduct in-depth product discovery
  • Define functional and non-functional requirements for the product
  • Describe user roles
  • Write technical documentation and product specifications
  • Finalize product strategy and goals
  • Establish timeframes and cost estimates for the project


Following an agile approach to project management, the features we’ve developed:

  • Full-featured mentors dashboard
  • Full-featured entrepreneurs dashboard
  • Personas profiles
  • Onboarding feature that simplifies the user’s interaction with the platform
  • Calendar for setting deadlines for professional mentor consultations
  • A subscription-based model and payment system
  • Detailed questionnaires to help startups grow


As a result, today, this platform for mentoring helps thousands of novice entrepreneurs to evaluate the viability of their business ideas by filling out the questionnaire. The Northell team has reached the primary goal of our Customer, taking it from a raw idea to a successful product launch. In the development process, more capabilities have been discovered. Our Customer deployed a professional tool with well-built functionality and personalized user experience that helps new businesses to set their path to startup development in just a few clicks.

Digital matchmaking platform

Another example of an exceptional contribution to the startup project is our case on designing a platform for digital matchmaking for young talents and employers. The Customer’s team contacted Northell with a half-baked idea of needed functionality and design specifics.

So, based on the insights from market research and target audience feedback, we started to plan the design strategy and features, keeping end users’ essential needs in mind. The challenges we outlined to work on throughout the project:

  • Build the design strategy and UI/UX design from scratch
  • Craft sophisticated and easy-to-use functionality of the matchmaking platform
  • Build clear and consistent user journeys
  • Adopt a mobile-first approach to make the platform highly responsive


The scope of features we’ve successfully designed:

  • Personalized onboarding to welcome students and employers
  • A two-step sign up
  • Student profile
  • Employer profile
  • Analytics dashboard
  • Job postings
  • Job applications
  • Interview scheduling
  • Advanced search to enable companies’ searches
  • Chat to allow real-time communication
  • Wish list of favorite companies for students
  • Push notifications


As a result, we helped our Customer release a digital matchmaking platform that enables students and young professionals to connect with their dream employers quickly, directly, and seamlessly. We have fulfilled all our Customer’s design requirements, proven by positive feedback from the test users. This platform became a top-priority professional network between students and employers that help both parties find perfect job matches with ease and high engagement.

Read Also: Outsourcing Software Development For Startups: The Complete Guide


Northell’s tips for successful startup product development

Before embarking on product development for startups, we recommend browsing the below best practices on how to improve your development process, get to market quickly, and succeed.

features tips for successful startup

Follow a lean approach at all startup stages of product development

We recommend sticking to the Lean approach throughout all startup stages of product development to maximize your chances for success and provide a decent solution to your customer’s main problems.

A lean approach is a framework that consists of three recurring steps:

  1. Build – We create an MVP version of your product, test it, and gather user feedback.
  2. Measure – We use multiple approaches to collect feedback by creating polls, small tasks for target users, and surveys, as well as tracking analytics, metrics, and product performance
  3. Learn – The feedback gathered and measured results serve as a valuable source of information to understand customers’ needs and expectations, identify technical issues, UX inconstancies, gaps in product behavior, what needs to be polished and finalized, etc.


All these steps are reiterated until the final product fully meets the customers’ expectations and works as expected.

The basic principles of a Lean approach emphasize agility and continuous learning from honest user feedback. As a result, it helps startups eliminate spending endless hours and resources on analyzing and building false hypotheses on customer needs and wants. By rolling out an actual product prototype, you can learn from customers’ reactions and go through substantial product transformations to make it more desirable for users.

Let’s share our ideas with each other!

Use Agile development techniques

Startup product development is an iterative process that involves starting small and growing big to reduce risk and build confidence in your product’s market need. So, it’s important to stay agile and remain flexible to changing priorities of your project and customers, changes in market conditions, and technology trends.

From product discovery until final release, the agile development methodology breaks the development process into multiple phases called sprints (or iterations) and lasts 2-4 weeks. Before the start of each sprint, your development team gathers to discuss and prioritize the work that needs to be done in the next iteration. That allows your collaborative team to respond quickly to customer needs when the project is underway.

The Agile strategy focuses on task-based project management, where each iteration has its goal, scope of work, and key deliverables. Such a flexible structure to product development allows you to build the product smoothly while focusing on the most critical features and discovering areas for improvement step by step.

Therefore, we recommend sticking with the Agile development methodology, as it is a proven way for startups to deliver quality and value to their customers while reducing risk to your project and gradually gauging customer interest.

Set success metrics

To evaluate the actual product performance results, you should define a set of metrics and KPIs to track. The choice of KPIs will depend on your unique goals and product type. For example, paid subscription apps should track the number of new subscriptions over a specific time, the percentage of active subscribers, etc. Building a service marketplace will require tracking an in-store positioning to understand whether your product is popular or similar.

Prioritize continuous innovation

To remain competitive in the crowded market and keep your product a top choice for customers, you should prioritize continuous product innovation. That will entail expanding your product’s capabilities, introducing new disruptive technologies to your product, opening new product marketing channels, etc. If you follow the fast pace of innovation, you will get consistent results and build a strong product culture in your business.

Define roles and responsibilities in your startup

To build a new digital product, you should carefully consider the roles and responsibilities needed for your startup project and get your development team together. Successful product development for startups requires a diverse range of skills, including design, marketing, engineering, testing, and management.

The design team creates attractive product concepts, marketers devise strategies to reach target audiences, engineers ensure technical feasibility, testers ensure your product is ready for release, and managers organize and coordinate everyone involved in the project.

When these skills are combined together, startups can distribute tasks between the team members effectively and successfully step towards bringing the product to market.

Recommended reading: How to Build a Software Development Team in 2023?

Gather a strong product development team

To create products that are not only visually appealing but also generate substantial profits, we recommend you hire a strong product development team.

First, a strong product development team will be able to conduct extensive market research to develop the best product ideas relevant to your industry and in line with innovations. Secondly, such a team can identify the latest trends in the industry and make your product address those needs, remain competitive, and maximize the potential profits of your company. Thirdly, such a team’s prior development experience will help you lower production costs while allowing you to invest in other business aspects.

So, a strong product development team is essential for any business looking to stay competitive in the market, introduce high-quality products and build long-term customer relationships. Great startup product development team includes:

  • Project manager
  • UI/UX designer
  • Front-end developer
  • Back-end developer
  • DevOps
  • QA engineer

Main challenges of startup product development

For many aspiring entrepreneurs, product development for startups is a challenging journey since they can face many obstacles and hurdles along the way. Below, we list startups’ most common problems and offer actionable solutions to solve them.

Main challenges of startup product development

Insufficient funding

Problem: One of the most widespread problems for many startups is running out of funding to develop their product. Raising capital can be difficult, especially for new businesses without proven market demand.

Solution: We recommend first developing an MVP following the Lean Startup methodology, which includes iterative and incremental product development that can help you to balance the budget, minimize costs, and avoid project risks.

Poor market research

Problem: Startups must conduct thorough market research to identify a viable market for their product. That entails understanding customer needs, analyzing competition, and identifying unique selling propositions.

Solution: An MVP is a product’s basic version containing only essential features. Launching an MVP allows startups to test the market and get customer feedback before investing in developing a full-fledged product.

Time-stretched startup stages of development

Problem: Startups must develop a high-quality product that quickly meets customer needs and expectations to get ahead of direct competitors. However, this can be time-consuming as it involves designing, prototyping, testing, and refining the product until it is ready to launch.

Solution: Northell recommends following an Agile development emphasizing flexibility, collaboration, and continuous improvement. This approach enables startups to quickly adapt to changing market conditions and customer feedback while reducing their time to market rapidly as they quickly respond to market needs.

Slow time-to-market

Problem: In today’s fast-paced business environment, time-to-market is critical. Startups must develop and launch their product quickly to gain a competitive edge.

Solution: Outsourcing can help startups reduce costs, increase efficiency, and access specialized expertise directly. In short, by outsourcing product development, startups can focus on their core competencies and free up resources for other critical tasks.

Failure to meet the growing market demand

Problem: As a startup grows, it needs to be able to scale its product to meet growing demand. That requires designing a product that scales easily and building a robust infrastructure supporting growth while staying relevant to today’s technology trends and innovations.

Solution: Leveraging technology solutions such as the cloud and implementing microservice-based architecture can help startups ensure the product is scalable to meet growing market demand. Also, as we mentioned earlier, it’s essential to focus on constant innovation rather than on people or budgets. That will help keep up with the times while maintaining competitiveness and customer demand.

Read Also:

How to Hire Software Developers for a Startup: a Step-by-Step 2023 Guide

Custom Software Development For Startups: Fundamental You Need to Know

Custom Enterprise Software Development: Everything You Need to Know

How much does startup product development cost?

The cost varies depending on many factors. For example:

  • The complexity of the product ( the scale of your project)
  • The features and functionality required (starting from MVP – basic functionality and going to a full-fledged digital product with advanced features and top design practices)
  • The technology stack (depend on your development partner, their expertise, and technology proficiency level)
  • The location of the development team (e.g., rates in Eastern Europe are commonly lower compared with Western companies and US developers)
  • Performance, security, and scalability requirements
  • Third-party integrations
  • Product type (web, mobile, hybrid, cross-platform)
  • Engagement model (team augmentation, full-time dedicated team)
  • Development approach (in-house (the total cost of the project can be between $160,000 and $180,000) or outsourcing ($20,000 to $100,000))


On average, the cost of developing an MVP version may range between $20,000 to $100,000 and go above. However, it is essential to note that development cost is just one component of the cost required to bring a product to market. Other costs, such as marketing, sales, and ongoing maintenance and support, must also be considered.

To get a more accurate estimate of the cost of startup product development, it’s best to consult with our experts. All you need is to provide us with detailed information about the product requirements and features so that we can prepare a more accurate estimate based on your needs and available capabilities.


How long does it take to develop a startup product?

The same logic for cost estimations works for timeline calculations. The time it takes to develop a startup product can vary depending on several factors, such as:

  • The complexity of the product
  • The size of the development team
  • The technology stack
  • The development methodology


On average, a simple startup product with a small team and commonly-used technology stack could take around 4-6 months to develop. In contrast, a more complex product with a larger team and a more sophisticated technology stack could take up to a year or more.

That’s another reason why Northell recommends starting with MVP development. Building an MVP first will shorten your development time with a focus on delivering core features to the market quickly.

The timeline for startup product development will depend on the project goals

Startup product development: Key takeaways

When it comes to digital product development, it’s essential to be equipped with best practices and recommendations from experienced specialists to set up your startup journey right from the start. We hope exploring the basics, and experienced-based step-by-step guide created by our team helped you to fill all gaps and eliminate misconceptions in startup product development.

Northell is ready to help you create a long-term successful product strategy, find your market fit, streamline the path to customers, eliminate risks early, and avoid wrong decisions. With our years of hands-on experience in product development for startups, we can cater to your specific needs, no matter the project scale and industry focus. Starting a startup is an adventure, and the Northell team is ready to support you along the way.

How do you create a startup product?

To create a digital product, we follow the next steps in a startup product development process:

- Identify a problem or need
- Define your product needs
- Develop a go-to-market strategy
- Define the scope of work
- Create a product roadmap and prioritize features
- Design your product
- Build a prototype
- Refine your product
- Launch your product
- Continuously improve

How to acquire customers for the business product?

Acquiring customers for a business product is essential to build a successful startup market story. There are numerous approaches to acquiring customers for the business product. The most widespread are:

- Employing a subscription-based model for your product.
- Providing free basic functionalities with premium purchases.
- Using social media to build a strong online presence.
- Offering incentives such as discounts or free trials can encourage potential customers to try your product.
- Using paid advertising and platforms like Google AdWords, Facebook Ads, and LinkedIn Ads will allow you to target specific demographics and interests.

What is the product development approach best for my startup?

Northell recommends using the following best approaches for startups:

- Agile development is a flexible and iterative approach to product development that emphasizes collaboration, customer feedback, and continuous improvement. It is well-suited for startups that adapt quickly to changing market conditions and customer needs.
- Lean startup methodology emphasizes creating a minimum viable product (MVP) that can be quickly tested with customers to validate assumptions and gather feedback. It is ideal for startups that want to minimize risk and maximize learning in the early stages of development.
- Linear process: This is a more traditional approach to product development that involves breaking the cycle into stages and using gate reviews to assess progress and make go/no-go decisions. It is suitable for startups that clearly understand their product and market and need a more structured approach to development.

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