Once you’ve defined your market, you can do some qualitative research to understand how much they’re willing to pay for your solution to build your ARPU hypothesis.
If you find that this is too low to fit the model market fit equation, then you can consider raising the price. If you do raise the price, you need to make sure that the Channel Model Fit still holds. You may need to change the definition of the market to find customers with a higher willingness to pay.
% You can capture
This variable is probably the hardest to predict. If you peru mobile database have identified your target market and know how many target customers there are, and you understand what they might be willing to pay ARPU, you can work your way back to the percentage of the market you need to create a $100M+ business.
If anything, it’s easy to overestimate the percentage you think you can capture. For example, if you’re a SaaS startup and this variable goes to 50%+, you should be worried.
Conversely, for SaaS businesses without strong network effects, I use 10% as a rule of thumb. Over time, great SaaS companies will capture more than 10% of the addressable market, but it’s a good starting point.