How can I estimate the value of new product ideas?
Your new product ideas are only as good as the impact they make on your goals. And with each idea, it is important to estimate the impact you expect it to have — before you ask your dev team to build it. This will help you and your stakeholders better understand whether each feature is worth the effort.
Estimating the Impact of Your Ideas
For each feature or idea, think about the value that it brings and how much of a real impact it might have. For example, on your registration flow, perhaps you are considering removing the first name and last name fields (and only ask for email address and password). Do your research to estimate the impact you think this may have on your registration conversions.
Will it be a 10% increase on registrations? Or is it more likely to cause a 10% decrease? It may be difficult to come up with these estimates, but the important part is to develop your hypothesis and come up with reasoning behind it.
When estimating the overall impact, you should first create a hypothesis which states what impact you expect the feature will have towards your goal. Go down your list of features and perform the same exercise for each. Do not overthink this; just go through the features and mark them accordingly.
With other features, you may find that some seem to have a larger impact than what you may have originally thought. This exercise helps you deeply review the feature list and assess what is worth your time to pursue in the next 3 months. Going through this process should help weed out low-impact ideas and separate the "nice to have" ideas from the ones with potential to add proven value. It is an important prioritization process.
Estimating the Cost of the Ideas
Product management and the prioritization process would be simple if not for costs. You could build everything if money was no object. But you know this is far from reality. Each of the features and products you are considering will have its own associated costs (time and effort needed to build and support it).
You will need to take a close look at those costs to help you better understand the size of the features that you are considering. Costs do not always refer to dollars and cents. Human capital and resources (engineers, designers and product managers) are even more important. Always consider the level of output that is possible based on your team size. And keep this team size in mind when looking to build your roadmap and feature list.
Work with your engineering lead to go through each of the features and discuss them at a high level to understand the level of effort required. As you go through this process, you will gain a better understanding of each feature's relative size. In most cases, these initial estimates might not be spot on. That is okay — the point of this exercise (at this stage) is to help you gauge the rough level of effort needed. Which features are easy to implement vs. difficult ones which may take a lot of time and resources?
Another consideration? The amount of effort needed for maintenance and upkeep. Some features might be very easy to initially build, but you might soon find that the upkeep of maintaining and supporting them is not worth it. Or, perhaps it ends up creating a lot of bugs and additional issues that you also need to support. For each feature, make sure that you understand the true cost of what is required before deciding to move forward.