Vertical software - built for a specific industry, not a general audience - is one of the strongest categories in SaaS. But most vertical SaaS ideas fail because they are not validated before money is spent. A proper validation process takes 2 - 4 weeks, costs €2,000 - €5,000, and answers the only question that matters: is there a market willing to pay?
For examples we have built, see software for construction companies and software for restaurants.
The 5-step validation framework
Step 1: Size the market. You do not need €100M TAM. You need enough customers paying enough per month.
- Potential customers in your geography x monthly price x 12 = annual revenue potential.
- Below €500,000? May be too small for standalone SaaS.
Sources: industry associations, chamber of commerce data, LinkedIn Sales Navigator, government business registries.
Step 2: Map the competitor landscape. Find direct competitors (other software), indirect competitors (spreadsheets, WhatsApp), and what they get wrong. Zero competitors is a red flag - it may mean no demand. The best position is 2 - 5 competitors doing mediocre work.
Step 3: Talk to 20 potential users. Not five. Patterns only emerge with volume. Ask how they handle it today, what is most frustrating, what it costs monthly, whether they would pay €X/month. Red flag: if 15 of 20 say “annoying but we deal with it,” the pain is not acute.
Step 4: Run a willingness-to-pay test. Conversations lie; behaviour does not. Build a landing page with pricing and a “join waitlist” button. Run a €500 - €1,000 ad campaign. Above 5% visitor-to-waitlist conversion is strong; below 2% needs work.
Step 5: Define the MVP scope. For every feature ask: “If I remove this, can I still test the core value?” If yes, remove it. See what is an MVP and how to build one in 12 weeks.
Red flags that kill vertical ideas
- Market too small. Fewer than 1,000 customers at €50/month means a €600,000/year ceiling - before churn and costs.
- Incumbents too strong. 70%+ share and deep pockets makes entry expensive.
- Regulation is a barrier. Some verticals require €50,000 - €200,000 in certifications. See software for regulated industries.
- The pain is not acute. “Nice to have” does not sell.
How much validation costs
| Activity | Cost | Duration |
|---|---|---|
| Market research (DIY) | €0 - €500 | 1 week |
| User interviews (20 calls) | €0 (your time) | 2 weeks |
| Landing page + ad test | €500 - €1,500 | 1 - 2 weeks |
| Paid Discovery sprint | €2,000 - €5,000 | 1 week |
| Total | €2,500 - €7,000 | 3 - 5 weeks |
Compare to building a product nobody wants: €30,000 - €80,000 and 4 - 6 months. Validation is the cheapest insurance.
Frequently Asked Questions
Can I skip validation if I am the target user? You can shorten it, not skip it. Your experience is one data point. Twenty data points reveal patterns invisible from inside the problem.
What if validation shows weak demand? That is the best possible outcome - you saved €30,000+ and months of work. Pivot or move on.
Should I validate before talking to an agency? Ideally yes, but a good Discovery sprint includes validation.
Related Articles
- Niche B2B SaaS: how we partner with industry insiders - Our partnership model.
- What is an MVP and how to build one in 12 weeks - What to build after validation.
Have a vertical idea worth testing?
Book a free Discovery call. We will help assess the market and decide whether a paid Discovery sprint is the right next move. Reach out at info@tsunami-digital.com or via the form on our homepage.