The 5 Stages of Product-Market Fit (And Why It's Not Binary)
Most founders think about product-market fit incorrectly.
They treat it like a light switch. Either you have it or you don't. You're wandering in the dark, and then one day—flip—you've "achieved" product-market fit and everything gets easier.
That's not how it works.
Product-market fit is a spectrum. You move through stages, and each stage requires different focus areas to keep progressing. The question isn't "do I have PMF?" The better question is: "what stage am I in, and what should I focus on to strengthen it?"
I've watched hundreds of SaaS companies go through this progression, both through TinySeed and through conversations with thousands of founders over the years. Here's the framework I use to think about it.
Stage 1: Pre-Product-Market Fit
Typical metrics:
Month-over-month growth: < $500
Monthly revenue churn: High (5-10% or more)
MRR: Usually $0–$5,000
What it looks like:
Early adopters are showing enthusiasm, but they're not necessarily converting to long-term users. You're relying heavily on yourself for sales, product development, and every customer interaction.
What to focus on:
Customer interviews to identify your Ideal Customer Profile and understand their pain points
Experimenting with different value propositions
Testing marketing and sales channels to find initial traction
Common pitfalls:
Not driving enough leads. You can't build a business with a small trickle of new customers.
Ignoring negative feedback or only seeking positive reinforcement
Mistaking your audience's initial interest for actual product-market fit
Stage 2: Weak Product-Market Fit
Typical metrics:
Month-over-month growth: $250–$1,000
Monthly revenue churn: Moderate (3-7%)
MRR: Usually $2,500–$20,000
What it looks like:
Customers are using the product regularly, but satisfaction and retention are inconsistent. You're starting to see early signs of customer segments that resonate with what you've built. You're still doing most of the work yourself.
What to focus on:
Strengthening retention through better features and onboarding
Investing in marketing and sales efforts
Identifying and targeting your most promising customer segments
Common pitfalls:
Weak value proposition and unclear messaging
Spreading marketing efforts across too many channels without mastering any
Not tracking funnel conversion rates
Stage 3: Emerging Product-Market Fit
Typical metrics:
Month-over-month growth: $500–$2,500
Monthly revenue churn: Low (1-5%)
MRR: Usually $15,000–$40,000
What it looks like:
Inbound interest and word of mouth become noticeable. Conversion rates improve throughout your funnel. Retention gets better as customers regularly find value in the product. Your sales process becomes more defined and repeatable.
What to focus on:
Investing in customer success to ensure users achieve their desired outcomes
Evaluating your pricing structure
Strengthening your brand and messaging to differentiate from competitors
Common pitfalls:
Failing to find repeatable marketing channels
Letting customer support quality slip as you grow
Unwillingness to hire and delegate
Stage 4: Strong Product-Market Fit
Typical metrics:
Month-over-month growth: $2,500+
Monthly revenue churn: Very low (0-3%)
MRR: Usually $30,000–$83,333
What it looks like:
Strong brand recognition in your market. A loyal, engaged customer base with very low churn. A predictable flow of inbound leads and established sales and marketing processes.
What to focus on:
Hiring to scale operations across functional areas
Continuing to evaluate pricing power as you become more established
Developing a long-term vision that enables sustainable, profitable growth
Common pitfalls:
Failing to anticipate plateaus before they hit
Ignoring employee satisfaction and company culture
Not balancing growth with profitability
Stage 5: Mature Product-Market Fit
Typical metrics:
Month-over-month growth: $5,000+
Monthly revenue churn: Very low (0-3%)
MRR: > $83,333
What it looks like:
You're widely recognized in your market. Your product is often the default choice for your ICP. Word of mouth continues to grow, but so do expansion and enterprise opportunities. Customers experience significant switching costs and rarely leave. Expansion revenue can exceed churn.
What to focus on:
Maximizing customer lifetime value through pricing tiers, add-ons, and upsells
Maintaining speed and feature velocity as your team grows
Building internal leverage: professionalizing operations, strengthening leadership
Deciding your endgame: 10x growth? Build to sell? At what price?
Defending your position through competitive intelligence and deepening your moat
Common pitfalls:
Key person dependencies in critical areas
Getting disrupted by nimbler competitors
Failing to recognize diminishing returns on existing channels
Allowing culture or pace to erode as the team grows
A Few Clarifications
Product-market fit is generally an early-stage concept. In the words of Paul Graham, it's whether you've made "something people want." But I find it useful to extend the framework further because the work of strengthening PMF doesn't stop at $20K MRR.
If you have a large audience or you're exceptional at marketing, you can accumulate customers and MRR without real PMF. The key indicator is whether customers actually get value and stick around. If churn is 10% or higher per month, you're effectively pre-PMF regardless of your other metrics.
High annual contract values can give the appearance of being further along than you are. A few $100K contracts can mask underlying PMF problems. Pay attention to retention and expansion, not just revenue.
Where Are You?
The point of this framework isn't to label yourself and move on. It's to help you focus.
If you're pre-PMF, don't worry about scaling marketing. Worry about whether you're building something people actually want.
If you're at emerging PMF, don't get distracted by enterprise sales. Focus on finding repeatable channels and strengthening retention.
If you're at strong PMF, don't keep doing everything yourself. Hire and build the team that can take you to the next stage.
Every stage has different work. Know which stage you're in, and do that work.