Your app need a good answer to the question: “Why not go with the established competitor’s product?”. That’s what your Unique Selling Proposition (USP) is for. This is especially important when you start out, because a new product has fewer features than the competition. You also don’t have brand recognition. People buy Apple products just because they’re made by Apple. A startup doesn’t have that advantage.
Your product is also likely to have some serious shortcomings. It takes years for software to get good, so you need something to compensate for your lack of features, lack of brand, and other ways in which your product isn’t great.
You can try to compete on price. Just charge less than everybody else, right? Except, this can backfire on you in two ways. One, you send a signal that your product belongs in the “budget” section and is therefore worse than other products. And two, the cheapest products get the most difficult-to-please and most demanding customers. I’m not entirely sure why this is, but my hunch is that people who look for the cheapest products have a negative disposition. Maybe they’re afraid they’re getting taken advantage of, or maybe they resent having to pay for software in the first place. When you charge more you get customers that look at the value provided by your software and decide based on that to go ahead with a purchase. For the first kind of customer any price is too high. The second kind of customer will be happy if you explain in plain language what your product costs and what they get in exchange. You don’t want to be the most expensive product in your market and you don’t want to be the cheapest. Just be somewhere in the middle. Maybe somewhere the lower 3rd, that way you can easily raise your prices as your product gets better without pricing yourself out of the market.
Can you distinguish yourself with some really cool feature? Probably not. It might work in the beginning, but once you get some success your competitors will notice. Established businesses have more resources and most features can be copied. Usually competitors will make a feature that’s equivalent and not exactly identical, but it amounts to the same thing. The one feature that made your product unique has been commoditized and you go back to square one.
You also can’t distinguish yourself based on “universal benefits”. You can say your product is “fast”, or “easy to use” but every competitor will say the same. You can say your product is “secure”, but even competitors with the worst security practices (and the record to prove it!) can put any number of logos on their website that prove their product meets every industry standard. Ever noticed how companies with terrible customer support have these Customer Service awards plaques on their website? You should absolutely work your hardest to provide great service, but to really distinguish yourself you need more.
So you can’t compete by having more features, you can’t compete on price, you can’t compete with cool unique features. If none of these approaches are good, what can you do?
To differentiate yourself in a way that lasts your product needs to be something the competitors explicitly are not. Good products drive a wedge in a market where customers have to choose whether they want a product of Type A or Type B, but they can’t choose both. If you segment the market intelligently you’re the first and therefore best product in this new subcategory. This puts you as a new startup in a terrific position.
If you’re going to compete with Gmail you don’t want to be the product that’s cheaper (Gmail is already free) or the product that’s faster (Gmail used to be fast, too) or the product that has the most features. You want to be the product that is about privacy. No ads. You fight newsletter spam and email open tracking and other bad practices. What is Gmail going to do? Nothing! Gmail is an ad-based product, after all.
With Thymer we’re boldly choosing a text-based UI. Many people, like us, use text-based IDEs all day. It’s the kind of software interface we like, so odds are, other people will like it too. It’s not a feature our competitors can just copy, because it defines what our app is. If we succeed I’m sure people will try to copy us outright. That’s inevitable. If our app is good enough clones won’t hurt us much.
There is a final reason why it’s important to have a clear USP for your app. You want to be the best product for this new segment you’ve created. Any time you think about adding a new feature or adding some text to your product page you can ask yourself if it fits with your core theme. This helps you focus on what matters. You don’t want to dilute your vision, you want to make it stronger. It will put off many people, but those who like it will end up really liking your product. When you start out, that’s exactly what you want.