Time to market definition
/What is Time to Market?
Time to market is the period of time between when the first ideas are formed for a new product and when it is eventually made available to consumers. It is especially important in industries where products are outmoded quickly, since being first to market may give a business a substantial boost in sales, and also reduces the risk of incurring obsolete inventory costs.
Time to market is also a valuable measurement for maintaining consistent product design schedules, so that products are rolled out at a predictable pace. Time to market is useful for maintaining control over costs, since shorter projects generally tend to absorb fewer costs. Consequently, more successful businesses tend to have a relatively short time to market for the bulk of their new products.
Related AccountingTools Courses
How to Measure Time to Market
There is no standard measurement for time to market, since it can be difficult to determine the starting date for the measurement period. It may be the date when an idea is initially formulated, or when it is approved for development, or when it is fully funded, or when the assigned development team starts work. There may be months or even years between initial idea formulation and project staffing, so these differences are important. This is also a problem on the back end of a development project, though the range of possible values is smaller. The ending date may be when engineering passes the design to manufacturing, or when the first copy is shipped, or when it is first bought by a customer. The best approach may be to adopt whichever start and stop dates are being most commonly used within the industry, so that the firm’s time to market results can be compared to the reported results of competitors.
Whatever approach is used for measuring time to market, be sure to use it consistently for all product launches, so that management will be able to consistently judge time to market over an extended period of time.