How to conduct a feasibility study: Step-by-step guide with examples

Editor’s note: This article was updated by Kayode Adeniyi on 7 January 2025 to provide more comprehensive, practical guidance regarding how to conduct a feasibility study template. The updated, customizable feasibility study template can be downloaded here.

Opportunities are everywhere, from small ones that don’t require many resources to massive ones that need further analysis and evaluation. One of your key responsibilities as a product manager is to evaluate the potential success of those opportunities before investing significant money, time, and resources. That’s where a feasibility study comes in.

A feasibility study can help you figure out if your project makes sense financially, technically, and operationally before diving in headfirst. You can determine the viability of a project through a feasibility study by assessing aspects such as technical requirements, financial investment, market dynamics, and potential risks.

These studies are indispensable for organizations exploring new product launches, market expansions, or strategic investments, allowing you to make informed, data-backed choices as you:

• Evaluate opportunities from multiple perspectives
• Reduce uncertainties and mitigate risks
• Align projects with broader organizational goals
• Ensure only viable projects move forward
• Optimize resource allocation

In this article, we’ll discuss what factors are considered in a feasibility study, why and how you should conduct one, the challenges of stakeholder management, and more. You can download this customizable feasibility study template as a practical starting point for your own assessment, tailoring it to your particular needs.

What is a feasibility study?

A feasibility study, also known as a feasibility assessment or feasibility analysis, is a systematic analysis and evaluation of a product opportunity’s potential to succeed. It aims to determine whether a proposed opportunity is financially and technically viable, operationally feasible, and commercially profitable.

This critical decision-making tool enables you to analyze key aspects of a project to assess its overall viability. Feasibility studies help organizations mitigate risks, optimize resource allocation, and maximize potential returns before committing significant time, money, and effort.

A feasibility assessment typically considers a wide range of variables that can be broken down into five core factors — technical feasibility, financial viability, market potential, operational feasibility, and legal compliance:

You might conduct a separate feasibility study for each of these factors, or you may cover all of them in a single, comprehensive assessment. Based on the analysis’s findings, your team can decide whether to proceed with the product opportunity, modify its scope, or pursue another opportunity and solve a different problem.

Let’s get into these factors in more detail.

Factors considered in a feasibility study

1. Technical feasibility

Technical feasibility examines the technical resources and expertise needed to develop the proposed project and identifies any technical challenges that could arise. It evaluates whether the technology, tools, infrastructure, and expertise required for development and implementation are available and sufficient.

For example, a software company exploring an AI-powered customer support chatbot would assess the need for machine learning expertise, compatibility with existing systems, and data security requirements. A potential challenge might include integrating the chatbot seamlessly with the company’s CRM platform while ensuring compliance with GDPR.

Key considerations:

1. Technology stack and tools required
2. Resource availability (e.g., skilled personnel)
3. Integration challenges
4. Estimated development timeline

2. Financial viability

Financial viability determines whether the project is financially sustainable and capable of generating an acceptable return on investment (ROI). It involves a thorough analysis of costs, revenue potential, and financial risks.

For example, an ecommerce platform considering a drone delivery service must calculate upfront costs (drones, training, infrastructure), ongoing operational costs, and projected revenue from faster delivery times that might attract premium-paying customers.

Key considerations:

1. Development and operational costs
2. Revenue projections and pricing models
3. Payback period and ROI calculation
4. Risk of financial loss or unforeseen expenses

3. Market feasibility

Market feasibility focuses on the demand for the product or service, along with the competitive landscape, market trends, and target audience’s needs. It determines whether the project aligns with market conditions and customer expectations.

For example, a startup developing a subscription-based fitness app must assess the total addressable market (TAM), user interest in fitness gamification, and existing competitors such as Peloton or MyFitnessPal. User surveys or focus groups can validate demand.

Key considerations:

1. Market trends and growth potential
2. Target audience demographics and behavior
3. Competitive analysis
4. Barriers to entry and unique selling proposition (USP)

4. Operational feasibility

Operational feasibility assesses whether the organization has the operational capacity, structure, and processes to support the project effectively. It examines logistics, staffing, and day-to-day management.

For example, a retail chain expanding into same-day delivery must evaluate warehouse management, route optimization software, and staffing levels to ensure smooth operations.

Key considerations:

1. Internal processes and resources
2. Staffing requirements and training needs
3. Supply chain and logistics challenges
4. Scalability and operational risks

5. Legal feasibility

Legal feasibility ensures that the project complies with relevant laws, regulations, and industry standards. This step identifies potential legal hurdles that could affect implementation.

For example, a food delivery service planning international expansion must navigate labor laws, food safety standards, and cross-border tax regulations. Legal counsel may be required to handle compliance in multiple jurisdictions.

Key considerations:

1. Regulatory requirements (e.g., data protection, environmental laws)
2. Intellectual property (IP) considerations
3. Contractual obligations
4. Potential liabilities and legal risks

Example application of a feasibility study

Imagine that a leading logistics company is exploring implementing autonomous delivery vehicles. They conducted a feasibility study, resulting in the following:

1. Technical feasibility — Ensured GPS systems, sensors, and AI algorithms could navigate urban landscapes
2. Financial viability — Calculated the initial investment of $500,000 per vehicle against an estimated 20 percent reduction in delivery costs
3. Market feasibility — Validated customer interest through pilot programs and surveys showing 65 percent user adoption in urban areas
4. Operational feasibility — Integrated the system with existing delivery hubs and restructured routes for maximum efficiency
5. Legal feasibility — Addressed road safety compliance, liability concerns, and local transportation regulations

The study concluded the initiative was viable, and the company launched a pilot project that resulted in significant operational savings and improved delivery times.

Why conduct a feasibility study?

Here’s why conducting a feasibility study is essential and how it benefits businesses:

1. Avoid wasted resources on unviable product opportunities

Investing time, money, and effort into a project that ultimately fails can be costly, both financially and reputationally. Feasibility studies help teams assess viability early, ensuring resources are allocated to initiatives with a higher likelihood of success.

Imagine, for example, a retail chain considering opening a flagship store in a new city. A feasibility study might reveal that the target market lacks sufficient purchasing power or that existing competitors dominate the area, making the venture unlikely to succeed. With this insight, the company can redirect resources to a more promising location or strategy.

Consider a different scenario where a SaaS startup is planning to expand internationally. Conducting a feasibility study highlights data privacy regulations like GDPR in Europe and reveals a lack of language support for non-English-speaking markets. The team uses this insight to prioritize localization efforts and regulatory compliance before launching.

Key benefits:

1. Prevents unnecessary expenditures on unfeasible projects.
2. Redirects efforts to initiatives with better ROI potential.
3. Minimizes opportunity costs by focusing on viable projects.

2. Align product decisions with organizational goals

Feasibility studies ensure that projects align with an organization’s strategic objectives, core values, and long-term vision. Systematically evaluating the project’s scope and potential allows teams to avoid initiatives that deviate from business priorities. Demonstrating how a product opportunity supports larger company goals can also help secure stakeholder buy-in.

Let’s say that a technology company specializing in enterprise software is considering developing a consumer-facing app. A feasibility study could show that such a pivot requires significant investment in unfamiliar markets, misaligning with the company’s B2B expertise and long-term growth strategy. Instead, the company may choose to double down on its enterprise focus.

Another example could be an ecommerce platform considering adding augmented reality (AR) features to enhance the shopping experience. A feasibility study uncovers the technical complexity of integrating AR tools with the existing platform, as well as a significant upfront cost. However, it also identifies a high ROI potential in product categories like furniture and fashion. This targeted insight helps the business secure stakeholder buy-in.

Key benefits:

1. Ensures alignment with strategic goals and organizational priorities.
2. Provides clarity on how the project fits into the larger business context.
3. Builds stakeholder confidence with data-backed rationale.

3. Identify risks and challenges early

Every project carries risks, but identifying and mitigating them early can save time, money, and reputational damage. Feasibility studies analyze potential hurdles, technical, financial, operational, or market-related, before they become costly issues.

For example, a startup exploring a subscription-based meal delivery service might use a feasibility study to uncover:

• Operational risks — Logistics challenges in delivering fresh meals in remote areas
• Market risks — Insufficient demand in certain regions or price sensitivity among potential customers
• Legal risks — Compliance issues with food safety regulations

Identifying these risks early allows the team to adjust their strategy accordingly, focusing on urban areas or introducing a tiered pricing model.

Similarly, a hospital exploring telemedicine services could use a feasibility study to evaluate the technical infrastructure required, patient adoption rates, and the cost of compliance with HIPAA regulations. The study’s findings help them implement a pilot program for high-demand specialties, maximizing impact with minimal risk.

Key benefits:

1. Enables proactive risk management by surfacing challenges early.
2. Helps develop contingency plans for foreseeable issues.
3. Builds a clear picture of what success looks like and the obstacles to overcome.

How to conduct a feasibility study

The activities involved in conducting a feasibility study differ from one organization to another. Also, the threshold, expectations, and deliverables change from role to role. However, a general set of guidelines can help you get started, as can this sample template that you can customize to your needs.

Here are some basic steps to conduct and report a feasibility study for major product opportunities or features:

1. Clearly define the opportunity

Defining the opportunity is critical to a successful feasibility study. Use data to substantiate the problem and its impact, ensuring relevance and clarity:

• Articulate the problem — Clearly describe the issue your project solves. For example, an ecommerce platform with a 35 percent rise in abandoned carts may identify “lack of payment options” as a key driver, backed by user surveys
• Understand the audience — Identify who benefits and their pain points through surveys or interviews. For instance, a SaaS targeting small businesses might discover 60% struggle with invoicing inefficiencies

Data-driven insights ensure a solid foundation for the feasibility analysis.

2. Define the objective and scope

Defining the objective and scope ensures alignment with organizational strategy and sets clear boundaries for the project:

• Objective — Clearly state the project’s purpose and its alignment with strategic goals. For example, a fintech budgeting tool’s objective could be: “Enhance user engagement and reduce churn through intuitive financial planning features.”
• Scope — Outline what’s included and excluded to avoid scope creep. For instance, a SaaS launching an AI task prioritization tool might focus on developing an AI algorithm and team training, excluding cross-platform features in the initial phase

Clarity in these areas ensures focused execution and measurable success.

3. Conduct market and user research

Market and user research are critical for understanding your target audience, identifying opportunities, and validating the need for your project. This step combines qualitative and quantitative methods to gather actionable insights and ensure the project aligns with market demands.

Some helpful research methods include:

• Interviews — Direct conversations with potential users or stakeholders provide deep insights into their pain points, preferences, and expectations. Use structured or open-ended questions tailored to your project’s focus. For instance, a product manager for a fitness app interviews gym-goers to understand their frustrations with tracking workout progress, uncovering a desire for real-time feedback
• Surveys — Customer surveys allow you to gather scalable, quantitative data as you collect input on user needs, feature preferences, or pricing expectations. An example could be a startup exploring subscription models for home security systems surveys users about willingness to pay, identifying optimal pricing tiers
• Competitive analysis — Analyzing competitors helps identify gaps in the market, assess positioning, and understand feature trends. Tools like SEMrush or SimilarWeb can provide competitive insights. For instance, a SaaS company discovers competitors lack robust integrations, positioning their product as an all-in-one solution

Meanwhile, these steps will guide you through conducting market analysis:

1. Define the market — Identify your target market by segmenting users based on demographics, behaviors, and needs. For instance, a meal delivery service targets urban professionals aged 25–40 seeking healthy, convenient options
2. Assess market trends — Analyze industry reports and trends to understand market growth, emerging technologies, or shifting user behavior. For instance, an EV charging startup reviews reports showing a 30 percent annual growth in EV adoption, validating their market entry
3. Evaluate market size — Determine the total addressable market (TAM), serviceable addressable market (SAM), and serviceable obtainable market (SOM). For instance, a project management tool estimates its TAM by combining all potential businesses using similar software globally
4. Identify customer pain points — Use insights from interviews and surveys to pinpoint gaps in the market and validate the problem your project solves. For instance, a collaboration tool uncovers that users struggle with real-time feedback on shared documents
5. Analyze competitors — Compare features, pricing, and market positioning of key competitors. Use SWOT analysis to identify your product’s differentiation. For instance, a startup in video conferencing identifies a gap in high-security features, differentiating their product for corporate clients

4. Analyze technical feasibility

Analyzing technical feasibility ensures that your project can be successfully built and implemented with the resources, tools, and expertise you have. This step works best when you collaborate closely with your technical team to uncover challenges, allocate resources effectively, and plan for smooth execution:

1. Collaborate with technical teams — Bring in engineers, developers, and IT experts early to discuss what’s possible. They’ll help identify technical requirements, potential bottlenecks, and integration challenges. For instance, if you’re adding an AI feature to your app, your team can assess data processing needs and ensure the new feature works seamlessly with existing systems
2. Allocate resources wisely:
   1. People — Identify who you need, like developers, testers, or cloud engineers, and ensure they’re available
   2. Tools and infrastructure — Use reliable platforms like AWS for cloud hosting, Jira for managing tasks, or Figma for prototyping
   3. Budget — Plan for the costs of development, testing, and any third-party tools or expertise you’ll need
3. Use the right tools — Equip your team with tools that make their work easier. For instance, use Slack or Microsoft Teams for communication, GitHub for code collaboration, and scalable cloud platforms like Azure to support your project as it grows

By collaborating with your technical team and planning resources thoughtfully, you’ll be prepared to tackle challenges and deliver a project that’s both feasible and effective.

5. Assess financial viability

Evaluating financial viability ensures your project is not only feasible but also financially worthwhile. This involves analyzing costs, projecting revenue, and calculating return on investment (ROI) to provide a clear picture of the project’s financial outlook.

Start by identifying all costs associated with the project:

• Development costs — Salaries for the development team, software licenses, cloud infrastructure, and any outsourced expertise
• Operational costs — Recurring expenses such as server hosting, maintenance, and customer support
• Marketing costs — Budgets for promotions, onboarding materials, and customer acquisition campaigns

Let’s see how this could look using an example of a fitness app launching a premium feature:

• Development — $150,000 (team salaries and tools)
• Operational — $20,000 annually for maintenance and updates
• Marketing — $30,000 for launch campaigns

This would bring the product’s total Year One costs to $200,000.

Next, estimate revenue based on pricing strategy and expected user adoption:

• Pricing model — Choose between subscriptions, pay-per-use, or tiered pricing
• Adoption rates — Use market research or surveys to estimate user interest

Continuing the fitness app example, let’s say that the premium feature will launch with a $20/month subscription and targets 5,000 users in its first year. The potential revenue would then be calculated like so: $20 x 5,000 users x 12 months = $1.2M.

Finally, calculate the ROI to demonstrate profitability:

• Formula: ROI = (Net Profit / Total Costs) x 100
• Example: If total costs are $200,000 and first-year revenue is $1.2M:
  • Net Profit = $1.2M – $200,000 = $1M
  • ROI = ($1M / $200,000) x 100 = 500%

This means the project generates five times the initial investment within its first year.

By presenting a clear financial breakdown, costs, revenue, and ROI, you provide stakeholders with a data-driven view of the project’s financial potential, helping them make confident decisions about moving forward.

6. Evaluate potential risks

Evaluating potential risks ensures your project is prepared to tackle challenges before they arise. Addressing risks across four key areas — technical, market, operational, and regulatory — can help you avoid costly setbacks and ensure a smoother implementation.

• Technical risks — Technical risks involve issues with the tools, infrastructure, or expertise required to deliver the project. An example of this is a fintech app incorporating AI fraud detection might struggle with processing real-time transactions due to system limitations or algorithm inaccuracies. To mitigate this, conduct extensive testing phases, ensure scalable cloud infrastructure (e.g., AWS), and allocate resources for ongoing algorithm refinement.
• Market risks — Market risks focus on customer demand, competition, and economic trends that could impact your project’s success. An example of this is a food delivery startup expanding into rural areas may face low adoption due to limited internet connectivity or smartphone penetration. To mitigate this, run small-scale pilot programs to test demand, use local surveys to understand user needs, and adjust offerings based on regional insights.
• Operational risks — Operational risks stem from logistical inefficiencies, resource constraints, or process-related issues. For instance, a retail chain offering same-day delivery might face delays due to insufficient warehouse capacity or under trained staff. Managing this requires optimizing warehouse workflows, use route-planning tools, and investing in staff training to handle increased operational demands.
• Regulatory risks — Regulatory risks arise from non-compliance with local laws, standards, or industry-specific regulations. For example, a healthcare SaaS company expanding internationally must comply with data privacy laws like GDPR or HIPAA to avoid fines and reputational damage. To address this, conduct a legal compliance audit, work with legal counsel to address regulatory requirements, and implement robust data encryption and privacy measures.

Proactively identifying and addressing risks in these areas equips you to create a clear, detailed, thorough plan that minimizes disruptions and sets your project up for success.

7. Summarize findings and decide

Effectively preparing and presenting the feasibility study report is critical to ensuring stakeholders understand your analysis and can confidently make an informed decision. Let’s break down how to approach this, starting with how to prepare the feasibility study report before looking at how to present that report.

How to prepare the feasibility study report

1. Organize the report — Structure your report to clearly present the key elements of the feasibility study. Use clear headings and bullet points to improve readability and make it easy for stakeholders to navigate:
   1. Executive summary — A brief overview of the study, including the problem, proposed solution, key findings, and recommendations
   2. Detailed findings — Summarize insights from each aspect of the analysis (technical, financial, market, operational, and regulatory) with supporting data and visuals
   3. Recommendations — State whether to proceed, modify, or abandon the project, providing a concise rationale
   4. Action plan — Include timelines, resource requirements, and next steps to implement the recommendation
2. Include visuals — Use charts, graphs, and infographics to simplify complex data and make the report more engaging. For example:
   1. A bar graph showing projected revenue growth
   2. A risk matrix highlighting high-impact risks and mitigation strategies
   3. A timeline visualizing key project milestones
3. Tailor content to your audience — Focus on what matters most to your stakeholders:
   1. Executives — Highlight ROI, strategic alignment, and high-level finding
   2. Technical teams — Include details about technical feasibility, resource allocation, and risks
   3. Finance teams — Provide detailed cost analysis and revenue projections

How to present the feasibility study report

1. Focus on clarity and engagement — Deliver your findings in a way that is easy to follow and keeps your audience engaged:
   1. Start with the executive summary to provide a quick overview
   2. Use visuals to emphasize key points and reduce information overload
   3. Keep your language clear and concise, avoiding jargon where possible
2. Encourage discussion — Allocate time for questions and feedback. This not only clarifies doubts but also builds stakeholder buy-in
3. Be prepared to defend your analysis — Anticipate potential concerns and have supporting data ready. For example:
   1. If cost overruns are a concern, highlight your contingency plans
   2. For risks, outline specific mitigation strategies

Following these steps will result in a structured, visually engaging report that you can deliver and present confidently. By doing so, you ensure stakeholders have the clarity and insights needed to make the best decision for your project.

Overcoming stakeholder management challenges

The ultimate challenge that faces most product managers when conducting a feasibility study is managing stakeholders.

Stakeholders, driven by their own perspectives and responsibilities, might raise concerns about the viability of your proposed product or feature, potentially even deeming it a misuse of valuable resources. They may even try to provide input on prioritizing your backlog, which, while well-intentioned, can be frustrating or create additional complexities for you.

Here are some tips to help you deal with even the most difficult stakeholder management challenges during a feasibility study:

• Use hard data to make your point — Never defend your opinion based on your assumptions. Always show them data and evidence based on your user research and market analysis
• Learn to set and defend boundaries — You are the voice of customers, and you know their issues and how to monetize them. Don’t be afraid to speak up and defend your team’s work as a product manager
• Build stakeholder buy-in early on — Engage stakeholders from the beginning of the feasibility study process by involving them in discussions and seeking their input. This helps create a sense of ownership and ensures that their concerns and insights are considered throughout the study
• Provide regular updates and maintain transparency — Keep stakeholders informed about the progress of the feasibility study by providing regular updates and sharing key findings. This transparency can help build trust, foster collaboration, and prevent misunderstandings or misaligned expectations
• Leverage stakeholder expertise — Recognize and utilize the unique expertise and knowledge that stakeholders bring to the table. By involving them in specific aspects of the feasibility study where their skills and experience can add value, you can strengthen the study’s outcomes and foster a more collaborative working relationship

Final thoughts

A feasibility study is a critical tool to use right after you identify a significant opportunity. It helps you evaluate the potential success of the opportunity, analyze and identify potential challenges, gaps, and risks in the opportunity, and provides a data-driven approach in the market insights to make an informed decision.

If you’re dealing with challenging stakeholders, remember the importance of data-driven decisions, maintaining transparency, and leveraging the expertise of your team.

Using a feasibility study, product teams can determine whether a product idea is profitable, viable, feasible, and ultimately worth investing resources into. It’s a crucial step in the product development process and when considering investments in significant initiatives such as launching a completely new product or vertical.

For a more detailed approach and ready-to-use resources, consider using the feasibility study template provided in this post. You can take a deeper dive into this template in our post that walks through why, when, and how to use it, along with tips for customizing the template to your needs.

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