How to Pick a Profitable Niche for Your Online Business

One of the beginner entrepreneurs’ common mistakes is thinking that everyone wants their product. This can lead to too broad demographics and can result in targeting the wrong people when advertising.

Therefore, picking a niche, a segmented market, is crucial for long-term success. Business owners can focus their efforts on attracting specific potential customers when it comes to product development and online marketing strategies.

This article will show you eight methods to choosing a profitable niche for your business.

Once you come up with a niche, the next step is to choose the right hosting plan for your online business. If you’re not sure where to begin, check out VPS hosting from Hostinger, which offers extensive storage and excellent customer support.

1. Choose Based on Your Passion

Starting an online business is not easy. If people work on something they don’t care about, they will tend to give up. Meanwhile, they’ll have the motivation to learn more and be consistent if they work in an area they love.

To determine your interests, ask yourself several questions:

  • How do I like to spend my free time?
  • What magazines or social media accounts do I subscribe to?
  • What topics do I like to learn about?

For example, if you like drawing and follow illustrators’ social accounts to learn their drawing methods and learn about industry trends, your niche can be graphic design or illustration.

2. Consider a Skill-Related Niche

If you’re stuck with listing your interests, consider writing a list of your skills or areas of expertise. This may be challenging for most starters as over 80% of new-level entrepreneurs experience imposter syndrome, which is the feeling of not being good enough.

However, having skills doesn’t mean that you have to be an expert. Your own experiences may add value or give new perspectives to certain people that can be your potential clients.

Think about what skills you have that people compliment you on or which industries you understand the most. Asking friends and family can also help to come up with ideas.

3. Do a Google Search

Check the keywords related to your niche and see whether the topic is popular enough on search engines. Then, try to dig deep into the topic by visiting related websites or eCommerce platforms and reading relevant articles.

Keep in mind that if the results for that topic are low, the potential for finding a target audience is the same.

Also, consider using Google Trends. This tool can help you understand the trends by typing specific keywords or topics. If you don’t know what keywords or topics to type, go to Year in Search or Trending Searches to notice previous and current trends.

After that, see whether the graph is stable for several years to ensure your business has consistent demand.

4. Research the Niche Value

Niche market value indicates whether it has demand and potential to grow. Some factors that contribute to niche value include market size and industry trends. Once you know a niche is valuable, you’ll have more confidence in doing the business.

Statista can be a perfect source to research the niche value.

It offers related information, like trend predictions for the next few years, helping you know whether the niche is likely to be profitable in the future. Statista also provides insights for various sectors, like media, health, and retail.

5. Identify Your Audience

If you have a customer base, their profiles can be a great start to finding a niche. Try to look for their shared interests and characteristics, like age and income level.

Different characteristics may need special products or services. For instance, if you’re passionate about travel and your audience is mainly in their 20s, providing digital nomad or wildlife experiences can be more relevant than family vacation packages.

A tool to help understand your audience is Google Analytics. It provides valuable data, like audience demographics and interests and the most popular content.

6. Check Social Media Trends

Understanding social media trends can help you notice what people need.

For example, during the pandemic, many people talk about mental health using #MentalHealthAwareness on Twitter. With the trending topic, you may assume that people are interested in mindfulness and self-care, like journaling notebooks or guided meditation.

Twitter and YouTube have a trending topic section on their platforms. Meanwhile, Facebook and Instagram share their topic ranks on Facebook IQ.

To get deeper insights into the trends, some social media platforms, like Twitter and Facebook, also share reports on each year’s trending topics.

7. Determine Potential Margin and Pricing

Once you notice the potential market for a niche, let’s see the pricing margin to estimate the revenue.

Pricing margin refers to the difference between the cost of producing or buying a product and the price when you sell the product. For example, if you buy phone cases for $8 and sell them for $10, the pricing margin would be $2.

Consider researching a rough estimation of costs in marketplaces like Amazon or AliExpress. No need to be too detailed, as you can go back to this process once you decide the best niche.

8. Analyze Competition

When you have some potential niches in mind, try to analyze the competitors in each niche. Doing so will help you see how you should position your store to win customers. Or, if the niche is too competitive, you may consider choosing another one.

Analytics tools like Similarweb can show the leading websites or apps in various industries, such as finance and travel.

If you have a particular website in mind, type in the URL in the search bar, and the tool will generate valuable insights, like the audience’s interests and similar competitors.


Choosing a niche is one of the most critical steps when it comes to starting an online business. It’s the only way to figure out your target market and beat your competition.

Ideally, your niche will relate to your passions and skills. However, you will also require a deep analysis of the audience, trends, and competitors.

To make sure the niche is profitable, check whether it has the demand by looking at analytics websites. Also, consider calculating the pricing margin to estimate the potential profits of the niche.

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