Size your market in an afternoon
Ask a research specialist to size your market two ways — top-down from the whole category and bottom-up from real customers and prices — then compare the two. You will not get a perfect number (nobody does), but you will get an honest range that beats a gut feeling and a hopeful slide.
Nobody can size a market to the dollar, and anyone who says they can is selling something. What you can get, in an afternoon, is an honest range.
Step by step
- 1
Frame the customer and the price
Be specific about who buys and what they would pay — vague inputs give vague answers.
- 2
Estimate top-down
Start from the category size and cut it down to the part you could plausibly serve.
- 3
Estimate bottom-up
Multiply a believable number of customers by a believable price and see where you land.
- 4
Compare and sanity-check
If the two numbers are miles apart, that gap is the interesting part — an assumption is off.
Two numbers beat one
A single market-size figure is a guess with good posture. Two figures from two methods give you a range — and a range you can defend is worth more than a point you can't.
Key terms
- Top-down.
- Starting from the whole category and narrowing to your realistic slice.
- Bottom-up.
- Building the number from real customers multiplied by a real price.
- TAM.
- The total addressable market — the whole pie, before you get honest about your share.
FAQ
Which method is more reliable?
Bottom-up, usually — it is grounded in real customers and prices rather than a top-line number you sliced hopefully.
Is this financial or investment advice?
No — it is general analysis to inform your own decision. The numbers are yours to weigh.