The document provides an overview of different methods for quickly sizing markets, including total market potential, total addressable market (TAM), segmented addressable market (SAM), and expected share of addressable market (ESAM). It then describes eight specific approaches to quickly size markets: using analyst spend statistics; census data; LinkedIn data; directories; a power curve analysis; resource constraints; and Bureau of Labor Statistics data. Each approach is illustrated with an example of how it could be applied to estimate the market size for a particular product or service.

1. Ins and Outs of Sizing a Market in No Time
Last Updated on: July 10, 2015
Created By: Brandon Hickie

2. Table of Contents
• Overview on Science of Market Sizing
• Understanding How to Think About a Market Opportunity
• Total Market Potential
• Total Addressable Market (TAM)
• Segmented Addressable Market (SAM)
• Expected Share of Addressable Market (ESAM)
• Opportunity Size Triangulation – 3 Ways to View an Opportunity
• What’s The Difference Between Top-Down and Bottoms-Up Approaches
• 8 Quick Market Sizing Approaches
• Quick Top-Down Market Sizing
• Analyst Spend Statistic Market Size
• Census-Based Market Sizing
• LinkedIn-Based Market Sizing
• Directory-Based Market Sizing
• Power Curve Market Sizing
• Resource Constraint Angle on Sizing
• Bureau of Labor Statistics Market Sizing

3. Overview on Science of Market Sizing
3

4. Understanding How to Think About a Market Opportunity
4
• 4 ways to think about market size. Knowing the level of detail necessary to address your concerns
is key to properly scoping the problem and approach.

5. Total Market Potential
• Definition: The potential sales value of a particular product or service within a specific target
segment over a specified time frame.
– How is it calculated?
• Total Market Potential = (# of Opportunities) x (Average Selling Price of Opportunities)
• Best to do this calculation at segment by segment level, not as an overall market.
– Important Assumptions:
• Company can win 100% of market opportunities.
• All opportunities within market are there for the taking.
• Price is consistent across market.
– Costs & Benefits:
• Statistic can be estimated in hours, not days.
• Useful for quickly understanding the potential for a B2B market opportunity in terms of
magnitude.
• Always grossly overstated, due to over-simplification.
5

6. Total Addressable Market (TAM)
• Definition: The potential sales value of a specific target segment over a specified time frame that
takes into consideration the available demand for a particular service or product.
– How is it calculated?
• TAM = (# of Opportunities) x (% Targetable Opportunities) x (Average Selling Price of
Opportunities)
• Targetable opportunities can be estimated via a market research survey or an
assessment of current market penetration.
• Best to do this calculation at segment by segment level, not as an overall market.
– Important Assumptions:
• Company can win 100% of its targetable opportunities.
• All opportunities within targetable segment are there for the taking.
• Price is consistent across all segments and customers.
– Costs & Benefits:
• Provides more realistic picture of market opportunity than total market potential.
• Always overstated
• Statistic can be estimated in a day or less if willing to use publicly available data to
estimate percentage of targetable opportunities.
6

7. Segmented Addressable Market (SAM)
• Definition: The potential sales value of a specific target segment over a specified time frame that
is limited to available demand for a particular service or product that can be addressed via a
specific business model and strategy.
– How is it calculated?
• SAM = (# of Opportunities) x (% Targetable Opportunities) x (% Opportunities Targeted
as Part of Business Model) x (Average Selling Price of Opportunities)
• The segment or business model addressable opportunities can be estimated via more
targeted market research.
– Important Assumptions:
• Opportunity tomorrow is same as opportunity today.
• Company can win 100% of its segmented or business model addressable opportunities.
– Costs & Benefits:
• Provides a more accurate estimate of actual revenue potential of a market or segment.
• Requires a more involved process, as you have to understand what percentage of the
market would be addressable via your business model.
• Inputs into calculation are difficult to come by and may require primary research which
can be very costly and time consuming.
7

8. Expected Share of Addressable Market (ESAM)
• Definition: The portion of the segmented addressable market sales value expected to be won,
due to a given produce or service, over a specified time frame.
– How is it calculated?
• ESAM = (Expected Win Rate) x (Segmented Addressable Market) x (Average Selling Price
of Opportunities)
• The win rate can be proxied by win rates in other similar segments or estimated via
market research.
– Important Assumptions:
• Opportunity tomorrow is same as opportunity today.
• Win rates are same across segments.
• Opportunity tomorrow is same as opportunity today.
• Price is consistent across all segments and customers.
– Costs & Benefits:
• Statistic provides most accurate estimate of actual market opportunity. Although
typically understated.
• Inputs into calculation are difficult to come by and may require primary research which
can be very costly and time consuming.
8

9. Developing a Clear Market Definition
• What is a Clear Market Definition?
– A series of externally identifiable characteristics that identify the group of companies who
would likely have a need for product/services and could reasonably be expected to consider
purchasing product/service or a competitor’s product/service within a given time frame.
• 6 Key Factors To Consider When Developing a Market Definition:
9
Market
Definition
Relevant
Good/
Service
Minimum
Viable
Opportunity
Resources
Timeframe
Costs
Opportunity
Limitations
Legend
Business Factor
Outside Factor

10. Opportunity Size Triangulation – 3 Ways to View an Opportunity
10
Opportunity
Size
Top-Down:
Percentage of total
revenue in current
market
Bottoms-Up:
Customer or
competitor customer
spend on this
category
Resource Constraint Sizing:
Ability and cost to serve
market within time and
resource constraints.

11. What’s The Difference Between Top-Down and Bottoms-Up Approaches
• Its all about how you view the market and what this enables you to see or prevents you from
seeing.
11

12. 8 Quick Market Sizing Approaches
12

13. Quick Top-Down Example
13
• Question: What is the market size for commercial printing services?
• Who are their target customers?
– Can we bucket each profiled customer by industry or another easily identified
attribute?
– Is there a minimum employee or revenue threshold to afford or need these services?
• We can use analyst firm IT Spend Statistics to figure this out.
• Minimum Revenue = Average Sales Price (ASP) / (% Revenue Spent on IT * %
Allocation of IT Budget Towards technology Area * % Take of Technology
Allocation )
• How many companies are in each of these target industries with the specified
characteristics?
– We use CapitalIQ, Jigsaw.com, LinkedIn.

14. Quick Top-Down Example Continued
14
• How much will customers be willing to spend on printing per a year?
– Can we estimate this from their current customers?
– If not, can we approximate number using publicly available competitor data?
• Key: Must be uniquely focused on space or breakout revenue in financial reporting.
• CapitalIQ and 10-ks are great sources for customer and revenue.
• We have a range, so conservatively estimate a high-end ($500k) and low-end ($200k)
• Putting it all together to calculate a market size:

15. Analyst Spend Statistic Market Size Example
15
• Question: What is the market size for disaster recovery services for a company who sells to
utilities and charges a minimum of $1,000 per a month for this type of service?
• What is minimum revenue for utility that would be likely to purchase DR services at this
price point or higher?
– We can use analyst firm IT Spend Statistics to figure this out.
• Gartner overall spend statistics
• Forrester DR/BC IT Spend Allocation Report
– Minimum Revenue = Minimum Sales Price / (% Revenue Spent on IT * % Allocation of IT
Budget Towards technology Area * % Take of Technology Allocation )
– Minimum Revenue = ($1,008*12)/(.062*.013*1.00) = $15,000,000
Company Annual
Revenue
Employee
Count
Allocation of
revenue to IT
budget (Utilities)
Allocatio
n of IT
budget
towards Target "take" %
Monthly Service
Price Can Afford
Inputs 0.9 6.2% 1.30% 100% 12
$5,000,000 6 $310,000 $4,030 $4,030 $336
$10,000,000 11 $620,000 $8,060 $8,060 $672
Basement $15,000,000 17 $930,000 $12,090 $12,090 $1,008
$20,000,000 22 $1,240,000 $16,120 $16,120 $1,343
$30,000,000 33 $1,860,000 $24,180 $24,180 $2,015
$40,000,000 44 $2,480,000 $32,240 $32,240 $2,687
$50,000,000 56 $3,100,000 $40,300 $40,300 $3,358
$75,000,000 83 $4,650,000 $60,450 $60,450 $5,038
$100,000,000 111 $6,200,000 $80,600 $80,600 $6,717

16. Analyst Spend Statistic Market Size Example Continued
16
• How many utilities generate less than $15 million in revenue per year in the United States?
– Looks like there are a couple good sources to make estimate: LinkedIn, US Energy information
Administration
– Need to convert revenue into an employee count to use LinkedIn. This can be done using an
industry revenue to employee multiplier.
• We can estimate total market opportunity without ASP since we have a canonical revenue list.
– Total Market Opportunity = ∑(Revenue* (% Revenue Spent on IT * % Allocation of IT Budget
Towards DR/BC) = $248,000,880
• What is our expected take of this market?
– Let’s use our current overall win rate of 25%.
– So total market opportunity = (25% * $248,000,880) = $62,220,000
Source Number of Utilities Confidence
LinkedIn 1309 Medium
US Energy Information Administration 1,225 High
Best Estimate 1,225 High

17. Census-Based Market Sizing Example
• Question: What is market size for firm who sells to US-based
architecture firms with greater than $2.5M in revenue and an ASP
of $5,000 per year?
• How many US-based architecture firms are there with greater
than $2.5M in revenue?
• Employee to Revenue Conversion: 20 employee minimum
• Find NAICS Codes for target space: 54131 and 54132
• Finding right Census Dataset - focus on dataset that is most
granular with firm size on low-end.
• Note: Hierarchical data so components are only additive when have
same number of NAICS digits.
• What is the overall market opportunity for this firm?
– Target Market Opportunity = Number of Opportunities * ASP =
(1857+365) * 5,000 = $11,110,000
17
Multiple
relevant NAICs
for a specific
sector.
Sometimes at
different
hierarchy in
data.

18. LinkedIn-Based Market Sizing Example
• Question: What is market size for firm who sells to US-based architecture firms with greater
than $2.5M in revenue and an ASP of $5,000 per year?
• How many US-based architecture firms are there with greater than $2.5M in revenue?
• Employee to Revenue Conversion: 20 employee minimum
• Identify parameters and determine if need to qualify by advanced keywords search.
• Determine if opportunity at firm or location level.
• Pull Counts by Company Size Ranges
18
Any
Size
Not
Specified 1 to 10 11 to 50
51 to
200
201 to
500
501 to
1,000
1,001 to
5,000
5,001 to
10,000 10,000+
None Architecture &
Planning
Location Count 7,326 1,121 3,514 1,917 632 91 22 24 2 3
None Architecture &
Planning
Headquarters Only 6,637 1,004 3,132 1,767 601 87 20 21 2 3
Architectural
Services
Architecture &
Planning
Location Count 1,239 158 588 375 97 15 1 5 0 0
Architectural
Services
Architecture &
Planning
Headquarters Only 1,098 135 510 338 95 15 1 4 0 0
Architectural
Design
Architecture &
Planning
Location Count 2,080 269 1,038 584 159 21 3 6 0 0
Architectural
Design
Architecture &
Planning
Headquarters Only 1,827 231 888 527 153 20 3 5 0 0
Architectural
Landscape
Architecture &
Planning
Location Count 141 19 69 32 18 1 0 2 0 0
Architectural
Landscape
Architecture &
Planning
Headquarters Only 125 17 61 27 18 1 0 1 0 0
Search Term Category Type
Company Count by Employee Size

19. LinkedIn-Based Market Sizing Example Continued
• Estimate composition of company size range that overlaps cut-off point using alternative
source like Census Data.
• Quarantine any data that does not need to be included in transformation to minimize
exposure to assumption.
• Apply conversion ratio to LinkedIn estimate and calculate number of opportunities:
• What is the overall market opportunity for this firm?
• Target Market Opportunity = Number of Opportunities * ASP = (960+189) * 5,000 = $5,745,000
19
Segment
Number of
Firms Total 0-4 5-9 10-19 20-99 100-499 500+
Number of
Firms >10 <20 20-99 100+
Architecture Services 23,581 14,704 4,482 2,481 1,599 262 53 4,395 56.45% 36.38% 7.17%
Firm Population Ratio
Approach
Less Than 20
Employees
100
Employees
or More Total
LinkedIn Category: "Architecture & Planning" 5,033 193 6,205
LinkedIn Search: "Architectural Landscape" 99 4 122
LinkedIn Derived 4,934 189 6,083
19
979
20 to 99 Employees
960

20. Directory-Based Market Sizing Example
• Question: What is market size for firm who sells to US firms in Financial Service industry with at
least 1,000,000 customers and an ASP of $100,000?
• What does this target market entail?
• Can it be broken-down into sub-markets?
• FDIC Insured versus Non-FDIC Insured
• Type: Commercial Bank, Retail Bank, Asset Management Company, etc.
• What is definition of Opportunity?
• Firm, location, division?
• How many US-based financial service firms are there with at least 1 million customers?
• Identify Directories
• Government Directories: Regulatory Agency and Regulation directories and databases
• Private Directories: Top firm lists, Association membership lists, licensing organizations
• Does any combination of directories allow for us to directly or indirectly estimate customers
and cover the whole space we are interested in sizing?
• FDIC Insured US Banks Database
• Towers Watson 2012 Top 500 investment firms
20

21. • Build list of companies by sub-market
• Review data on companies to see what might be able to be used to estimate customers
• Assets under management looks the best as it is available in both sources.
• Convert Assets Under Management to Customers for list of companies.
• Create combined list of firms with at least 1 million customer, dedup and count. We get 119.
• What is the overall market opportunity for this firm?
• Target Market Opportunity = Number of Opportunities * ASP = (119) * 100,000 = $11,190,000
Directory-Based Market Sizing Example Continued
21
Wells Fargo TD Bank Average
Customers 70,000,000 20,500,000
Assets 514,853,000,000 $98,613,149,000
Average Assets Per Customer 7,355 4,810 6,083

22. Power Curve Market Sizing Example
• Question: What is market size for company that
sells to accounting firms with $20 Million in
revenue if their ASP was $100,000 per year?
• How many accounting firm opportunities are
there?
• Prior Knowledge: This space is dominated by
the Big 4 (Ernst Young, KPMG, Deloitte,
PWC).
• Hypothesis: May be extremely consolidated
space, whereby we can use power curve to
estimate.
• Validate Hypothesis: Power curve
hypothesis is validated by Chart of top 25
accounting firms by revenue and then top
100 firms by revenue to confirm theory.
• Not strong enough to answer question
outright if need an exact number.
22

23. Power Curve Market Sizing Example Continued
23
• What is total revenue of accounting market?
• The top 100 firms account for
$49,468,330,000 and the total
accounting market is
$374,000,000,000. However, this
seems to include lots of other spaces.
• Can we estimate employment composition
for top 100 versus rest of market?
• No public data on this.
• Last resort, can graph revenues of top 100
and extrapolate out.
• 108 firms in target
• What is overall market opportunity for firm?
– Target Market Opportunity = Number of
Opportunities * ASP = 108 * $100,000 =
$10,800,000

24. Resource Constraint Angle on Sizing Example
• Question: What is the market opportunity 1- year out for a firm selling marketing
automation software to financial service firms with at least 50 million in revenue?
• Resource Constraints:
• Can bring on board 5 salespeople within budget this year
• Each salesperson can make 10 phone calls a day that get through to a
prospect
• 3 weeks of vacation per employee
• 25% of attempts will convert into opportunities
• 20% of opportunities will convert into sales
• 5% of the sales calls will convert within six months
• ASP $240 revenue per year
• Insight: Market size looks big enough to withstand well over a year of growth, so real
constraint is company’s own resources.
• What can we expect the sales to be after first year of operation?
• 10 calls/day x ((365 days/year - 21 vacation days)*(5/7)) x 25% opportunity
conversion rate * 20% sales conversion rate x $240/sale x 5 salespeople =
$147,000
24

25. Bureau of Labor Statistics Market Sizing Example
• Question: What is the U.S. market size for a real estate sales associate enablement
tool that costs $3 per user per month? And how will this market change by 2022?
• Who are your target users?
• Real Estate Sales Associates (Non-Brokers)
• Can use BLS employment tables to find specific occupation code: 41-9022
• Is this a horizontal solution or is focused on a subset of industries?
• No, it is a vertical product focused on residential real estate. This is
identified as code: 531000 in the BLS data
• How many retail sales associates are there in the U.S.? 139,000
• So the market size today is: 139,100 * 12 months = $1,669,200
• What do we project the market size will be in 2022? 1,669,200 * (1 + 12%
Forecasted Percentage Change) = $1,869,504

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