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I have an idea. How to evaluate the market size?
by
Bohdan
What methods are the best? What methods do you use?
I either sum the annual revenues of all the competitors or multiply the number of potential customers by the product price. Average both for a rough estimate. You can't and don't need to be precise.
How you find the annual revenues of all the competitors?
Use SimilarWeb or SEMrush to estimate monthly website visitors. Assume 4%-6% as paid users. For multiple pricing options, consider 55% on the lowest plan, 25% on the mid plan, 15% on the highest plan, and 5% as contact sales (can pose as a customer for an accurate quote). This will give an estimated revenue.
Thank you Akshay, What if competitor offers both free and paid plans? e.g:
A : Free
B : $25
C: $90
You could have a better idea (if it's B2B) to understand your market.
You can then calculate the total market size based around filters - using LinkedIn Sales Navigator.
Maybe, it's not an official way but if you segment the list to most active profiles then you can reach them faster.
You can try using the TAM/SAM/SOM methodology. It's especially useful if you're going to fundraise. Typically, this is the most popular methodology for illustrating market size to investors.
Read more about this, for example, on the HubSpot blog.
And, of course, you can use ChatGPT to help you calculate the metrics š
What is the industry/sector? Is it B2B or B2C? Are there existing products in the market? All questions to consider.
There are some easier ways these days and even softwares to help.
A starting point is seeing what you have tried already, then I can help from there?
I don't think I can add much to @Ako61142833 methodology. However, I think its worth considering who the market size is for?
If you trying to raise an investment - I think investors generally prefer to see large numbers (but still somewhat justifiable) - so in those scenarios I would tend to a bit generous with my estimates