IT:BD:Market:Estimating Market Potential
Summary
The oldest joke in estimating how big a market is …is “1%”
Notes
Unfortunately, one does have to come up with a plausible first guess as to the number of Customers/ will be interested in a new product.
Estimating Market Potential
MP = N × MS × P × Q Where: MP = market potential N = total number of potential consumers MS = market share—percent of consumers buying from you P = average selling price Q = average annual consumption
Assuming a static market (not growning) with a factor of 1, a known market size (plenty of data on the web), your price, and subscription model, the only unknown really is how many people will by from you.
Market Share
My current stab in the dark arrives at the same awful 1% – but plausibly – on the understanding that rejection is perfectly normal.
- 80% of the market (4 in 5) has no interest or need in your product.
- 14% of the market (1in 7) has no need in your market, but will listen. Maybe next time.
- 5% of the market (1 in 20) has an direct interest, that could be converted, given effort.
- 1% of the market (1 in 100) has a need for it, and will convert without too much effort.
If you have equal competition, only 50% of that 5% can be converted at best, etc.
It's just a guess. It's of very low value – but it will get you going.
After that it will depend on Strategy, Marketing, Execution.