Market Sizing & Guesstimates — Can thedrunkish do math?

Soukapps
Soukapps
Nov 2 · 2 min read

The ancient Persians were known to deliberate on big decisions when they were drunk. They called it the hot state. They then reconsidered their decisions the next day when they were sober. Only if the decision was approved both in their hot state and sober, they held on to it.

Its hard to argue with the success of this method. After all, they only ruled all of Western & Central Asia for 300 years.

Today sober decision making is when it is backed by data & stats. As the famous saying in SaaS goes...

Let us see how to pre-validate if your idea has a real market & its size. For Example, If you are building an app for handymen catering to Air Conditioned Homes in India, the following would be your next step.

Market Sizing for Air Conditioners (ACs) — Top Down Approach

Master Formula for the Guesstimate
Average growth rate of ACs = 10% (Economic times)
Assuming the average lifespan of an AC in India = 7 Years

Lets calculate the Estimated Number of ACs in India today….

Total Population of India — 1.3 Billion

Splitting the percentage of Population Residing in Rural & Urban India

Urban — 30%

Rural — 70%

  • Assuming the average number of members in a family = 5

Number of Families in Urban India = 75 Million

Number of Families in Rural India = 175 Million

I decided to Split Society into various categories in terms of their income (Higher income families are statistically more prone to purchase an AC in their homes)

Total Number of ACs in India = 12.4 Million
  • Assuming average price of an AC = INR 25,000

Total Market Size = 25,000 X (1.2 Million X 10% + 1.2 Million/7 Years)

= INR 75 Billion

Bottoms up!

Soukapps

Written by

Soukapps

An M-commerce agency helping Ecommerce, Hospitality, Construction, Fashion and Lifestyle brands with their mobile strategy

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