Why is Sizing Your Market So Hard?

The size of your market is the price of your product multiplied but the number of potential customers. Then how come it can be so hard to calculate accurately? First let us consider the price. You have multiple products all at different price levels and potentially using different pricing models. You may have supporting services and add-ons or offer discounts for volume or buying bundles of products together.

You may charge for your product based on the number of users so straight away you need to know not only how many employees there are at a company, but what proportion of those employees have a need to use the product. Very large organisations will not expect to pay the same per user as smaller organisations — they will expect a volume discount of some sort.

So, we can see the pricing calculations can soon become complex. The same complexity can arise when identifying potential customers. Does your product serve a particular industry sector such as Financial Services or Healthcare? If so, is the product equally relevant and valuable to all sub-sectors within this sector? Do you plan to make the product available in all countries — is this even feasible given language, timezone and general support considerations.

And of course, the market landscape is always changing with new economic factors, competitive entrants and the evolution of the product itself. These calculations soon become too complex to do manually or on a spreadsheet.