01 · Recognize
Market sizing
How much demand or revenue could exist?
You are in this case when
- The interviewer asks for a number nobody has, and wants your route to it.
- The size feeds another decision: entry, launch, investment.
02 · Structure
Which drivers matter?
- 01
Define scope
What countsGeography, customer, product, period and units; current versus potential demand.
- 02
Build the estimate
Segment and multiplyPopulation or businesses × eligibility × adoption × frequency × price.
- 03
Cross-check
A second routeSupply-side or analogue; sanity-check units and show a range.
Annual market = eligible buyers × adoption × purchases per year × price
03 · Solve
Work the scratch sheet.
Illustrative practice scenarioEstimate annual spending on professional dog grooming in a metro area of 1,000,000 households.
- Dog households1,000,000 × 40% = 400,000
- Use a groomer400,000 × 50% = 200,000 households
- Spend per household4 visits × $60 = $240 a year
- Market200,000 × $240 = $48,000,000 a year
- Cross-checkAbout 250 groomers × $192,000 each ≈ $48,000,000
Two routes land near $48m, which is what makes the estimate credible. Say the assumptions out loud; the interviewer is grading the route, not the digits.
Work backward from an answer
If the answer is “about $50m”, two independent routes should land near it. So build the second route before defending the first.
04 · Recommend
Make the call in three buckets.
About $48m a year, with a range of $35m to $60m.
Demand-side and supply-side routes agree; the swing is the share of dog owners who use a groomer.
Confirm the 50% usage assumption with one survey or category data. Risk: the metro definition changes the household count by a third.
“I will define the market first, estimate it from customer behavior and cross-check the result.”
Watch for: A market estimate is not a sales forecast. Apply reachable share and ramp-up separately; do not multiply overlapping percentages.
Special sauce
Bring a real company into the room.
If users grow 6% and revenue grows 15% on a comparable basis, the implied revenue-per-user increase is 1.15 ÷ 1.06 − 1, approximately 8.5%; what mix change might explain it?
Read the story →pricing · Membership retailCostcoIf Costco added 1,000 SKUs, what incremental sales would cover the extra inventory and handling costs? Start with sales per SKU, gross margin and inventory days; then test whether customers switch from existing products.
Read the story →Three terms to use
- TAM / SAM / SOM
- Total, serviceable and obtainable market; state each definition.
- Top-down vs bottom-up
- From a population and rates, or from units and prices; use both.
- Penetration
- The share of eligible buyers who actually buy.
Original Harper practice examples; every figure is illustrative. Adapt the questions to the client’s objective, timing and constraints.