7. Market Sizing and Competitors: Bottom-Up Estimates Explained
After this lesson you can
- Build a bottom-up estimate from reachable customers, realistic price and purchase frequency
- Test how sensitive an estimate is to its weakest assumption
- Explain why top-down "one percent of a huge market" claims mislead
- Map direct competitors, substitutes, workarounds and doing nothing using customer-named criteria
- Map who uses, who pays and who decides, including buying groups, beneficiaries and funders
- Separate technical readiness from customer readiness in research ventures
Video coming soon
Videos are planned to publish from December 2026.
A lesson on replacing big market claims with numbers you can defend. It builds bottom-up estimates from reachable customers, maps what customers do now, and separates users, payers and decision-makers across the four venture types.
Questions and answers
Questions a learner would ask about this lesson. Think through your own answer before you open each one.
- How do I build a bottom-up market estimate?
Show answer
Count the reachable customers, the specific people or organizations with the problem that you can identify, contact and sell to with the time and channels you have now. Multiply by a realistic price per purchase and by purchases per year. The result is a yearly ceiling for reachable customers, not a forecast, and the lesson labels the method practitioner consensus with weak evidence.
- What is wrong with saying "we only need one percent of a huge market"?
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The share is assumed, not earned. The claim skips how any customer is reached, hides who decides and who pays, ignores what customers use now, and confuses a product category with a customer. Even small percentages still need many real sales.
- My product has no competitors. Is that good?
Show answer
The lesson treats it as a warning sign. Customers with a real problem already do something, whether a direct competitor, a substitute, a workaround or simply doing nothing, and that is your competition. "No competitors" often means the problem is misunderstood or current alternatives were never asked about.
- Who is the customer when one person uses the product and another pays?
Show answer
Map the roles: the user has the problem and uses the solution, the payer provides the money, and the decider says yes or no. In business sales the buying group commonly includes an economic buyer, a user, an evaluator and a champion. Social ventures test beneficiary impact and funder fit as separate hypotheses.
- My technology works in the lab. Is it ready for the market?
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Not necessarily. Technical readiness asks whether it works, with evidence from lab tests owned by the research team. Customer readiness asks how far a customer has shown that they need, will adopt and can pay for a solution in their real setting. Research ventures should track both, and the first customer may be a licensee or partner.
Practice quiz
- Question 1A bottom-up estimate multiplies:
- Question 2Founder A has about 40 reachable clinics, a price hypothesis of 150 dollars per clinic per month, and 12 monthly payments a year. What is the yearly ceiling?
- Question 3In Founder A's sensitivity table, what happens to the yearly ceiling if only half the clinics are truly reachable?
- Question 4In a business sale, the person who controls the budget is best described as the:
- Question 5Founder C's workshops are free for families and funded by foundations. The customer analysis should:
- Question 6A founder says the product has no competitors. The best interpretation is:
- Question 7Founder D's sensor works in the lab, but no utility has tested it in operations. This shows the difference between:
- Question 8Founder C's delivery cost is about 35 dollars per family, and they piloted workshops with 48 families. What would delivery cost for those 48 families?
- Question 9Which of these does the lesson count as a real competitor?
- Question 10In a comparison matrix, where should the columns (criteria) come from?
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