market shares calculation


I’m guessing you don’t know how much your competitors are doing each year? I bet you’re wiser than you think.

Want to calculate both your market potential (the total amount being spent in your category in your market) and your share of that potential?

I know it’s shockingly accurate because I’ve been having clients do it this way for close to ten years, and I’ve been comparing their results to a proprietary method we use to calculate market potential. They’re always within shouting distance of one another, and once I share the steps with you, it won’t surprise you why that’s the case.

WARNING: I know this isn’t exact, but rather than tugging at my leg with all the ways this isn’t the best method to do this, why not try it? Have you done it dozens of times and found it shockingly accurate? Until you’ve walked the walk and found it flawed, stay off my pants, please.

This only works if you share your own revenue numbers with your employees. You do that, don’t you?

1. Gather together everyone in your company who’s been working for you—or originally worked for one of your competitors and now works for you—for at least a year. You want people with knowledge of your market, your industry, and your competitors. You should expose newer employees to the process, but their answers will likely hurt your sample.

2. Ask each of your group to write down—separately and without comparing answers—every competitor you have. Tell them to really think about it. Try and think of all the small, even one-person, shops that compete with you. List them all out.

3. Now, next to each competitor, have them guess what each of your competitor’s annual revenues are – if that’s your metric.

4. Collect everyone’s sheets of paper and bust out Excel. For each competitor, take the average of everyone’s guesses* to come up with estimated revenue per competitor.

5. Add up the average estimated revenues of each competitor and add your own revenue. This will give you an eerily accurate estimate of the total dollars spent in your market in your business category.

6. Divide your revenue by the answer to question five, and you’ve got your estimated market share. I’d be surprised if your answer turns out to be much different than what you’d get using my double-triple-secret way of calculating market potential. It rarely is.

TAKE ACTION: Schedule time to do this with your team in the next week. Look at your calendar and find when you can do it. Put it on the calendar. Follow the steps above. I’ve even built a simple Excel template for you to use that looks like the image above. Download it here with our love.

*Want an even more interesting formula that will affect it slightly? Weight the answers of people with more experience in your market in your industry. So, the woman who’s been with you twenty years? Her guesses get weighted ten times more than the dude who’s been with you two years.