When most businesses forecast their revenue goals, they first calculate their total addressable market, which is the total market demand for their industry’s products or services. Put simply, it’s the maximum amount of revenue a business could generate if they captured their entire market.

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However, unless you're a monopoly, you most likely can’t capture the total addressable market for your products or services. Even if you only have one competitor, it would still be extremely difficult to convince an entire market to only buy your products or services.

That’s why it’s crucial to calculate the maximum amount of revenue you can possibly generate by selling your products or services to the customers who would realistically benefit from buying your solutions. This amount of potential revenue is called your market size or serviceable addressable market, and you can use it to accurately measure your business’ potential for growth.

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Originally published Apr 10, 2019 7:53:27 AM, updated October 08 2020


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