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The Science of B2B Market Sizing

B2B organizations should form an idea about their market size as a key step toward developing a successful marketing strategy. The market size is a measurement of the potential available market to a company. In short, this is the first and foremost step in creating a go-to marketing strategy. To make these projections, companies can take the help of various models and hypotheses largely dependent on essential market assumptions. 

The following guide will take you through the B2B market sizing mechanism and make you aware of the processes that can be undertaken to measure the market size. 

Common B2B market sizing applications 

On the one hand, investors use market sizing to understand or estimate the value of publicly traded companies. On the other hand, B2B businesses use market sizing data to evaluate the resources, investments, market decisions, and opportunities. B2B market sizing can help in the following ways: 

  • Estimating the potential revenue a business can drive from a product or service. 
  • Assessing the products or services’ market potential to invest in the proper development resources for its expansion. 
  • Estimating partnership opportunities. 
  • Gauging acquisition opportunities. 
  • Showing target markets the priority of the market segments. 
  • Evaluating the product or service’s impact on the market segment. 
  • Understanding the resource needs of the workforce that can cater to the market segment. 

So, B2B market sizing can help you in several aspects of your GTM strategy. When estimating a market opportunity, it is crucial to know how this information can add up to contribute to the company’s growth. 

Considering the market sizing is important as the larger the market becomes, the larger the business.

Commonly used measurements 

The fundamental step in market sizing is to find the necessary information to help form the right strategy and take the correct decisions. Analyzing and estimating key markets can reduce go to market cost by ensuring that you collect adequate data to justify investment decisions. 

B2B market researchers can assess the market size in different ways. It is a daunting task. 

We’ve outlined the four most effective ways that you can follow to assess the B2B market opportunity. Below is an in-depth understanding of all the four methodologies that B2B marketers can rely on. 

When calculating the market sizing, it requires some creativity on your part as you will have to make some assumptions to create an estimate.

1. Total market potential 

The total market potential is the estimated sales value of a particular product or service over a specified period within a particular target segment. The data collected by calculating the total market potential assumes that all opportunities within the target market are ready to use the products and services of the B2B company if and when they are available within the bandwidth of the target segment. Therefore, the formula for calculating the total market potential is: 

Total market potential = number of opportunities X average selling price of opportunities

If you want to understand the potential for a B2B market opportunity in terms of magnitude, calculating the total market potential is your solution. However, when calculating the total market potential, it is essential to check if the selling price is inversely or directly correlated to any sub-segment of the B2B market opportunity included in the estimation. 

So, if you have to calculate the total market potential, follow the formula as mentioned above.

2. Total addressable market 

The total addressable market or TAM also calculates the estimated sales value of a particular target audience over a specified time frame. However, there is one slight difference between total market potential and addressable market. Unlike total market potential, the total addressable market considers the target audience’s demand for a particular product or service. So, the total addressable market is calculated in terms of the number of targetable opportunities. The formula to calculate the total addressable market is: 

Total addressable market = number of targetable opportunities X average selling price of opportunities 

The targetable opportunities can be measured in the current market penetration or a market research survey. To get the best results for targetable opportunities, it is suggested to calculate it segment by segment. Like total market potential, in the total addressable market, you also have to consider the selling price and evaluate if it is directly or inversely related to any sub-segment of the market opportunity that is a part of the estimation. 

This is how the total addressable market can be calculated.

3. Segmented addressable market 

The segmented addressable market is the potential sales value of a specific target market over a particular time frame. However, in a segmented addressable market, marketers focus on the available demand for a specific product or service that can be met through a definite strategy and business model. Therefore, the formula for calculating the segmented addressable market is: 

Segmented addressable market = number of opportunities targeted as part of the business model X average selling price of opportunities 

To calculate the segmented addressable market, you have to recognize the percentage or share of the market that could be addressed through the specific business model you have obtained. Once you calculate the segmented addressable market, you get a more accurate estimated value of the actual revenue that the B2B organization can gain by selling its products or services. 

Therefore, gather the estimated data and check the potential sales calculated by the segmented addressable market.

Expected share of the addressable market 

The expected share of the addressable market is a part of the segmented addressable market value that can be gained by selling the products or services of a B2B company to investors over a particular time frame. To determine the portion that can be addressed, surveys are conducted. In short, some form of market research has to be done by which the company will comprehend the percentage or share of a market segment from which they can expect to win. The formula for calculating the expected share of the addressable market is: 

Expected share of addressable market = expected win rate X segmented addressable market 

To calculate this data, B2B marketers have to access their company’s expected success rates within a given market segment. This will fetch you the most accurate results, and you can estimate the actual revenue potential of a market or segment. 

Now that you are armed with the knowledge of calculating market size with different measurements, let us focus on some tips and tricks that can be adapted to aid the process. 

Comprehensive tips on market sizing for B2B organizations 

Once you have a clear idea about measuring the market size, these effective tips will help you carry out the process in a hassle-free manner. 

  • To gather data for a comprehensive B2B market sizing, use primary and secondary resources for research to get a clear picture for top-down, supply-side, and demand-side analysis. 
  • To understand all aspects of the supply chain, it is recommended to speak to people from different strata in the organization (like end-users, distributors, suppliers, and manufacturers). 
  • To cover up the loopholes and the gaps of understanding, you have to acquire confidence and make clear and explicit assumptions. 
  • A rule of thumb for measuring the market size is to keep things simple. It is natural to get confused with the details when working with significant data. Ensure to maintain a record of all the sources to update and refer to them later. 
  • Last but not least, clients’ opinions matter. So, seek their input, which can add to the market sizing analysis. 

However, all prospects are not equal. So, you will have to differentiate them to get the accurate estimated value. However, the method to follow for calculating the market size can depend on the type of your market and target audience. 


Market assessment can occur either within the existing market or in a new market vertical. For studying the market, you need to combine different key variables. However, in a B2B scenario, key data points such as firmographic, technographic, and buyer intent data can enhance the process to get the most accurate insights and help you in accurately calculating the potential market size. 

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