

Ask HN : How can I estimate my market? - csomar

I'm up to a program, I didn't start it yet, but still planning.<p>The problem is that I can't estimate the market potentiel so that I can control my spending (spend more or less).<p>The product is a Windows application, I have tried "download.com" and watch how many downloads my competent are getting. My software advantage, is that customers don't find on other ones the right options they need and I'm implementing those options on my software.<p>But does download counters give me a real estimate of market?? How can I predict how many people needs my product?
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patio11
I am immensely skeptical of playing the estimate-size-of-market game because
the _addressable_ size of the market (i.e. how many of them you can contact)
is the limiting factor for most small businesses.

Anyhow, here's how I did it for my company back in 2006. I used two methods:
top down and bottom up. Both involve a whole lot of hand waving.

[http://www.kalzumeus.com/2006/06/29/guestimating-market-
size...](http://www.kalzumeus.com/2006/06/29/guestimating-market-size/)

Of the two these days I'd be much more inclined to use the bottom up approach,
but either way these estimates are so laughably inaccurate I don't think they
have that much utility. Example: the bottom-up approach predicted 2k searchers
for my product in a month. I now personally achieve roughly that much in a
day. Market size, shmarket size.

(Instead, I prefer estimation by axiom: if you can sell it to anyone, you can
sell enough of it to matter, when multiplied over the entire Internet.)

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Skeletor
I'm going to suggest something crazy. You probably won't be able to estimate
the size of your market using the internet. Go to a research library where you
can read and copy paid industry and market research reports for free (the
library pays the fees.) Bring a USB key and you can download the reports (at
least in SIBL in NYC.)

I would suggest you do some old fashioned market research by looking at the
age/sex/demographics/industry of your target customers and reading market
research reports on them and industry reports on your competitors and other
replacement products. A replacement product is one that isn't a direct
competitor but people can use instead of your product (for example: Gmail and
Google calendar is not a direct competitor of a CRM system like
Salesforce.com, but people can and do use it instead of a CRM system.)

I think you could do all of this with 1 day spent in the library. You can find
the same information on the internet, but it will take you a lot longer and
you would have to pay for many of the same reports you could get from the
research library for free.

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lrm242
I've used Google's Keyword Tool
(<https://adwords.google.com/select/KeywordToolExternal>) to estimate the
number of people searching for keywords that might indicate they'd be a
customer; however, you should be careful about any conclusions you draw unless
you're keywords are very specific.

~~~
puzzle-out
Also, Google trends (<http://www.google.com/trends>) can give a more
impressionistic idea of whether a market, as judged by search requests, is
growing.

~~~
csomar
if you don't know it, Google Search Insights is much more powerful and gives
better estimates

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flipbrad
I suspect most approaches (barring methods so time consuming your spending
will be out of control before you even start) aren't going to give you
something something remotely accurate (or useful for your question). Having
said that, there might be unexpected side-benefits to research though, like
finding out exactly which features people are key to people downloading some
competitor programs and neglecting others.

It sounds as though you want to estimate how much un-addressed market
potential there is (otherwise you would be taking the alternative approach of
estimating the resources needed so you make a product that's flat out better
or better value for money than your rivals, thus competing for market share in
a tapped-out market).

But don't count on it or waste too much time - why not figure out what maximum
resources you would put into this based on a tiny chance of success, release
that first attempt, and improve on it as an when either it starts gaining
traction (suggesting real demand and possible success in future if you go
through with this) or when new resources open up to you that you don't mind
risking on this to take it a little further?

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ryanwaggoner
You could run a test with Adwords:

<http://news.ycombinator.com/item?id=357674>

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coopr
Use the various suggestions below to estimate your market size. Do both top-
down and bottoms-up. Then, for both estimates, consider what would happen if
you were off by 10x (in a bad way - you'd overestimated your market size by an
order of magnitude).

Do you still have a viable business? Yes? Great, go for it and stop worrying
about market sizing! No? Revisit your assumptions in the market sizing
calculations - if they are as good as you can make them, and you find that
being off by an order of magnitude will kill your business, then proceed
carefully, because the actual market size may in fact be 1/10th what you
originally estimated.

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kvs
I did a similar estimate using bunch of download sites and Google Keyword
Tool/Trends. The hardest part, from my experience, is not the estimation of
market size (people who need a product) but how many of them will actually
turn into paying customers (people who want _your_ product).

Especially if your market has free alternatives.

