# How to calculate market size: bottom-up market sizing for a niche B2B product, with a worked example

> How to calculate market size for a niche B2B product: count the businesses that fit, multiply by your price, then compare with the customers you need.

- Source: https://productovi.com/blog/bottom-up-market-sizing
- By: Sergey Bruh
- Published: 2026-09-30
- Topics: Market size, Niche, Where to grow next

If you're wondering how to calculate market size for a niche product, the reliable way is **bottom-up market sizing**: count the customers who could actually buy your product and multiply by your price, instead of taking a share of a big number from a market report. For a niche B2B product that's a four-step chain: how many businesses of your type exist, what share fits your product, what share you can reach in the next few years, and what you charge each of them. Then compare the result with the number of customers you need. Below is the whole chain on one example, including how to check the assumptions in an afternoon.

## Top-down vs bottom-up market sizing: why top-down numbers mislead

"The pet-care market is worth billions; if we take 1%, we're rich." That sentence has two problems. The billions include food, medicine and toys, nothing your software competes for. And the 1% is a wish, not a plan: it doesn't say who the customers are or how you'll reach them.

A bottom-up estimate starts from individual customers. Every number in it is something you can check by looking up a list, visiting a few businesses or making a few calls. That makes it smaller and far more useful.

## The market size formula on an example: software for vet clinics

Iryna and Bohdan build VetNote, a web app for small veterinary clinics: appointment booking, patient records per animal and vaccination reminders to owners. It costs **1,200 UAH a month**. They have 30 paying clinics in two cities and want to know whether the market can carry a real business.

The formula behind the four steps: market size = businesses of your type × share that fits × share you can reach and win × price. The figures below are illustrative, made up for this example. Use them to follow the method, not as data about the Ukrainian vet market.

### Step 1. Count all businesses of your type

From public business registers, online maps and supplier directories, the founders estimate about **2,400 veterinary clinics and practices** in the country.

### Step 2. Keep only those that fit

VetNote is built for small clinics with a reception desk and appointments. Two filters:

- **Small clinics, 1 to 4 vets:** about 70%. 2,400 × 0.70 = **1,680**.
- **Work by appointment and have a computer or tablet at reception:** about 80% of those. 1,680 × 0.80 = **1,344**.

### Step 3. Keep only those you can reach

For the next three years the founders can sell in person and through two veterinary suppliers in six regions, which hold about 45% of the fitting clinics: 1,344 × 0.45 ≈ **605**. If they win about one clinic in five of those, that's **121 clinics**.

### Step 4. Multiply by the price

The three results have common names (each is explained in [TAM, SAM and SOM](/blog/tam-sam-som)):

| Level | What it counts                                         | Clinics | MRR at 1,200 UAH, UAH |
| ----- | ------------------------------------------------------ | ------- | --------------------- |
| TAM   | Every clinic, if all of them bought                    | 2,400   | 2,880,000             |
| SAM   | Clinics the product fits                               | 1,344   | 1,612,800             |
| SOM   | Clinics you can realistically win in about three years | 121     | 145,200               |

In yearly terms the SAM is 1,344 × 1,200 × 12 = 19,353,600 UAH, about 19.4 million. The number to plan with is the last row: roughly **145,000 UAH of monthly revenue** within reach.

## Compare it with what you need

A market size means nothing on its own. Compare it with your targets:

**Ramen profitability for both founders.** They need 60,000 UAH a month for living costs and tools. After roughly 8% for taxes and payment fees:

$$
\frac{60\,000}{1\,200 \times 0.92} \approx 54.3 \rightarrow 55 \text{ clinics}
$$

That's 4.1% of the SAM and 9.1% of the reachable 605. Achievable. (The method: [ramen profitability](/blog/ramen-profitability).)

**Market-rate pay for both plus one hire.** Say 250,000 UAH a month: 250,000 / 1,200 ≈ 208.3, so **209 clinics**, 15.6% of the SAM and well above the 121 they can realistically win.

So the market is big enough for the first goal and too small, as defined today, for the second. That's a common result, and it's useful: it tells the founders when they will need to widen the market, years before they hit the ceiling.

![Filtering 2,400 vet clinics by size, fit, reach and win rate leaves 121: enough for the 55 needed for ramen profitability, short of the 209 needed for market pay plus one hire](/blog/bottom-up-market-sizing/diagram.png)

## When the ceiling is too low: four ways to widen

1. **More regions.** Reach the other 55% of fitting clinics through more suppliers or online channels.
2. **An adjacent segment.** Larger clinics, grooming salons or pet hotels: each needs its own check of fit and price.
3. **A higher price for more value.** A plan for clinics with several vets, priced by the number of vets, as in [how to price a SaaS product](/blog/how-to-price-a-saas-product).
4. **Another country.** Usually the most expensive option for a small team: language, payments, regulations.

Be wary of the shortcut: signing a few big clinic chains. It fills the gap quickly, but a customer that makes up a large share of your revenue brings its own risk; see [customer concentration](/blog/customer-concentration-risk).

## Check the assumptions in an afternoon

Each percentage in the chain is a guess until you test it. The founders open an online map of one city, list 40 veterinary clinics and check their websites and a few by phone:

| Assumption                                               | Guess | Sample of 40 clinics |
| -------------------------------------------------------- | ----- | -------------------- |
| Share with 1–4 vets                                      | 70%   | 29 of 40 = 72.5%     |
| Of those, appointment-based with a computer at reception | 80%   | 23 of 29 = 79.3%     |

Close enough to keep the estimate. If the sample had shown 40% instead of 70%, the whole SAM would shrink by nearly half, which is exactly why the check is worth an afternoon.

The reach and win-rate assumptions are harder to test in advance. Revisit them every six months against real sales: how many clinics in a region you've contacted, and how many bought.

## What this means for funding

A realistic SOM of about 145,000 UAH a month can support two founders and a small team. It will not produce the kind of exit a venture investor needs, which makes it a good fit for a self-funded business. The reasoning is in [bootstrapping vs venture capital](/blog/bootstrapping-vs-venture-capital).

## Common mistakes

- **Starting from a market report.** A share of someone else's big number is not a plan.
- **Counting businesses that can't use the product.** A clinic without a computer at reception is not in your market yet.
- **Mixing monthly and yearly figures.** Pick one and label every column.
- **Treating TAM as the goal.** Nobody wins every customer. Plan with the SOM.
- **Never updating.** Sales data beats every assumption; replace guesses with real rates as they come in.

## Key takeaways

- Bottom-up market sizing: count businesses, filter by fit, filter by reach and win rate, multiply by price.
- TAM, SAM and SOM are three steps of the same chain; plan with the last one.
- Compare the result with your targets: ramen profitability first, then real salaries and hires.
- Check each assumption with a small sample, and replace guesses with sales data over time.

## FAQ

### What is the difference between bottom-up and top-down market sizing?

Top-down takes a large published market figure and assumes a share of it. Bottom-up counts the actual customers who fit and multiplies by your price. For a niche B2B product, bottom-up is more accurate and shows where the customers are.

### What are TAM, SAM and SOM?

TAM is the revenue if every possible customer bought. SAM is the part your product actually fits. SOM is the part you can realistically win in the next few years with your channels and team. To run the three levels on your own numbers, use the free [TAM SAM SOM calculator](/tools/tam-sam-som-calculator).

### How big should the market be for a bootstrapped product?

Big enough that your realistic SOM covers the founders' pay and the team you plan to hire, with room to spare. If your targets need more than a fifth or so of the market you can reach, plan how to widen it early.

### Where do I find the number of businesses in a niche?

Public business registers, online maps, industry associations, suppliers who sell to that niche and trade fair exhibitor lists. Combine two sources and check a sample by hand.

## Learn it hands-on

The lesson [The market, bottom up](/courses/bootstrapped-product/the-market-bottom-up/theory) sizes the market for a product for car repair shops step by step, with numeric exercises and a practice task checked by AI. The case [Another city or another kind of shop?](/courses/bootstrapped-product/another-city-or-another-kind-of-shop/theory) shows how to choose where to grow when one city is not enough. Both are part of the course _From Idea to Profitable Product: Building Without Investors_.

## Related lessons

- [The market, bottom up: a market size example](https://productovi.com/courses/bootstrapped-product/the-market-bottom-up.md)
- [Ideal customer profile: narrow or widen the niche](https://productovi.com/courses/bootstrapped-product/narrow-or-widen-the-niche.md)
- [Market expansion: another city or another kind of shop?](https://productovi.com/courses/bootstrapped-product/another-city-or-another-kind-of-shop.md)
- [Money milestones for a startup](https://productovi.com/courses/bootstrapped-product/money-milestones.md)