# The market, bottom up: a market size example

> A market size example, bottom up: count the businesses that can buy, multiply by the price and check whether your revenue goal fits inside, with GarageDesk in Vinnytsia.

- Course: [From Idea to Profitable Product: Building Without Investors](https://productovi.com/courses/bootstrapped-product.md)
- Module: Is the market big enough?
- Lesson 18/30, ~28 min
- Source: https://productovi.com/courses/bootstrapped-product/the-market-bottom-up

## Bottom-up vs top-down: top down is a guess

**Alex Tutor:** Today you and I help GarageDesk's founders size their market with a real market size example, and you've already done some homework.

**Sofia:** I found a report: car servicing in Ukraine is worth billions of hryvnias a year. If GarageDesk gets just 1%, that's millions.

**Alex Tutor:** That's top down: a huge number times a hopeful percentage. It says nothing about who buys GarageDesk. Bottom up starts from businesses you can name, count and call.

![Left: a person pours a tiny cup from a giant water tower in the clouds. Right: a person walks down a street clicking a hand counter at each small garage.](https://productovi.com/courses/bootstrapped-product/inline/the-market-bottom-up-illustration-2.webp)

*Count the shops that could buy, not a percentage of a huge number.*

**Nina:** So we count shops, not hryvnias.

**Alex Tutor:** Three steps. Count the businesses in the niche. Keep only those that can actually use and buy the product. Multiply by the price. Then compare the result with your goal.

> **Exercise:** Why is "1% of a market worth billions" a weak way to size GarageDesk's market?

## How to estimate market size: counting Vinnytsia

**Oscar:** Online maps list about 480 car repair places in Vinnytsia. After removing duplicates, closed places, dealerships, body shops, tire shops and one-bay garages, about 310 are left.

**Nina:** A former colleague at the distributor says they deliver parts to about 300 independent shops in the city. Close enough.

**Alex Tutor:** Two sources that roughly agree beat one number that only looks precise. If you had 310 and 900, you would need a third source before going further.

**Alex Tutor:** Let's test that rule on a less lucky case.

> **Exercise:** Suppose the maps gave about 310 independent shops in the niche, but a business directory listed 900. What should Oscar do next?

**Sofia:** And all 310 can use GarageDesk?

**Oscar:** No. Of the 31 shops I visited on my route this spring, 19 fit: a computer or a phone at reception, and regulars who come back for service.

> **Exercise:** Vinnytsia has about 310 independent shops with 2 to 8 bays. In Oscar's sample, 19 of 31 shops fit GarageDesk. Using the same share, how many of the 310 fit?

## The ceiling: SAM times the price

**Alex Tutor:** Those 190 shops are GarageDesk's **SAM** in Vinnytsia: the part of the market it can actually serve and reach today. Now multiply by the price.

**Sofia:** At 600 UAH a month each?

**Alex Tutor:** Yes. The result is the monthly revenue if every single fitting shop in the city paid. It's a ceiling, not a forecast.

![In a room with a low ceiling, a stack of boxes grows upward and a person on top reaches up to touch the ceiling.](https://productovi.com/courses/bootstrapped-product/inline/the-market-bottom-up-illustration-3.webp)

**Nina:** And a ceiling you never actually reach.

$$
\text{Ceiling} = N_{fit} \times p \qquad \text{Share needed} = \dfrac{G}{N_{fit}}
$$

*The monthly ceiling is the number of fitting businesses N_fit times the monthly price p. The share needed is the number of customers your goal requires, G, divided by N_fit.*

> **Exercise:** 190 fitting shops in Vinnytsia, 600 UAH per shop per month. What is the monthly revenue ceiling in UAH?

## Does the goal fit inside?

**Alex Tutor:** Now the goal. How many paying shops make both founders ramen profitable?

**Oscar:** 84. Nina's 30,000, my 18,000 and the tools.

**Alex Tutor:** Careful: tools cost 3,500 now, not 2,000. Keep 84 as the working target for today, and recount it when the costs settle.

**Sofia:** So what share of the 190 is 84?

> **Exercise:** Both founders need 84 paying shops. Vinnytsia has 190 fitting shops. What share of them would GarageDesk have to win, in percent?

## A realistic share: the SOM

**Sofia:** 44%. Is that a lot?

**Alex Tutor:** For two people, winning almost half of all fitting shops in a city is a lot. Some will keep their notebook forever, some have a niece to call, some will pick a competitor.

**Alex Tutor:** Before anyone guesses a realistic share, measure where GarageDesk is today: 22 paying shops.

> **Exercise:** GarageDesk has 22 paying shops, and Vinnytsia has 190 fitting shops. What share of the fitting shops already pays, in percent? Round to one decimal place.

**Oscar:** I'd call one in four realistic within two years. We already have 22, about 12%.

**Alex Tutor:** Then that's your **SOM**: 190 × 25% ≈ 47 shops, about 28,500 UAH a month. Well below the 50,000 you need.

![480 map listings shrink to 310 independent shops and 190 that fit (the SAM); a realistic 25% is about 47 shops, short of the 84 the goal needs.](https://productovi.com/courses/bootstrapped-product/diagrams/m5-l2-bottom-up-count.png)

*Count businesses you can name, then compare with the goal.*

**Nina:** So Vinnytsia alone can't get us both to ramen.

**Alex Tutor:** Not with this niche at this price. You have three levers: more shops, a higher price or a smaller goal. Choosing between them is next lesson.

**Alex Tutor:** Hold on to those three levers. Check a conclusion founders often jump to.

> **Exercise:** **True or false:** since the realistic share in Vinnytsia (about 47 shops) falls short of the 84 the goal needs, GarageDesk's only option is to find more shops.

> **Exercise:** Put the steps of a bottom-up market estimate in order.

## Next city

**Sofia:** Could the same count work for another city?

**Alex Tutor:** Exactly the same steps. Oscar, you mentioned Khmelnytskyi: same parts distributors, 120 kilometers away.

**Oscar:** I don't know a single shop owner there yet.

**Alex Tutor:** Then the plan for counting matters even more. Write it before you drive there.

> **Exercise:** In Vinnytsia, GarageDesk counted its market bottom up from online maps, a parts distributor's customer count and a sample of shops Oscar had visited. Khmelnytskyi is 120 km away, and Oscar doesn't know a single shop owner there yet. In 3–5 sentences, write a plan for counting fitting shops in Khmelnytskyi bottom up: which two or more sources, how to filter them and how to estimate the share that fits.

> **Key ideas**
>
> - **Top down** (a big market × a hopeful %) is a guess. **Bottom up** counts businesses you can name and call.
> - Count from at least two sources and check they roughly agree: 480 map listings → about 310 after filtering; the distributor's 300 confirms it.
> - Keep only those that fit, from a real sample: 19 of 31 → 310 × 19 / 31 = **190** (the **SAM** in Vinnytsia).
> - Ceiling = 190 × 600 = **114,000 UAH a month** (1,368,000 a year). A ceiling, not a forecast.
> - Share needed = 84 / 190 = **44.2%**. A realistic share (**SOM**) of 25% gives about 47 shops, 28,500 UAH a month: Vinnytsia alone isn't enough.

**Alex Tutor:** Next time: Khmelnytskyi or tire shops in Vinnytsia? Two ways to grow, one decision.

- Previous lesson: [Ideal customer profile: narrow or widen the niche](https://productovi.com/courses/bootstrapped-product/narrow-or-widen-the-niche.md)
- Next lesson: [Market expansion: another city or another kind of shop?](https://productovi.com/courses/bootstrapped-product/another-city-or-another-kind-of-shop.md)

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