Market sizing: the complete method, two worked examples and the numbers to know

Updated on 2026-11-12

Market sizing shows up in a large share of strategy consulting interviews, often as the very first question. And almost nobody fails it on the maths. People fail it on structure. Here is the exact method, a top-down example, a bottom-up example, a cheat sheet of formulas and the numbers to know by heart.

What is market sizing?

Market sizing means estimating the size of a market, in volume or value, from a few simple assumptions and with no external data. The classic prompt: "How many litres of shampoo are sold in France each year?" or "How big is the electric scooter market?".

Definition: market sizing - a numerical estimate of a market built by logical breakdown, from known orders of magnitude and stated assumptions, in a few minutes and without a calculator.

The interviewer is not looking for the right number. They watch how you break down a vague problem, how you set assumptions, and whether you stay calm on the maths.

Why do firms love this question?

Because in five minutes it tests four skills at once: structuring, quantitative reasoning, business sense and communication. It is the most efficient format to filter hundreds of candidates, which is why it appears almost systematically early in the process at McKinsey, BCG or Bain.

A strong market sizing shows you can turn a vague question into a clear calculation tree, defend every assumption, and land on a credible order of magnitude.

Top-down vs bottom-up market sizing

There are two ways to attack an estimate. Always state which one you pick, and why, before you calculate.

Top-down starts from a large known number, usually a population, and narrows it with successive filters until only the buyers are left. Bottom-up starts from one elementary unit, such as a store, a machine or a customer, works out what that unit sells, then multiplies by the number of units.

A simple way to choose: if you can describe who buys, go top-down. If you can describe who sells and how much one seller can handle, go bottom-up. The best interview answer often calculates with one approach, then checks the order of magnitude with the other. That is exactly how consultants make a number trustworthy.

How to do market sizing: the 4-step method

1. Clarify the scope: which product, which country, volume or value, over what period. A single scoping question often avoids a factor-of-ten error.
2. State your structure: describe the calculation tree out loud before touching a single number. The interviewer should follow you effortlessly.
3. Set round, defensible assumptions: 68 million people, not 67.9. Justify each assumption in one sentence.
4. Calculate, check, conclude: run the maths with round numbers, sanity-check the result, then give a final figure and a business comment.

Top-down market sizing example: shampoo in France

Goal: estimate the annual value of the shampoo market in France. Almost everyone buys shampoo, so the population is the natural starting point and we filter down from it.

• Population: about 68 million people.
• Users: assume about 90% of the population, so about 61 million people.
• Consumption: about 1 bottle of 250 ml per person per month, so 12 bottles per year.
• Price: about 3 euros per bottle on average (entry and mid-range combined).

Calculation: 61 million x 12 bottles x 3 euros, so about 2.2 billion euros per year.

So we report an order of magnitude of 2 billion euros. The point is not precision to the million, but reaching a credible figure through a clear path. You can then nuance it: premium products and dry shampoos would push the number higher.

Bottom-up market sizing example: a petrol station

Goal: estimate the annual fuel revenue of a busy petrol station, then use it to size the whole Paris region. Here capacity is what limits sales, so we start from the unit: one station and its pumps.

• Pumps: assume 6.
• Busy hours: about 6 hours a day, with one car every 6 minutes per pump, so 10 cars per pump per hour and 60 cars per hour for the station.
• Quiet hours: about 12 hours a day, with 2 cars per pump per hour, so 12 cars per hour.
• Cars per day: 6 x 60 plus 12 x 12, so about 500 cars.
• Average fill: assume 30 litres at about 1.80 euros per litre.

Calculation: 500 cars x 30 litres is 15,000 litres a day, or about 27,000 euros. Over a year that is about 5.5 million litres and roughly 10 million euros of revenue for one station.

From one unit to the market. To size the region you would multiply by the number of stations, which is the hard part. So run the check the other way round. The Paris region has about 12 million people and, by assumption, about 5 million cars. At 10,000 km a year and 6 litres per 100 km, each car burns about 600 litres, so about 3 billion litres for the region. Divided by 5.5 million litres per station, that gives around 550 stations as busy as ours. Most stations are smaller, so the real count is higher. The reasoning holds and the two approaches agree on the order of magnitude. A real interview version of this question is the number of petrol stations in the Paris region, asked at Bain.

Cross-checked example: rides on the Paris metro

Goal: estimate the number of rides taken on the Paris metro over a year. We cross two approaches to make it robust.

Demand approach. About 6 million working people in the Paris region, of whom we assume 40% take the metro on a working day, so about 2.4 million people. At 2 rides per day, that is about 4.8 million rides, plus about 1 million rides from non-workers and tourists, so about 6 million rides per working day. Over the equivalent of 300 full days a year, that gives about 1.8 billion rides.

Check. The operator reports on the order of 1.5 billion rides per year on the metro alone. Our estimate lands in the right order of magnitude, which validates the structure. In an interview, reconciling your estimate with reality is exactly the reflex that sets you apart. BCG has asked a close variant: how many people are in the Paris metro at 9 am on a Monday.

Market sizing cheat sheet

Most prompts fit one of five shapes. Recognise the shape and the tree writes itself.

Two reflexes go with the table. For a durable good, split first purchases from replacements, because in a mature market replacement is almost all of the volume. And when a population is not uniform, segment it by age, income or city size before applying a rate, instead of using one average for everyone.

The numbers to know by heart

Memorize orders of magnitude, never decimals. These cover most market sizing prompts.

One shortcut is worth learning: with a life expectancy of about 80 years and a stable population, each year of age holds about one eightieth of the population. In France that is roughly 800,000 people per year of age, which lets you size any age band in seconds.

TAM, SAM and SOM: market sizing outside interviews

Founders and product teams size markets too, with three nested figures. The TAM (total addressable market) is the revenue if every possible buyer bought the product. The SAM (serviceable addressable market) is the part you can actually reach with your product, your geography and your sales channels. The SOM (serviceable obtainable market) is the share of the SAM you can realistically win in the next few years, given competition.

The technique is the same as in an interview. A top-down TAM starts from an industry figure and filters it. A bottom-up TAM starts from a number of target customers multiplied by what each would pay, and it is the one investors trust most because every assumption can be checked.

The 5 mistakes that sink you

• Diving into the maths without stating your structure: the interviewer loses the thread and reads you as messy.
• Picking top-down or bottom-up without justifying it: the choice of approach is part of the score.
• Using numbers impossible to compute in your head: keep figures round and round early.
• Skipping the sanity check: a result never tested against reality is a red flag.
• Failing to conclude: always end with a final figure and a business comment, not a dangling calculation.

Market sizing practice cases

Market sizing is trained through repetition, out loud and timed, never just on paper. These cases come from real interviews and each has a worked solution. Start with the first three, which are the most accessible.

• Telecom services in France, asked at Arthur D. Little
• Ticket revenue of a concert venue, asked at Oliver Wyman, a pure bottom-up
• Hair salons in a city, asked at Roland Berger, demand against capacity
• Baby diapers in France, asked at Accenture
• Shared electric scooters in Paris, asked at BCG, sized from the supply side
• The global ski market, asked at McKinsey
• Forklift batteries in Europe, asked at L.E.K., a business market
• Industrial 3D printers in Japan, asked at Strategy&

Browse all case interviews on FrameLab