Bottom-up market sizing: a worked example for a small SaaS

You

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.

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.

Alex Tutor

Question 1

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

Choose one answerBecause 1% is always too optimisticBecause it measures all car-servicing spending, not the shops that could buy GarageDesk, and the 1% is a guessBecause reports about Ukraine are never correctBecause market size doesn't matter for a small company

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.

You

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.

Alex Tutor

Question 2

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?

Your answer

Units: shops

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.

You

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.

Nina

And a ceiling you never actually reach.

Alex Tutor

\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.

Alex Tutor

Question 3

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

Your answer

Units: UAH a month

Alex Tutor

Now the goal. How many paying shops make both founders ramen profitable?

Oscar

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.

You

So what share of the 190 is 84?

Alex Tutor

Question 4

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

Your answer

Units: % (e.g. 12.5)

You

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.

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.

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

Question 5

Put the steps of a bottom-up market estimate in order.

Tap an item, then tap where it should go. You can also drag or use the arrows.

You

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.

Alex Tutor

Question 6Short answer · AI-checked task

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.

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Alex Tutor

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

Alex Tutor

That’s the lesson. You answered every task — nicely done.

Next lesson: Another city or another kind of shop?