Market sizing from demand or supply side

Rule of thumb: supply side works better in clearly outlined environments (e.g., how many people are served in a coffee shop per year, how many cars are fueled in a gas station, etc.). Nevertheless, your thinking always needs to include the demand side (even if just for validation).

Cheers, Sidi

Hi,

It's simple:

• Start with an approach you are more confident about
• If you know how to do it both ways - mention it to the interviewer: "We can calculate this market both from the supply and the demand sides. Le'ts start with the supply / demand side and later, if we have time, check the answer using another method"

Best

Generally speaking, I believe it is better to approach market sizing from the demand side - after all 100% of demand equals the market size. That may not be the case with 100% of supply - that may be a lot more or a lot less than the actual demand for a product.

However, there may be instances, where it would be interesting or sensible to come from the supply side. This may be the case if you want to demonstrate a market opportunity, i.e. "Total supply for left turning widgets is X, but the market potential is actually Y, which is a lot more than X.".

Also in some cases it may simply be easier to calculate, but that's a very weak argument.