Boosted Boards Competitive Analysis (Part 3 of 5)

Total Addressable Market

Total Addressable Market

What’s the total addressable market (total revenue potential)?

There are usually two approaches to getting the total revenue potential for a market. If it’s a completely new market with no existing products or competition, the only way to model the total market is by a Top Down approach. If sales data exists for the same or similar products, then a Bottom Up approach can be used to estimate sales volume. This is the preferred method as it is usually more conservative than Top Down estimations.

Top Down – You start with the entire size of the target market, in this case people who work in dense urban areas where parking isn’t easily available or convenient. You could look at the population size and start narrowing it down from there. The 2017 population count estimate for San Francisco is 884,363 (source: http://worldpopulationreview.com/us-cities/san-francisco-population/). The total employment estimate from 2016 is 627,915 (source: https://www.census.gov/quickfacts/fact/table/sanfranciscocountycalifornia/INC110216). From that number, you can estimate 2% penetration, so that means around 12,500 people. At $1500 per board, that’s $18.75M in revenue just for San Francisco alone. Now I have to preface this by saying, a Top Down approach usually isn’t the most accurate way in predicting real sales volume. What it does well is predicting the potential revenue ceiling.

Bottoms up – Here you start with an existing product. It could be electric scooters if they are more mature in the market and have more historic data available. It also could be regular bikes in the $1000-1500 range since that’s the price point of Boosted Boards. Since those are proven sales streams, you would estimate how much of that you could capture. But if you are lucky, you can find actual estimations already done for you online.

Estimated Electric Bike Sales 2016
Estimated Electric Bike Sales 2016

(source: https://www.statista.com/statistics/326124/us-sales-of-electric-bicycles/)

For a deeper read on market estimation, you can also check out these articles below.

Sources:
https://productmanagementtips.com/2012/04/21/market-sizing-quick-and-dirty-techniques/
https://www.planprojections.com/projections/market-size-estimation/

Part 4 – Product Feature Comparison Matrix

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