Market sizing questions test your ability to structure ambiguity, make reasonable assumptions, and perform quick calculations. They appear in almost every consulting interview process.
What Makes Market Sizing Different
Unlike pure math problems, market sizing requires:
- Structure — Breaking a big question into smaller, answerable parts
- Assumptions — Making educated guesses with justification
- Sanity checks — Validating your answer makes sense
- Communication — Explaining your thinking as you go
The interviewer cares more about your process than the exact number.
The Three Golden Rules
Rule 1: Always Structure First
Before calculating anything, outline your approach. "I'll estimate this using a top-down approach, starting with population and narrowing down."
Rule 2: State Your Assumptions Clearly
"I'll assume the average household size is 2.5 people" is much better than just using 2.5 silently.
Rule 3: Sanity Check Your Answer
Does your final number make sense? Compare to benchmarks you know.
Top-Down Approach
Start with a large number and narrow down through filters.
Template:
Total Population → Target Segment → Usage Rate → Frequency → Price = Market SizeExample: Fitness App Market in the US
Step 1: US Population = 330M
Step 2: Smartphone owners = 330M × 85% = 280M
Step 3: Fitness-interested = 280M × 30% = 84M
Step 4: Willing to pay for app = 84M × 20% = 17M
Step 5: Average annual spend = $50
Market Size = 17M × $50 = $850M
Sanity check: Peloton alone has ~3M subscribers at ~$500/year = $1.5B. Our number includes cheaper apps, so $850M for paid fitness apps seems reasonable.
Bottom-Up Approach
Build up from individual units.
Template:
Number of Locations × Customers per Location × Spend per Customer = Market SizeExample: Coffee Shops in Berlin
Step 1: Berlin population = 3.5M
Step 2: Coffee shops per capita = 1 per 1,000 people (assumption)
Step 3: Number of shops = 3,500
Step 4: Customers per day per shop = 200
Step 5: Average spend = €5
Step 6: Days open per year = 350
Annual market = 3,500 × 200 × €5 × 350 = €1.2B
Sanity check: €1.2B / 3.5M people = €343 per person per year, or ~€1/day. For a coffee-loving city, seems plausible.
Typical Numbers & Benchmarks
Memorize these for quick estimation:
| Metric | US Value |
|---|---|
| Population | 330M |
| Households | 130M |
| Avg household size | 2.5 |
| Median household income | $75K |
| Life expectancy | 78 years |
| Workers | 160M |
| Cars | 280M |
| Global | Value |
|---|---|
| World population | 8B |
| EU population | 450M |
| China population | 1.4B |
| India population | 1.4B |
Translating to Revenue & Profit
Once you have a market size in units or customers:
- Revenue = Units × Price
- Addressable market = Total market × Your realistic share
- Profit potential = Revenue × Industry margin
3 Practice Questions
Q1: How many diapers are sold in the US per year?
*Approach:* 4M births/year × 2.5 years in diapers × 6 diapers/day × 365 = ~22 billion diapers
Q2: What's the market size for dog food in Germany?
*Approach:* 84M people × 10% dog ownership × 1.2 dogs/owner × $500/year = ~$5B
Q3: How many Uber rides happen in NYC daily?
*Approach:* 8M population × 30% use rideshare × 2 rides/week / 7 days = ~700K rides/day
How to Drill Market Sizing
Market sizing combines math with structure. Practice both:
- Mental Math Sprint — Build calculation speed
- Brain Teasers — Practice estimation logic
- Case Math Drills — Apply to business scenarios
Market sizing is a skill. The more you practice, the faster and more accurate you become.