Commercial Potential - Market Size

It is helpful to think about the size of the potential market for products embodying the invention in assessing commercial potential. At this point, all that is necessary is to develop an estimate of the order of magnitude of the market potential, i.e., the amount of eventual annual sales in today's dollars.

Although complicated spreadsheets can be used to estimate market size, so can the back of an envelope - which is the method recommended here. The basis of the calculation is as follows:

How many potential customers are there?

How many products (units) will each customer buy each year?

What will be the selling price of each product?

To develop your estimate, simply multiply the above three numbers together and round off the answer to one significant figure. Of course, there are many other ways to develop the estimate - you can ask an expert, ask a supplier of an existing similar product, use published market research data, etcetera.

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