When I told my parents about my plan to make Bingo Card Creator my father was very skeptical. “Patrick, you know I love you, but how many teachers are there that play bingo?” You’ll likely have to answer a question similar to this for your own product idea. Here’s how I would go about answering it (although not to Dad, at least until I have a paycheck in hand — he ran his own business for years too, and while he’s not interested in software he has a deep appreciation for results).
One method of estimating a market starts with identifying your minimum qualifying feature and winnowing from there. Suppose for the sake of argument I sell only to teachers. How many school teachers are there in the United States? Hey, that sounds like a Microsoft interview question… but since I’ve got the luxury of thinking it over (and having access to Goooogle), I can come up with a much better answer than a number pulled out of my hindquarters.
There are a few places that keep fairly accurate numbers of the number of teachers there are. One obvious source is the Bureau of Labor Statistics. There are 1,486,650 elementary school teachers in the United States. Well, that was certainly easy. So I’m going to sell 1.5 million copies? No.
Now we winnow down from that 1.5 million. First, how many of them play bingo? I’ll be conservative and say thats no more than 10%. (This is a number pulled out of my hindquarters). We’re now down to 150k teachers. Of this, how many are hooked up to the Internet and have access to a computer when they prepare for classes? For a low-ball estimate, lets say 50%. We now have 75k teachers who meet the minimum requirements for being interested in a bingo card creator. 75k sales, yaaaaay!
Not quite. You see, there are free alternatives to buying bingo software or buying bingo cards, such as making them yourself or using my free competitors. Free is probably good enough for most teachers — call it 60% that would never spend a penny on bingo software. Of the remaining 40%, lets say half would theoretically like to spend the money but don’t have it in the budget and/or don’t have purchasing power at their school district or the will to spend their own cash.
So 20% of 75k means there are 15k American elementary school teachers who run bingo games regularly and could potentially be convinced to buy software. If I can sell to 1 in 10 of them, my market size is about 1,500 users. And there we go. (That is, incidentally, not a sales projection – there are other gates they have to make it through, from not buying from a competitor first to finding my software exists to installing it to handing their credit card numbers over to a barely trusted party to…).
Another method of estimation is to figure things out from the bottom up. For example, Yahoo receives about 10k searches for bingo cards every month (they will happily inform you of this at Overture). If we assume that only 20% of those folks are actually interested in teaching with bingo (as opposed to gambling), thats 2k searches per month from qualified buyers. Somebody probably has decent statistics on this but I’m guessing people are calling it quits after about 2.5 searches on an item, so thats 800 unique users searching per month. If Yahoo holds 40% of the search market, then there are give or take 2k unique users per month searching for educational bingo software.
So, anyhow, long story short: There does indeed exist a niche to target. Can I do it successfully? Well, we’ll find out soon.