Determining the Size of Your SaaS Market

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When you’re starting a bootstrapped SaaS business, you have to find a painful problem to solve. For that, you have to find an audience first. But how do you figure out if the audience is big enough to support your business today and five years from now?

There are three different approaches to determining this elusive number. Different methods will be needed depending on the kind of customers you want to serve. B2B, B2BC1, and B2C markets each need different tools to figure out those numbers. You can find detailed step-by-step guides below, based on my own experience in startups working in all three fields.

No matter what kind of service you offer, you will never find exact numbers about the size of your audience. Most of the time, audience size is a moving target. Industries contract and expand, sometimes extremely fast, and any number is outdated within weeks. Even if anyone knew the exact figures, there would be little value in making them public. You would invite more competition of it looked juicy. If there is any number at all, treat it like a ballpark figure.

To get to any significant audience size number, you will have to do a lot of research and collect a lot of information. You won’t do this work in a day. It might take weeks and often months to sift through the data. Often, a subject matter expert will drop a number in a side remark of some obscure industry podcast. The more time you spend looking into many different places, the more precise your outcome will be.

If you have an enterprise-focused business, it is more likely that you will find public information you can trust. Consumer-focussed companies have a harder time there, as information will be abundant but very hard to validate.

Even for enterprise markets, the numbers out there are likely to be skewed or inflated. It depends on the institution that releases them. Enterprise companies often are required to publish their financial records and reports, which include market sizes directly or at least allow you to infer them in combination with market share ratios.

Some industry expert groups also release general industry reports, which often cost money. A good example for this is HolonIQ in the EdTech space.

Those reports are well worth it, for two reasons. Those reports commonly contain the exact information you need and much more that will allow you to make a very knowledgable guess as to your chances in that market.

The second reason is the more important one: many entrepreneurs, particularly in the bootstrapped community, shy away from spending money as it goes against the spirit of being scrappy. You will have an immediate and often critical advantage over those founders who just guess. They usually guess wrong. When they do, they give up quite quickly. Spending a few hundred bucks in advance will save you thousands later on, and you will come out of it with the condensed findings of subject matter experts in addition to the numbers you seek.

Before we dive into the specific kinds of markets and how to find their sizes, let me give you a few tips to find meaningful numbers in a sea of unfiltered information.

A good rule of thumb is to count the number of deciders and not just the number of buyers in a specific industry. These are sometimes the same people, but if you sell into enterprise industries, those roles will diverge. Targetting and selling to the people who decide is critical, so these are also the relevant people to be counted.

Reading up on the history and evolution of an industry before doing audience size research is highly recommended. This data will reveal the key players, you will learn about the tectonic forces of the industry that you may not be aware of, and you will absorb how change is accepted, welcome, and often resisted. That will actively inform not just your approach to determining the size of the audience, but also if it is an audience worth selling to.

Talk to people in the industry first. Ask them personally about their opinion about their industry, how big it is, and how big they think it could get. Find out who are trusted sources of information and whose numbers you can rely on. Do this part after having done some cursory research, and ask industry experts about their opinion about the sources you have found. You will be surprised how many people who work in that industry every day completely dismiss many outwardly reputable sources.

Finding B2B Market Sizes

The easiest way to find out how big your B2B audience is would be by purchasing industry reports from reputable sources. In the EdTech market, for example, that would be companies like HolonIQ. They are often quite expensive, but the data they provide is going to be a treasure trove of insight.

Industry magazines, both old-school print versions and online editions, are a densely packed source of information. Not only do they contain expert opinions on the field, but they also know very well how large their market is, as they are sold directly to members of that market. The easiest way to find out numbers here is to ask for the number of magazines they circulate. That can often be done by asking to publish advertisements in one of their next issues. Asking for the cost of an ad and the number of people who will see it will give you two critical insights: the audience number you’re after and the amount of competition you will have to expect for your audience’s attention.

More and more industry-specific podcasts are appearing all over the place. They often feature interviews with C-level executives from big companies, so they are packed with valuable information about the industry. Often, the people being interviewed will talk about the market they operate in, including market size and growth rates. The great thing about podcasts is that you can just reach out to the host, and you will likely get an answer. Ask them about what you are looking for and how you can find it, and they will give you pointers or even numbers they have access to. Asking about advertising on podcasts might yield the same kind of interesting numbers that asking about advertisements in industry magazines would.

Conferences are a staple in the enterprise world. Often, just looking at the vendor map of a conference will give you great insight as to the size of the companies, their position in the market, and the kinds of customers they serve. It will also allow you to find smaller companies that are in the same field but who you may not have heard of yet. For any important industry conference, download or explore the conference vendor map.

Lastly, enterprise companies have extensive search engine marketing budgets. Figuring out the search terms they rank for will lead you to get some insight into how much competition is in that market. You will learn what companies have found out about the search terms their customers search for, and how much you can expect to spend to be seen by those potential customers of yours.

Finding B2BC Market Sizes

In B2BC markets, where your customers are freelancers or small businesses, you will have less access to industry reports. Usually, there are not enough larger companies in those fields to make a living on selling $500+ reports every year, so the industry reports that were available for B2B markets are likely very scarce. The good thing is that most of the time, a B2BC market is somewhere in the supply chain of a larger B2B market, so you will still find information about the market as a part of a bigger industry in those B2B reports. However, they won’t drill down deep enough for specific information to your B2BC market, so you will need to find other sources.

The big players in those markets often publicly provide information about the size of their market to attract funding. While those numbers are likely overblown for dramatic effect, they will give you an indication as to the order of magnitude you can expect.

One great thing about B2BC markets is that they are often community-based. Many freelancers hang out at the same watercooler, which often is either a social media site or a forum/community that is specific to their craft. Finding these communities is essential in determining market size. Facebook groups are often a good indicator of size. If just a tiny niche of people from the market you’re interested in already resides in a Facebook group of over five thousand people, you can expect the actual market to be quite big. If you can barely find a group at all, your audience may be too small or just somewhere else. Make sure to ask people who work in the industry to lead you to the place where they gather.

Find and talk to the subject matter experts in the market. These people are often influencers, publicly communicating about the market and the developments within. They have YouTube channels, an Instagram following, a Twitter community, and much more. Those are the people who you will find on industry podcasts and giving interviews on the industry blogs. Reach out to them. They will know exactly what is going on, how big their audience is, and what the market is doing.

The hosts of podcasts in B2BC industries are very good targets for your research too. Not only do they know a lot about the industry themselves, but they will also be able to connect you to the subject matter experts in their network. This is true for any market, but it’s particularly useful in B2BC markets where there are so many more solo brands.

Finding B2C Market Sizes

Sales reports from companies in the field are a good start for determining B2C audience sizes. Most companies are private and thus don’t publicly expose their financial data. However, you can find some information on how they’re doing financially either by looking at sales reports those companies provide themselves or by investigating their tax reports with the authorities under which they operate. Those are often semi-public, and you can request them for a fee from the tax or commerce agencies in the country of founding.

It’s worth looking into the companies of a market to understand the size of it. How many people are employed by that company? How are they funded? Do they burn through cash, or do they have a reliable revenue stream? Answers to these questions will require asking the people who work for them. You can do that through sales calls or by reaching out to them directly with your questions. People often are willing to help people make progress in their field, as long as you’re not direct competition. It never hurts to ask.

The competition in B2C markets is notoriously high, as those markets tend to be where everyone wants to end up. That makes gathering reliable information very hard. Often, government institutions will keep some statistical data and make it available either in their publications or upon request. The same goes for non-profits that exist in almost all markets. Reaching out, maybe providing them with some value or exposure might give you a lot of insight.

In summary, finding the size of your potential audience will require you to gather a lot of information from a lot of sources. Sifting through this information will take time, so plan accordingly. It’s always worth it to be personal. Reach out to people who have some standing in the respective markets and communities. Be truthful about why you ask, and people will be helpful most of the time. Some won’t be. There will always be skeptics, and some markets are full of them.

But if you’re determined to find out if a market is a good fit and the right size for your business, you will get there eventually. Determination is vital here, as in most parts of starting a new business.

Remember that many founders give up at some point during this process. Stick with it, and you’ll be ahead of the curve for sure.

  1. Meaning “Business to Business Consumer”, a variant of B2B for very small businesses or freelancers. Don’t confuse this with B2B2C.

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