How to Calculate Your Market Share

Defining Market Share

What is the definition of market share? Let’s cover these basics first and foremost. Put simply, your company’s market share is the percentage or portion of the entire industry’s sales that you can call your own.

Let’s try a simple example. Say you run a taco truck in the neighborhood, but so do two other businesses. Collectively, you all sell 100 tacos over a weekend – 25 of which were sold by your van. That means you have a 25% market share.

In truth, real-world market share is a touch more complex than that – so let’s dive in.

How Do You Calculate Market Share?

How to find out your company’s market share? Like so much of modern business and economics, the answer is not just in the data – but how you put it to use.

Select a period to analyze

Often, market share is calculated for a specific time period – be that a week, a month, a quarter, a calendar year, a financial year, and so on.

Defining what period of time you intend to calculate market share for is therefore the first step to take in the whole process.

Select market share basis

What does market share basis mean? It’s pretty simple. The most common market share basis calculations use one of two mainstream metrics with which to work.

The first option is calculating your market share versus the value of your industry overall. For example, if the US eCommerce industry is worth $5 trillion today, what percentage of that is yours?

The other metric is calculating market share using the number of customers you have compared to the total or estimated number of customers active in your industry today.

Determine the company’s total revenue

By having an active understanding of either your customer base size or the number of units sold for the timeframe you are choosing to analyze, you can collate the information accordingly to begin your market share calculations.

Determine industry-wide total

Determining the industry total is a vital step to learning how to calculate your company’s market share. However, because of this, accuracy is key.

Ensure that the industry totals you are determining cover the same time frame for your original analysis and that you are using the same methodology (customer base size, sales revenue, units sold, etc.) as before.

Determine your market share

With all of this data collated and synchronized across timeframes and methodologies, you can calculate your market share.

Doing so means dividing the third step – your total revenues – with the fourth step; the industry’s total revenues. The figure you get is your percentage of market share.

Why is market share significant to business?

Important for your business goals

What is your company’s vision, and how is it shaping your business performance? Does one impact the other – and if so, is it towards directives you intend to capitalize on?

Determine who is leading your market

Who are the major power players in your industry? If it’s you, what are you getting right, and where do you need to shore up? If not you, then who – and how do you differentiate to capture customer interest?

Gauge where your industry is headed

Where is your industry heading, and how healthy is it? Does this quarter show better potential than the last? What understanding of your industry can you obtain by understanding your role within it?

Year on year, data shows trends, innovators, and disruptors in your industry

As you collate greater levels of market share analysis, you can see patterns emerging. They relate not only to your own performance but also to your contemporaries in your sector – and how they are innovating versus your own strategic movements.

How does market intelligence impact market share?

Market share depends on data – and that means you need it fast, accurate and intelligently tracked.

No need to bear that burden alone – talk to Evalueserve today for analytics, business intelligence, and forward directives aplenty.