Before you launch a new product, you need to have an idea of how many people will buy it. There are two ways to do this. If you’re already selling products, it’s often easiest to start by looking at your existing customers. Who among them might find this new product useful? Then build up your forecast from there.
Think about other people who are similar to your current customers, including those in adjacent market segments. This is called a bottom-up approach. To do a top-down calculation, start with a large, diverse population (say the entire population of the U.S.) and then use a series of qualifying attributes, such as income level or age, to narrow your potential market.
To get the best of both of these methods, have two people on your team use each one and then compare the results.
Adapted from HBR’s Go to Market Tools: Market Sizing.