How to Approach Market Sizing Based on Resource Constraints

Viewing a Market Size Based on Resource Constraints
Note: This post is part of a series on 8 B2B Market Sizing Approaches to Quickly Assess Market Opportunity
A market opportunity is only addressable if a company has the resources to go after and compete for it. However, top-down and bottom-down approaches do not account for this factor. Consequently, it is important to evaluate how resource constraints will affect a company’s expected share of addressable market (ESAM).  Resource constraint market sizing does just that.

What is a Resource Constraint Market Sizing Approach?

It’s the process of estimating a market opportunity using production, capacity, and cost constraints. This is similar to sales forecasting within constraints. Typically, it is used alongside a demand estimate to estimate an overall opportunity available.
Image provided by: {link:}The Full Signal{/link}

“Bootstrappers don’t build top-down models. For them, top down = belly up! Instead, they build bottom-up models, starting with real-world [cost, production, and opportunity rate] variables.”

— Guy Kawasaski, advisor to Motorola


This approach provides a realistic look at a market that can be taken within a given timeframe.


It fails to evaluate demand, so it can over-estimate what is there for the taking.

Example of a Resource Constraint Market Sizing Approach in Action

  • Question: What is the market opportunity 1- year out for a firm selling marketing automation software to financial service firms with at least 50 million in revenue?
  • Resource Constraints:
    • Can bring on board 5 salespeople within budget this year
    • Each salesperson can make 10 phone calls a day that get through to a prospect
    • 3 weeks of vacation per employee
    • 25% of attempts will convert into opportunities
    • 20% of opportunities will convert into sales
    • 5% of the sales calls will convert within six months
    • ASP $240 revenue per year
    • 20,000 target prospects
  • Insight: Market size looks big enough to withstand well over a year of growth, so real constraint is company’s own resources.
  • What can we expect the sales to be after first year of operation?
    • 10 calls/day x ((365 days/year – 21 vacation days)*(5/7)) x 25% opportunity conversion rate * 20% sales conversion rate x $240/sale x 5 salespeople = $147,000

Additional B2B Market Sizing Approaches

Click here for the following how-to guides and stay tuned as more become available:

Marketing Manager, Pricing Strategy
You might also like ...
Predictable Pitfalls of Founders and How to Avoid Them
Editor's Note: This article originally appeared in People + Strategy magazine here. We have romanticized founders having their “eureka” moments, writing their...
by Alisa Cohn
Startup Strategy
The Simple Secret to Getting Ahead in Tech
A couple of weeks ago, I read a fantastic article in the Wall Street Journal about Leyla Seka’s rise through...
by George Roberts
Startup Strategy
Using Empathy to Improve the Customer Journey
Empathy is key to improving the customer journey, but to develop it we need to get as close as we...
by OpenView