Market sizing questions test your ability to make reasonable estimates with limited information. They appear as standalone questions or within larger cases.
Two Core Approaches
Top-Down
Start with a large, known number and narrow down:
- Total population or market
- Apply relevant filters (age, income, geography)
- Estimate adoption/penetration rate
- Multiply by price/frequency
Example: How many cups of coffee are sold daily in New York City?
- NYC population: ~8.3 million
- Coffee drinkers: ~60% = 5 million
- Average cups/day: 1.5
- Total: ~7.5 million cups/day
Bottom-Up
Build up from individual units:
- Start with one location/customer/transaction
- Estimate unit economics
- Scale up to the total market
Example: Same question, bottom-up approach
- ~3,000 coffee shops in NYC
- Average shop sells ~500 cups/day
- Coffee shops: 3,000 × 500 = 1.5M
- Add offices, homes, restaurants: ~6M more
- Total: ~7.5 million cups/day
Best Practices
- State your approach upfront — Tell the interviewer which method you’re using
- Round aggressively — Use clean numbers (330M for US population, not 331.9M)
- Segment when helpful — Urban vs. rural, age groups, income levels
- Sanity check — Does your answer pass the smell test?
- Show your math — Write down calculations clearly
Common Pitfalls
- Forgetting major segments (e.g., business vs. consumer)
- Using overly precise numbers that slow you down
- Not checking if the final answer is reasonable
- Jumping to numbers without stating assumptions