1. What Is Market Share?
Market share is the percentage of an industry’s total sales that a particular company or product controls. It shows how much of the market you “own” compared to your competitors.
2. Why Market Share Matters
- Measures business performance in the industry
- Tracks growth or decline relative to competitors
- Attracts investors and stakeholders
- Informs pricing, strategy, and expansion plans
3. Market Share Formula
Market Share (%) = (Company’s Sales / Total Market Sales) × 100
For example:
- If your business earns £2 million in sales and the total market generates £10 million:
- Market Share = (2,000,000 / 10,000,000) × 100 = 20%
4. Step-by-Step Market Share Calculation
- Determine your sales revenue for the period (monthly, quarterly, or annually)
- Find total industry sales from industry reports, trade publications, or government data
- Divide your revenue by the total market revenue
- Multiply by 100 to express as a percentage
5. Types of Market Share
- Revenue Market Share: Based on total sales in pounds
- Unit Market Share: Based on number of units sold
- Customer Market Share: Based on number of customers
Choose the type that best suits your business model.
6. Example for a Small Business
Let’s say:
- Your café sells £120,000 of coffee per year
- The total local market sells £1,200,000 worth of coffee annually
Market Share = (120,000 / 1,200,000) × 100 = 10%
You hold a 10% market share in your local coffee industry.
7. How to Increase Market Share
- Improve product or service quality
- Reduce prices or offer better value
- Launch targeted marketing campaigns
- Innovate with new features or offerings
- Expand geographically or digitally
8. Limitations of Market Share Analysis
- Relies on accurate total market data
- Doesn’t reflect profitability
- Can be distorted by short-term promotions
- Not always a complete measure of success
Use market share alongside other metrics like profit margins and customer satisfaction.
Frequently Asked Questions
Can market share go above 100%?
No. All competitors’ shares combined should equal 100%.
How do I find total market size?
Use industry reports, government statistics, trade groups, or market research firms.
Is higher market share always better?
Not always—profitability and sustainability also matter.
Do I need to track market share monthly?
Quarterly or annually is more common, depending on your industry.
Can startups calculate market share?
Yes, using projections or estimates for early-stage performance.
What’s the best tool to calculate market share?
Spreadsheets, market research tools, or CRM dashboards like HubSpot or Salesforce.
Conclusion
Market share calculation is a powerful way to assess your competitive position. With a simple formula and the right data, you can track your growth, compare yourself to rivals, and shape smarter business strategies in 2024.