Top-down market sizing — find a big industry report, quote the headline, claim a slice — is the most common sizing method and the least persuasive. Investors discount it instantly, for a simple reason: it is unfalsifiable. Nobody can check it, so it carries no information.
Bottom-up sizing produces a smaller number that is worth more, because every input is a claim someone can argue with. Arguable is the point.
The bottom-up calculation
1. Count the customers who have this problem
Not the addressable industry — the countable entities. “Independent physiotherapy clinics in the UK” is a number you can source from a registry or trade body. “The healthcare market” is not a count. If you cannot find a source for the count, narrow the definition until you can.
2. Cut it to who could plausibly buy
Strip out the ones too small to pay, too large to be served by you, or structurally unreachable. This step is where honest sizing loses most of its number, and doing it visibly is what makes the rest credible.
3. Attach a price you can defend
Anchor to what those customers already pay for something adjacent. If comparable tools charge £40–£90 a month, your annual figure per customer sits in that band. A price with no anchor is the weakest link in any sizing model.
4. Multiply, then state your three-year reachable share
Count × price gives your realistic total. Then say what share you could reach in three years given your actual channel, and show the arithmetic. A founder who says “2% because we can reach roughly 400 clinics through trade associations” is more credible than one claiming 10% of something enormous.
Worked example
| Step | Input | Figure |
|---|---|---|
| Countable customers | Independent physio clinics, UK (trade registry) | ~4,300 |
| Plausible buyers | Excludes single-room practices with no admin overhead | ~2,900 |
| Defensible annual price | Anchored to adjacent scheduling tools at £65/mo | £780 |
| Realistic total | 2,900 × £780 | ~£2.3m |
| Three-year reachable | Trade-association and referral channel, ~12% | ~£270k ARR |
£2.3m is not a venture-scale number for a single geography — and saying so is a strength. It tells you the model needs a second market or a higher price point, which is a real finding rather than a rounding error in a $40bn claim.
What to put in the deck
One slide, four rows, every input sourced. Show the cut from countable customers down to plausible buyers, because that subtraction is what signals you understand your own market. A single unexplained large number reads as research not done.