Would you size a market top-down or bottom-up, and how do you choose?

I'd pick the one where my inputs are better. Top-down starts from a big number and narrows it. Bottom-up starts from one unit, like a store or a customer, and multiplies up. Take dog grooming in a city of 1 million people. Top-down. A million people is about 400,000 households. Say 40% have a dog, so 160,000 homes with a dog. At about 1.5 dogs each that's 240,000 dogs. Maybe a third go to a groomer. That's 80,000 dogs, 5 visits a year, $60 a visit, so $24 million. Bottom-up. One salon with 2 groomers, each doing 6 dogs a day, 5 days a week, 50 weeks a year, does 3,000 grooms. At $60 that's $180,000 a salon. If the city has about 125 salons, that's $22.5 million. How I choose comes down to the data I have. If there's a solid population or household number, top-down is fast. If the client gives me sales per store, bottom-up is firmer. Ideally I'd do both and see if they agree.

I'd pick the one where my inputs are better, and run the other as a test. Top-down starts from a big number and narrows it. Bottom-up starts from one unit, like a store or a customer, and multiplies up. Take dog grooming in a city of 1 million people. Top-down. A million people is about 400,000 households. Say 40% have a dog, so 160,000 homes with a dog. At about 1.5 dogs each that's 240,000 dogs. Maybe a third go to a groomer, since short-haired dogs get washed at home. That's 80,000 dogs, 5 visits a year, $60 a visit, so $24 million. Bottom-up. One salon with 2 groomers, each doing 6 dogs a day, 5 days a week, 50 weeks a year, does 3,000 grooms. At $60 that's $180,000 a salon. If the city has about 125 salons, one for every 8,000 people, that's $22.5 million. The two agree on volume, 400,000 grooms a year against 375,000, which they reach from different inputs. Both use the same $60, so the match says nothing about the price. That still needs its own check. How I choose comes down to three things. First, the data I have. If there's a solid population or household number, top-down is fast. If the client gives me sales per store, bottom-up is firmer. Second, how fragmented the market is. With a few big chains I can count outlets. With thousands of one-person operators, like groomers working from a van, I can't, so I'd go top-down. Third, what you're testing. If you ask whether a market is big enough to enter, top-down answers it. If you ask how much our client could sell, bottom-up ties the number to stores and staff, which the client controls.