How to Calculate the Market Share for Your Company

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how to calculate market share

Calculating the market share for your company is not an easy task, especially when the marketplace is surrounded by many private companies. In this case, the analysis of the market share is of paramount importance as it simply interprets the market’s revenue or units that are controlled by your company. At the same time, the market share showcases the company’s stand within the market.

Many companies make use of their market share to increase their productivity and performances, simply because, it doesn’t depend on “the state of the economy or tax policy changes”.  If the market is not completely filled, you can use the outcome in calculating your market share to uphold the pillar of your company as you cling on the lead stand through the capture of the current market share strategically.

Why Must I Calculate My Company’s Market Share?

Market share is highly effective in various factors that influence the company’s productivity; some of which are suppliers, customers, and most importantly the competitors. In whichever ways, calculating the market share simply indicate competitiveness in the market.

It is very important because it determines the basis of your company’s functionality against your competitors. It will sprout an effective decision that will aid your company performance, the opportunity to grow at a faster pace and an increase in the value of your productivity.

More reasons to back up the need to calculate the market share is to understand the types of market share that are available; these include.

The Unit Market Share: This is the number of items sold by a particular company. It can be calculated as you divide the number of unit sales by the total market unit sales.

The Revenue Market Share: This type of market share indicates the selling price of each commodity sold. It can be calculated by simply dividing the sales revenue by the total market sales revenue.

How to calculate market share

Most companies and business organizations are always concerned with the issue of calculating the market share. The solution to how to calculate market share is simply defined by measuring the sales of the company’s overall (total) revenue over a specific period of time.

 

Alternatively, as soon as you have your company revenue and the total revenue of the market at a specific period of time, you can calculate the market share for your company.

How? Divide your company’s revenue total by the market revenue total to produce the market share percentage. With this, you can also determine other companies market share (your competitors); you will only need an accurate estimate of their actual sales figures and financial reports.

Mathematically;

Market share= (your company’s total sales or revenue) / (the market’s total sales)

Are you achieving your company’s goals and vision? The only proof to your answer is a true comparison with other competitors as your company, and it can only be made known if you make use of the guidelines above on how to calculate market share.