How to Calculate Market Share

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Companies calculate market share -- the percentage of the market a company captures -- to understand the status of their business within an industry. For example, a company with a 2 percent market share has a small slice of the industry and would want to consider ways to expand. A company with an 80 percent market share would, in essence, dominate the industry.

Market Share by Revenue

  • To find revenue market share, find the total revenues for the industry. Then figure the company revenues. Divide company revenues by industry revenues and multiply by 100. This is the percentage of market share for the company. For example, if a business earns $12 million in a $130 million industry, divide 12 by 130 to reach 0.092. Multiply by 100, and you find a 9.2 percent market share.

Unit Market Share

  • To know what percentage of an industry's units are sold by a company, find the total number of industry units sold. Divide the number of units sold by the industry unit number and multiply by 100. For example, if the business sells 5,000 units in an industry that sells 100,000 units a year, divide 5,000 by 100,000. The result is 0.05. Multiply by 100 to see that the business sells 5 percent of the units in the industry.

References

  • Photo Credit violetkaipa/iStock/Getty Images
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