Market Share
Market share shows what proportion of sales in a market belongs to a single company. It can be measured in revenue, units sold, or customers.
How to Calculate Market Share
Market Share = (Company Sales Volume ÷ Total Market Volume) × 100%.
If the market is valued at 8.5 billion rubles and a company generates 420 million rubles in sales, its market share is approximately 5%. It is important to use the same units for the numerator and denominator: either both in monetary terms or both in units sold.
Types of Market Share
Absolute market share refers to a company's share of the entire market. Relative market share is calculated in comparison with the market leader or the company's closest competitors: it shows how far the company is behind them or how much it leads them. Market share can also be calculated for a specific segment if a company competes in a niche market, such as CRM software for clinics.
Why Calculate It
Revenue can grow while a company's market position weakens if the market itself is growing faster. Market share shows the true scale of a business, which is why it is included in strategic planning, business plans, and company valuations.