What Is Market Share?
Market share tells you how much of a defined market you own relative to competitors. Here's how to measure it and why it matters.
Key Takeaways
- Market share is your revenue (or volume) divided by total market revenue (or volume), expressed as a percentage.
- You must define the market clearly before the number means anything.
- Growing market share at the expense of margins is often a trap — focus on profitable share.
The basic calculation
Market share = your revenue ÷ total market revenue × 100. If your market is worth £50 million and you generate £2 million, your market share is 4%. Simple in theory, but the definition of 'the market' is everything. A local bakery and a national bread brand are not in the same market even though both sell bread. Define your market by geography, customer segment, and product category before calculating.
Why market share matters
Market share is a proxy for competitive position. Gaining share while the market grows means you are growing faster than rivals. Losing share in a growing market means competitors are outpacing you even while your revenue rises — a warning sign often masked by top-line growth. For SMEs, tracking share in a well-defined niche is more meaningful than tracking share of a huge category where you are irrelevant.
How to estimate it without industry data
Total market size is rarely published for niche categories. Estimate it by: counting the number of plausible customers in your geographic area and multiplying by average spend; using trade association data or sector reports; or using competitor revenue estimates from Companies House filings and adding them up. An imprecise estimate reviewed regularly is far more useful than no estimate at all.
The profitable share trap
Chasing market share by cutting price is one of the most common SME strategic errors. Share won through discounting is not durable — a competitor can always undercut you. Focus on growing share in your most profitable customer segments, even if that means accepting lower share overall. A 6% share of the premium segment is often worth more than 15% of the commodity end.