Step 4 of 6 · Market & pricing
Market size, competitors, pricing and unit economics
Guides on market sizing (TAM, SAM, SOM), competitor analysis, pricing a new product and startup unit economics such as CAC, LTV and payback.
4 market & pricing guides
- 1Intermediate · 5 min readHow to estimate market size: TAM, SAM and SOM done properlyTo estimate market size, count the buyers you could realistically serve and multiply by what each would pay per year. That bottom-up figure gives your serviceable market (SAM); a wider version covering everyone with the problem is your total market (TAM); the share you could plausibly win in a few years is your obtainable market (SOM).
- 2Beginner · 5 min readCompetitor analysis for startup ideas: a practical methodCompetitor analysis for a startup idea means mapping everything your buyer could use instead of you: direct competitors selling a similar product, indirect ones solving the same problem differently, and the status quo of spreadsheets, staff or doing nothing. Compare them in a simple grid, read their pricing pages and customer reviews for gaps, and treat 'no competitors at all' as a warning rather than good news.
- 3Intermediate · 5 min readHow to price a new product when you have no sales dataTo price a new product, start from the value it creates for a specific buyer, check the price against the alternatives they already pay for, and make sure it clears your costs with a healthy margin. Ask buyers about their current spending and budget rather than what they would pay, launch with a price that feels slightly high, and test it with real offers.
- 4Advanced · 5 min readUnit economics for startups: CAC, LTV, margin and paybackUnit economics measure whether a single customer is profitable once you account for what it cost to acquire and serve them. The core figures are customer acquisition cost (CAC), gross margin, churn, lifetime value (LTV) and CAC payback period.
Learning paths that cover this
Key terms
- Beachhead market
- The first narrow, reachable segment you aim to win completely before expanding into adjacent markets.
- Bottom-up market sizing
- Estimating a market by multiplying the number of reachable buyers by what each would realistically pay.
- Break-even point
- The sales volume at which total revenue covers total costs, so the business neither loses nor makes money.
- Burn rate
- How much cash a business spends each month beyond what it brings in.
- Churn rate
- The share of customers or revenue lost over a given period, usually measured monthly.
- Contribution margin
- Revenue from a sale minus the variable costs of making that sale, the amount left to cover fixed costs.
- Customer acquisition cost (CAC)
- The total sales and marketing spend needed to win one new paying customer.
- Customer lifetime value (LTV)
- The total gross profit you expect to earn from an average customer over the whole relationship.