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BUSS1 - Market Size, Share and Growth Calculations

Jim Riley

10th April 2015

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Students preparing for AQA BUSS1 need to be ready to calculate and interpret data that relates to the size and growth of a market and to the market shares achieved by competitors in the market.The BUSS1 exam may include information which enables these calculations to be performed - indeed the questions may require students to undertake such calculations. Students might also be required to use market-related data to calculate a firm's revenues as part of a profit or breakeven calculation.I have summarised below the formulae that you need to know and provided some examples of how to use them.

Calculating Market Size (per period)

Example: Method 1

Number of units sold in market (per period)

Units

100,000

Average selling price (£) in market

SP

£15.00

Market size = (Unit x SP)

MSize

£1,500,000

Example: Method 2

Firm's revenues (per period)

Revs

£250,000

Market Share (%)

MShare

5.0%

Market size = (Revs / Market Share)

MSize

£5,000,000

Calculating a Firm's Revenues

Example: Method 1

Number of units sold (qty) in period

Units

5,000

Average selling price (£)

SP

£20

Firm's Sales Revenue =

Revs

£100,000

Example: Method 2

Market size (£)

MSize

£2,000,000

Firm's Market share (%)

MShare

5.0%

Firm's Sales Revenue = MSize x MShare

Revs

£100,000

Calculating the Market Growth Rate (%)

Example:

Market Size (£) This Year (Y1)

Y1

£4,600,000

Market Size (£) Last Year (Y0)

Y0

£4,200,000

Change in Market Size (£) (Y1 - Y0)

£400,000

Percentage Change (%) = (Y1 - Y0)/Y0

9.5%

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Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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