QuickBooks Blog
Need help choosing a plan?
Created with Sketch. 1800 917 771 Schedule a call
Need help?
We're here for you.
Schedule call
Created with Sketch.
What is GMROI?
Running a business

What is Market Share? Formula and How to Calculate

If you’re aiming for long-term business growth, it’s essential to understand your market share. It provides valuable insight into how well your business is performing compared to your competitorsβ€”and when you should expand.

Here, we’ll explore how to calculate market share and interpret the results, so you can better identify opportunities for growth.

Β Key takeaways

  • Market share measures your company’s portion of total industry sales.
  • Calculating market share reveals competitiveness and growth potential.
  • The formula is: (Your Sales Γ· Industry Sales) Γ— 100.
  • Market share impacts profitability, innovation and investor confidence.
  • To improve your market share, grow your business with greater customer loyalty, innovation and brand awareness.
  • Intuit QuickBooks offers financial tools to monitor performance and profitability for every stage of business growth.

What is market share?

Market share represents the percentage of an industry’s total sales that a particular company earns. In other words, it shows how much of the market a business controls compared to its competitors. For example, if a business sells 20 out of every 100 products purchased in its industry, it holds a 20% market share.

In practice, knowing how to calculate market share helps you gauge business performance, plan growth strategies, and anticipate market shifts. It can reveal whether your company is gaining or losing ground.

Here’s a quick overview:

  • High market share: Indicates a strong competitive position, customer loyalty, and greater influence in pricing and partnerships.
  • Low market share: Suggests more limited recognition, smaller customer base, and potential room for growth or improvement.

How to calculate market shareΒ 

To gauge your competitiveness and track your progress, it’s important to compare your business against your industry’s averages. Here’s how to calculate the market share you hold:

1. Define your market and time period: Specify product/category, customer segment, geography, and channels, then set a clear window of time to look at. Generally, market share should be calculated regularly (quarterly or annually) to monitor performance trends and identify competitive shifts. New or rapidly growing businesses may find it helpful to review this data more frequently.

2. Pick your measurement type:Β Choose revenue or units, and stick with it so you can analyse trends. Make sure your data reflects the same scope and period.

3. Compile your sales and market/competitor totals:

  • If you’re comparing your sales to the whole market, gather total industry sales for the same scope/time.
  • To compare your performance to competitors, total top competitors’ sales for the same scope/time.

4. Apply the market share formula:

Market Share (%) = (Your Sales Γ· Total Market Sales) Γ— 100Β 

We explain more about how to calculate a company's market share below.

5. Review, record, and repeat: Β Calculate regularly (typically quarterly or annually) to monitor trends and competitive shifts. Document your sources and assumptions so your calculations remain repeatable.

Market share formula and exampleΒ 

Here’s how to calculate a company's market share quickly. The formula is straightforward:

Market Share = (Company’s Sales / Total Industry Sales) Γ— 100

This calculation provides the percentage of market control a company holds.

Example:

If your company earns $5 million in annual revenue, and the total industry revenue is $100 million, your market share is:

(5,000,000 Γ· 100,000,000) Γ— 100 = 5%

Types of market share measurements

While the basic formula is consistentβ€”Market Share (%) = (Your Sales Γ· Total Market Sales) Γ— 100β€”the data you use varies depending on your focus:

  • Revenue-based: Uses total company and industry revenue.
  • Unit-based: Uses number of units sold to highlight sales volume and product reach.
  • Time period: Applies the same formula to a specific timeframe (monthly, quarterly, or annually) to track trends and seasonal performance.

You can read more about profitability in this guide to tracking and improving profit margins from Intuit QuickBooks.

Market share vs relative market shareΒ 

Your general market share compares your business to the performance of your entire industry. Your relative market share provides a clearer picture of how your business competes against the top players in your industry.

Type

Definition

Formula

Example

Market share

Measures a company’s total share of industry sales.

(Your Sales Γ· Total Market Sales) Γ— 100

If your company has $5M in sales out of $100M of the market’s total, your share is 5%.

Relative market share

Compares your company’s market share to the largest competitor’s share.

(Your Market Share Γ· Largest Competitor’s Market Share) Γ— 100

If your 5% share competes with a 10% leader, your relative market share is 50%.

What is the impact of market share for businesses?

Improving your market share can significantly boost your business growth and stability. Here’s how it influences key business areas:

  • Competitive advantage: A higher market share can indicate industry dominance, giving you leverage to set trends and outperform competitors.
  • Profitability: Larger shares often lead to higher profit margins.
  • Pricing power: Dominant players can influence pricing across the market thanks to their reputation and customer base.
  • Investor confidence: Investors view high market share as a sign of long-term potential.
  • Bargaining influence: Companies with higher shares may negotiate better deals with suppliers or distributors.
  • Innovation and growth: Market leaders often have the resources to invest in product development.
  • Risk exposure: High market share may reduce vulnerability to downturns in the industryβ€”but it can increase your exposure to regulatory or public scrutiny.
  • Brand perception: A strong market presence boosts your brand authority and consumer trust.
  • Threat to smaller competitors: By dominating the industry, you can limit opportunities for smaller businesses to grow within the market.

How to increase market share in your business

Growing your market share takes consistent effort, strategic planning, and an understanding of your customers’ needs. Here are some proactive steps to strengthen your position:

Research competitors ahead of time

Understanding your competition helps to identify gaps and new opportunities in the market.

  • Analyse competitors’ pricing, marketing, and customer reviews.
  • Identify what makes your products or services different.
  • Benchmark against leaders to give yourself realistic goals.

Focus on customer loyalty

Retaining existing customers is usually more cost-effective than acquiring new ones.

  • Offer rewards programs or exclusive perks.
  • Maintain excellent quality and service.
  • Engage with customers through personalised experiences.

Lean into product innovation and technology

Innovation keeps your business relevant and competitive.

  • Introduce new features or updates regularly.
  • Invest in technology that makes your business more efficient.
  • Encourage customer feedback, so you can learn what to improve.

Increase brand awareness effortsΒ 

Visibility drives recognition and sales growth.

  • Use social media and content marketing to reach new audiences.
  • Collaborate with complementary brands.
  • Invest in targeted advertising and PR initiatives.

Focus on market share growth with Intuit QuickBooks

By consistently focusing on your market share, you can stay adaptable and proactive, even in high-pressure industries. By tracking performance against your competitors, you can make informed decisions that fuel growth and keep your business sustainable.

Intuit QuickBooks supports business owners with tools to manage finances and analyse profitabilityβ€”information you need to calculate your market share. By combining clear financial data with strategic analysis, Intuit QuickBooks gets you ahead in an evolving marketplace.


Related Articles

Looking for something else?

Get QuickBooks

Smart features made for your business. We've got you covered.

Help Me Choose

Use our product selector to find the best accounting plan for you.

QuickBooks Support

Get help with QuickBooks. Find articles, video tutorials, and more.

A computer screen showing a picture of a computer.

TAKE A NO-COMMITMENT TEST DRIVE

Your free 30-day trial awaits

Our customers save an average of 9 hours per week with QuickBooks invoicing*

No credit card needed

Cancel anytime

Unlimited support

By entering your email, you are agree to our Terms and acknowledge our Privacy Statement.