Debitoor Dictionary

Accounting terms explained in a simple way

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Market share - What is market share?

Market share is the process of comparing the sales over a specified period of time in an industry as whole to the sales by a particular business over the same time period

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While the market share is typically determined by overall sales by a business within a given industry, it can also be used to calculate the share of a particular product or brand, for example. The market share provides a business with an understanding of the weight that their company/product/brand has on the market as a whole.

Why determine market share

Market share can be useful in a number of different respects. Primarily, the market share calculation gives a company a better idea of the amount of business it is doing in the overall market. In other words, the size of their contribution to the total market in which they operate.

For growing businesses, this can help a company understand how competitive they are in their market, and by comparing their market shares over different periods, generate information about

Market share can be determined easily if you stay on top of your income and expenses with Debitoor accounting & invoicing software

What market share means for your business

Market share not only helps in keeping track of the standing of your business within your industry, but also is often an important factor for potential investors, who often keep a close eye on the changes in market share.

In addition, when the market share of a business is growing, this can be a great opportunity for the company to take advantage of an expanding share by lowering prices to try to capture even more of the market. If a company prefers not to decrease prices, it can also be a good time to launch a new product or begin a new advertising campaign.

In some industries, there are companies that hold such a large market share that this can cause barriers to entry into the market for other potential competitors.

The market share equation

The market share can be determined using a simple formula to figure out the percentage a business holds within the given market:

Sales of a business over set time period / industry sales over the same time period

The same equation can be applied to determining the market share of a particular product as well, by replacing the necessary details.

Market share and invoicing & accounting software

In order to be able to determine the market share of a business, it’s important to keep thorough records of the income and expenses of the company. This typically means staying on top of recording incoming and outgoing cash payments, which can be challenging in the often hectic schedules of today’s small businesses.

With accounting and invoicing software like Debitoor, you can record income and expenses when they happen in just a few clicks (or taps with Debitoor’s Android or iPhone app) - making it easier than ever to keep thorough records of your business.