Market Size Validation for SaaS: Is Your Idea Big Enough?

Learn how to validate market size for a SaaS idea. A simple guide to estimating demand, revenue potential, and growth before building.

Introduction

In my opinion a great SaaS idea isn’t enough — it needs a market that’s big enough to sustain it. Market size validation helps you understand whether your idea can grow into a real business or stay a small side project.

In this guide, you’ll learn how to validate market size for a SaaS without complex financial models or expensive tools.

saas market size validation overview

Why Market Size Matters for SaaS

Market size answers one key question:

Can this idea realistically make money?

Even a well-built product struggles if:

  • The target audience is too small

  • Users are unwilling to pay

  • Growth potential is limited

Market validation reduces the risk before you invest time and money. That's why you need to find a SaaS problem worth solving.

Step 1: Define Your Ideal Customer Clearly

Before estimating market size, define:

  • Who the user is

  • What problem they face

  • Where they work or operate

Example:
Instead of “small businesses,” use “freelance designers managing multiple clients.”

The clearer the user, the easier it is to estimate market size.

Step 2: Estimate Market Size Using Search Demand

Search volume gives an early signal of demand.

Look for:

  • Problem-based keywords

  • Tool or software-intent keywords

  • Consistent monthly searches

If thousands of people search for related problems every month, the market is likely active. So it's important to know about keyword research for SaaS ideas to find profitable problems.

keyword search demand for saas market

Step 3: Use the TAM, SAM, SOM Framework (Simplified)

You don’t need complex spreadsheets.

  • TAM (Total Available Market): Everyone who could use your product

  • SAM (Serviceable Available Market): Users you can realistically reach

  • SOM (Serviceable Obtainable Market): Users you can realistically convert

Even capturing 1–5% of a focused niche can be profitable for SaaS.

Step 4: Check Willingness to Pay

Market size isn’t just about people — it’s about paying customers.

Validate pricing by:

  • Reviewing competitor pricing

  • Reading user complaints about costs

  • Checking if businesses already pay for similar tools

If people already pay, the market is validated. That's why I recommend you to learn about analyzing SaaS competitors.

Step 5: Analyze Market Growth Trends

Use trend data to see if demand is:

  • Growing

  • Stable

  • Declining

Evergreen SaaS ideas usually solve:

  • Workflow problems

  • Time management issues

  • Revenue-related challenges

Avoid ideas tied to short-term hype unless you plan fast execution.

saas market growth trend analysis

Step 6: Validate With Content or Landing Pages

Before building:

  • Publish a blog post

  • Create a simple landing page

  • Offer early access or email signup

If people engage, click, or sign up, your market is likely big enough to proceed.

Final Thoughts & Practical Advice

Market size validation isn’t about finding the biggest market — it’s about finding the right-sized market you can actually serve. Many successful SaaS products dominate small niches before expanding.

Final advice: focus on a clear audience, verify demand through search and pricing signals, and validate interest before building anything complex.

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