[GTM glossary](/glossary.txt) Opportunity modeling Market & Targeting # Opportunity modeling In short Opportunity modeling is the practice of building a simple model that estimates the revenue available in a market, segment, or set of accounts. It turns assumptions about account counts, win rates, and deal sizes into a number you can compare and defend. It differs from market sizing, which counts the total pool of buyers. An opportunity model goes one step further and asks how much of that pool your team could realistically win, given capacity, conversion, and timing. ## What goes into an opportunity model * **Account universe:** How many companies fit the segment, from firmographic and technographic data. * **Reachability:** The share of those accounts you can contact with a valid contact and channel. * **Conversion rates:** Stage-to-stage rates from contact to meeting to opportunity to closed-won. * **Deal size and cycle:** Average contract value and how long a deal takes to close. * **Capacity:** How many accounts your reps and budget can actually work in the period. --- ## How to build one ### 1. Start from the account count Define the segment as filters and count the matching accounts. ### 2. Apply the funnel Multiply by the share reachable, then by each conversion rate. Use your own historical numbers where you have them and mark guesses as guesses. ### 3. Multiply by deal size Convert expected wins into revenue, and use the sales cycle length to place it in time. ### 4. Run scenarios Build a low, base, and high case by changing the two or three assumptions you are least sure about. --- ## A worked example Say a segment holds 2,000 matching accounts. The team can reach 60 percent, so 1,200. If 5 percent of reached accounts become opportunities, that is 60. At a 25 percent win rate that is 15 deals, and at an average of 20,000 per year the base case is 300,000 in annual contract value. These numbers are illustrative only. The value is seeing which input moves the result most. --- ## Using the model * **Compare segments:** Rank candidate markets by modeled revenue and effort. * **Set targets:** Ground quota and pipeline goals in the same assumptions. * **Plan capacity:** Show how many reps are needed to work the opportunity. --- ## Common mistakes * **False precision:** A model with ten decimal places on guessed inputs misleads. * **Using total market as opportunity:** Not every account is reachable or winnable this year. * **Never updating:** Replace assumptions with actual results as data arrives. --- ## Opportunity modeling FAQs **What is opportunity modeling in sales?** Opportunity modeling is building an estimate of the revenue a market or segment could yield, based on account counts, reach, conversion rates, and deal size. It helps teams compare segments and set realistic targets. **What is the difference between opportunity modeling and market sizing?** Market sizing counts how big a market is in total accounts or revenue. Opportunity modeling estimates how much of it your team could realistically win, factoring in reach, conversion rates, and your capacity. **How do you build an opportunity model?** Count matching accounts, apply the share you can reach, multiply by stage conversion rates and average deal size, then run low, base, and high scenarios. Mark assumptions clearly and replace them with real results over time. **What data do you need for opportunity modeling?** You need an account count for the segment, historical conversion rates, average deal size, sales cycle length, and team capacity. If you lack history, use small pilots to collect real conversion numbers before relying on the model. Share term --- ## More related phrases * [Market analysis](/glossary/market-analysis.txt) * [TAM analysis](/glossary/tam-analysis.txt) * [TAM mapping](/glossary/tam-mapping.txt) ## Similar phrases * [Bottom-up market sizing](/glossary/bottom-up-market-sizing.txt) Bottom-up market sizing estimates a market by counting real customers and multiplying by what each would pay, building the total from unit-level data rather than from broad industry figures. * [Market sizing](/glossary/market-sizing.txt) Market sizing is the process of estimating how many potential customers exist for your product and how much revenue they represent, so you can choose where to focus. * [Serviceable obtainable market (SOM)](/glossary/serviceable-obtainable-market.txt) Serviceable obtainable market (SOM) is the share of your serviceable market you can realistically win in a set period, given your team, budget, competition, and sales capacity. * [TAM, SAM, and SOM](/glossary/tam-sam-som.txt) TAM, SAM, and SOM are three nested market-size estimates: the total market, the part you can serve, and the part you can realistically win. * [Pipeline coverage](/glossary/pipeline-coverage.txt) Pipeline coverage is the ratio of open pipeline value to the sales target for a period, used to judge whether there are enough deals to reach quota.