Size the market bottom-up for Vidyavik School Cloud, fee and attendance software for private schools: 3.5 lakh private schools, 40% with more than 300 students, 700 students on average in those, Rs 60 per student a year. What is the serviceable market, and why is a top-down figure useless here?

The serviceable market is about Rs 588 crore a year, and only the bottom-up path shows who pays and how much. 1.4 lakh schools with more than 300 students, at 700 students each and Rs 60 a student, give Rs 588 crore, about Rs 42,000 per school. The deck's top-down Rs 3,500 crore rests on an assumed software budget for every school, including the 2.1 lakh small ones that do not buy.

If you wanted to know how much a new tea stall outside a college could sell, you would count students walking past, guess how many stop, and multiply by the price of a cup. You would not start from India's total tea consumption and take a slice. Bottom-up sizing counts the buyers who can actually pay, multiplies by what each pays, and so tells you both the size and the sales motion. For a software company the second part matters as much as the first: it tells you how much each customer is worth and therefore how much you can spend to win one.

Start with 3.5 lakh private schools and keep only those that buy: 40% have more than 300 students, which is 1.4 lakh schools. At 700 students each, those schools hold 9.8 crore students. At Rs 60 per student per year, the serviceable market is Rs 588 crore a year. Each school pays 700 times Rs 60, Rs 42,000 a year.

The deck's Rs 3,500 crore assumes every one of the 3.5 lakh schools spends Rs 1 lakh a year on software. That number includes 2.1 lakh small schools the founders themselves say do not buy, and it assumes a budget more than twice what a 700-student school would pay Vidyavik. It is six times the bottom-up figure, and nothing in it tells you who signs the cheque or what one school is worth. A top-down number can only be checked against another top-down number; a bottom-up number can be checked by visiting ten schools.

Rs 42,000 a year per school is the number to hold on to. If Vidyavik will spend at most one year of revenue to win a school, it can afford about Rs 42,000 of sales and onboarding cost per school, which rules out a field salesperson visiting each one many times. It needs channels: school associations, fee-collection partnerships with banks, or a free attendance tool that upgrades to paid fee collection. Ten per cent of the serviceable market would be 14,000 schools and Rs 59 crore of revenue, a real business but not a huge one on these assumptions.

Say the limits. Every input is an assumption: the school count, the 300-student cut-off, the 700 average and the Rs 60 price. The price is the input most worth testing, because Rs 60 is about Rs 5 a month per student and a school that values online fee collection might pay more. The bottom-up tree makes each assumption visible, so diligence can attack them one at a time, which a top-down figure never allows.