S-curve (Sigmoid curve) is one of the most commonly used model for planning market adoption of a new product or service by business analysts. Here is a simple implementation with just three parameters:
Each year’s penetration = S/(1+81^((hypergrowth+takeover/2-year)/takeover))
- Start of fast growth/ Hyper growth : By this year, the penetration will be 10% of the saturation value, and it will start to grow rapidly. 10% was an arbitrary choice to simplify the model, and by doing some math you could change the formula to any value. It is a reasonable choice in most cases.
- Takeover time : How long it will take for the product to “catch on”? - The operational assumption in the formula is that this number of years after the start of fast growth, the product would have reached 90% of the saturation value and will start to slow down. Again, 90% is an arbitrary value I chose.
- Saturation : What is the maximum expected penetration after the product becomes mainstream? i.e. what is the value that the top of the s-curve will reach?
Each year’s penetration = S/(1+81^((hypergrowth+takeover/2-year)/takeover))