Porter's five forces
Five structural pressures that decide how much profit an industry can hold. Score them below — and get the answer the templates get wrong, because an industry is decided by its strongest force, not by the average of five.
Short answer
What are Porter's five forces?
Five structural pressures that determine how much of the value an industry creates its firms can keep: new entrants, supplier power, buyer power, substitutes, and rivalry. Published by Michael Porter in 1979, and still the standard way to describe why some industries are profitable and others are not.
The short version
- The forces do not average. One force at maximum caps the industry regardless of the other four.
- The most underrated force is substitutes — and the strongest substitute is usually the customer carrying on exactly as they are.
- It describes an industry, not a company. Brutal industries contain profitable firms.
- It is a snapshot: the entrants force in particular moves as fast as the tooling does.
Free · No signup · Nothing leaves your browser
Score the five, find the one that decides
1 means the force is weak and the industry can breathe. 5 means it sets the ceiling on what anyone here earns. Score honestly — the useful output is which force wins, not the total.
1.Threat of new entrants
How easily could someone else start doing this next quarter?
1 = Real barriers: capital, licences, network effects, years of data. · 5 = A weekend and a credit card. Anything you earn invites company.
2.Bargaining power of suppliers
Who can raise your costs without losing your business?
1 = Many interchangeable suppliers, switching is cheap. · 5 = One platform, one model provider, one distributor — and they set the terms.
3.Bargaining power of buyers
How much can your customers push the price down?
1 = Many small buyers, switching costs them real effort. · 5 = A few large accounts, comparison is easy, leaving is free.
4.Threat of substitutes
What else solves the problem, including doing nothing?
1 = Nothing else does this job acceptably. · 5 = A spreadsheet, an intern, or simply carrying on as before.
5.Rivalry among existing competitors
How hard do the incumbents fight for each sale?
1 = Few players, growing market, differentiated offers. · 5 = Many similar players, flat market, price is the argument.
0 of 5 scored
What this cannot know. Porter describes the structure of an industry, not your company. Brutal industries contain profitable firms and attractive ones are full of failures — the framework tells you what the weather is like, not whether you packed a coat. It is also a snapshot of a moment, scored by you, from your own view of a market you are probably invested in liking.
For whether your idea survives contact with that market, the Go/No-Go rubric scores seven criteria about you rather than five about the industry, and TAM SAM SOM sizes what is actually reachable.
Five forces describes the market and has no input about you. A 15-minute session ends with a written GO / WAIT / NO-GO and the reasoning behind it. Free tier, no card.
Why you must not average the five
Nearly every five-forces template ends with a number: add up the scores, divide by five, call it industry attractiveness. It reads like rigour and it inverts the framework.
The forces are constraints, and constraints do not compensate. Consider an industry with no new entrants, weak suppliers, no substitutes and no rivalry — but four buyers who account for every sale and know it. Four forces at one, one force at five. The average says 1.8 and sounds delightful. The reality is that the buyers take the margin, and they will keep taking it no matter how pleasant the rest of the structure is.
The same logic runs the other way. An industry with four fours and one one is not saved by that one.
So the scorecard above leads with the binding force — the strongest one — and reports the average underneath with a note saying how many points kinder it was. That gap is worth looking at, because it is precisely the amount by which the conventional summary would have flattered you.
Four ways the analysis goes wrong
❌ Averaging the five scores
The average is the summary every template reaches for, and it is wrong by the logic of the framework. Profitability is capped by the strongest force. Four ones and a five is not a 1.8 industry; it is an industry with a five in it.
✓ Instead: Report the binding force and its score. The other four tell you where you are not in trouble, which is worth knowing and is not the same as a verdict.
❌ Scoring your own market generously
You are invested in this industry being attractive, and the scale is subjective. Founders reliably score substitutes low because they are thinking about competitors rather than about customers doing nothing.
✓ Instead: For each force, name the specific thing that would justify a higher score before you settle on a lower one. "Doing nothing" is a substitute and usually the strongest one.
❌ Treating it as a verdict on your company
The framework describes the structure of an industry. It has no inputs about you at all, which is why it cannot say whether you will do well in it — and brutal industries contain profitable firms.
✓ Instead: Use it to understand what shape a winning strategy must have here. Then assess yourself separately.
❌ Doing it once, in 2019
It is a snapshot. Barriers that existed before a platform shipped an API, or before a model got ten times cheaper, may not exist now — and the entrants force moves fastest of the five.
✓ Instead: Date the analysis and redo it when something structural changes. The score you argue about is worth more than the score you filed.
What five forces cannot tell you
Anything about your company. There is no input for your team, your product or your cost base, so there can be no output about them either.
Where the boundary of the industry is. Draw it narrowly and rivalry looks mild; draw it widely and substitutes swallow you. The framework takes the boundary as given, and the boundary is usually the actual argument.
How fast any of it is moving. It was built for stable industrial markets, where structure changed over decades. A model getting ten times cheaper can rewrite the entrants force in a quarter.
Whether complements matter. Porter has no force for the platforms, ecosystems and integrations that decide a great deal of software economics — which is the standard critique and a fair one.
The weather, and whether you packed a coat
Five forces tells you what kind of market you are walking into. It has nothing to say about you — and the questions that decide whether a specific idea survives are about you: is the problem real, does a market exist, will they pay.
A 15-minute session works through seven such criteria and ends with a written GO / WAIT / NO-GO and the reasoning behind it.
15 min · free tier, no card
Frequently asked questions
What are Porter’s five forces?+
How do you score the five forces?+
Should I average the five forces?+
Does an attractive industry mean my startup will work?+
What is the most underrated of the five forces?+
Is this scorecard free, and does my data leave the browser?+
Related guides