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HHI Calculator & Normalized HHI Formula

Use this HHI calculator to compare standard, share-adjusted, and 0-1 normalized concentration before a deeper competition, pricing, or strategy review.

Method and assumptions documentedPlanning estimateSource note included

Live calculator

HHI calculator

HHI2,650

4 market shares sum to 100.0%.

ConcentrationHighly concentrated

Based on share-adjusted HHI (0-10,000) so incomplete share lists can be compared with threshold bands.

Merger delta1,750

60.0% combined share; structural presumption triggered.

HHI concentration summary

HHI squares each firm's market share and sums those squared values. Use a consistent market definition before comparing periods or merger scenarios.

HHI measureValue
Market share entries4
Total entered share100.0%
Raw HHI2,650
Share-adjusted HHI2,650
Normalized HHI (0-1)0.02
Pre-merger concentrationHighly concentrated
Merged firm share60.0%
Change in HHI1,750
Post-merger HHI4,400
Merger screenStructural presumption triggered
Normalized HHI formula

Normalized HHI = (HHI on a 0-1 scale - 1/n) / (1 - 1/n), where n is the number of firms. This 0-1 measure adjusts for the equal-share minimum and differs from share-adjusted HHI, which rescales the entered shares to total 100% for concentration-band comparisons.

Planning note

HHI is a screening metric, not a legal conclusion. Market definition, data source, product scope, geography, entry barriers, buyer power, and agency guidance can change the interpretation.

Use this for planning and comparison. Contracts, collections, payables, tax timing, payroll, refunds, one-time bills, seasonality, and accounting treatment can change the real business result.

Quick answer

HHI Calculator & Normalized HHI Formula: what it calculates

HHI Calculator & Normalized HHI Formula calculates HHI and merger concentration screen from market shares, merging share A, and merging share B. The visible formula is HHI = share1^2 + ... + sharen^2; normalized HHI (0-1) = (HHI on 0-1 scale - 1/n) / (1 - 1/n); merger delta HHI = 2 x share A x share B.

ResultHHI and merger concentration screen
InputsMarket shares, Merging share A, Merging share B
FormulaHHI and normalized HHI formulas

Formula

HHI and normalized HHI formulas

HHI = share1^2 + ... + sharen^2; normalized HHI (0-1) = (HHI on 0-1 scale - 1/n) / (1 - 1/n); merger delta HHI = 2 x share A x share B

Use one market definition and distinguish 0-1 normalized HHI from share-adjusted HHI used for the 0-10,000 concentration screen.

How to use

Steps

  1. Enter each firm's market share as a percentage separated by commas, spaces, or line breaks.
  2. Add two merging firm shares if you want a merger delta and post-merger HHI screen.
  3. Check whether the entered shares total roughly 100% before relying on the raw HHI.
  4. Compare share-adjusted HHI, post-merger HHI, and delta against the threshold notes.
  5. Use normalized HHI (0-1) when comparing concentration across markets with different numbers of firms.
  6. Use the result as a screening signal before legal or competition strategy review.

Example

Sample calculation

Market shares35%, 25%, 20%, 20%
Pre-merger HHI2,650
Normalized HHI (0-1)0.020
Merger delta1,750
Post-merger HHI4,400

Calculator use

Best for

  • Use this HHI calculator to compare standard, share-adjusted, and 0-1 normalized concentration before a deeper competition, pricing, or strategy review.
  • Reviewing the visible formula and assumptions before relying on the HHI and merger concentration screen.
  • Comparing the output with the sample calculation and benchmark table before using it elsewhere.
  • Pricing, runway, cash flow, or work assumptions before an operating decision.

Before relying on it

Check first

  • Using the HHI and merger concentration screen before confirming the visible inputs match the same task and context: market shares, merging share A, and merging share B.
  • Ignoring that use one market definition and distinguish 0-1 normalized HHI from share-adjusted HHI used for the 0-10,000 concentration screen.
  • Skipping the source notes when the formula, benchmark, or warning depends on outside context.
  • Mixing cash and accounting profit, or monthly recurring items and one-time items.

Details

What to know before using the result

HHISum of squared market shares

A single firm at 100% share has an HHI of 10,000; many small firms produce a lower score.

Concentration bandUnconcentrated, moderate, or high

The page uses the DOJ/FTC 2023 guideline bands for screening, not as a final legal conclusion.

Normalized HHI0-1 firm-count adjustment

Uses (HHI - 1/n) / (1 - 1/n) on the 0-1 HHI scale; equal shares produce 0 and a monopoly produces 1.

Merger delta2 x share A x share B

The delta formula applies to a two-firm merger scenario under the same market definition.

Source notes

References used for this calculator

U.S. Department of JusticeDefines HHI as the sum of squared market shares and lists DOJ/FTC concentration bands.2023 Merger GuidelinesStates that HHI above 1,800 is highly concentrated and a change above 100 points is significant.Normalized HHI technical noteCompares normalization procedures for HHI and explains why their structural differences matter.

Benchmarks

How to read the result

Unconcentrated: HHI below 1,000.

Lower concentration screen; still check market definition and missing share data.

Moderately concentrated: HHI 1,000 to 1,800.

Middle band under the DOJ HHI page; scenario changes can still matter.

Highly concentrated: HHI above 1,800.

A merger delta above 100 points in this band can trigger a structural presumption screen.

Calculator accuracy

Methodology and assumptions

Formula

HHI = share1^2 + ... + sharen^2; normalized HHI (0-1) = (HHI on 0-1 scale - 1/n) / (1 - 1/n); merger delta HHI = 2 x share A x share B

Inputs used

Market shares, Merging share A, Merging share B

Limitations

Business results depend on contracts, accounting treatment, taxes, payment timing, refunds, collections, and operating assumptions.

Review record

Catalog QA baseline on June 6, 2026. This date marks the catalog-wide automated and editorial QA baseline, not a tool-specific expert review.

Cite this page

Toolkit Shelf. HHI Calculator & Normalized HHI Formula. https://toolkitshelf.com/tools/hhi-calculator-herfindahl-hirschman-index-calculator

FAQ

Common questions

What is HHI?

HHI is the Herfindahl-Hirschman Index, a market concentration measure calculated by squaring each firm's market share and summing the results.

What is the normalized HHI formula?

On a 0-1 HHI scale, normalized HHI = (HHI - 1/n) / (1 - 1/n), where n is the number of firms. Equal shares produce 0 and a one-firm monopoly produces 1.

Why does the calculator also show share-adjusted HHI?

Share-adjusted HHI rescales incomplete entered shares to total 100% and keeps the result on the 0-10,000 scale used for concentration bands. It is different from the 0-1 normalized HHI formula.

Does a high HHI decide whether a merger is unlawful?

No. HHI is a screening metric. Final assessment depends on market definition, evidence, entry conditions, competition effects, and legal review.

Can this replace accounting or legal advice?

No. Business tools are scenario planners. Contracts, taxes, payment timing, accounting treatment, refunds, and legal requirements can change decisions.

What should I do after using a business tool?

Save the assumptions, compare a conservative scenario, and review the result with actual books, contracts, or an advisor before making a high-stakes decision.