Quickly estimate your Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) using a simple top-down percentage-based approach. Educational use only, not investment or business advice.
Define your base market and percentage assumptions
Enter your base universe, percentage assumptions for TAM, SAM, and SOM, along with average revenue per customer to visualize your market funnel and potential revenue opportunity.
Total Addressable Market - the entire potential market
Serviceable Available Market - your target segment
Serviceable Obtainable Market - realistic capture
Calculate potential revenue at each market level
Market sizing is a top-down approach to estimating the revenue potential of a business opportunity. It helps entrepreneurs, investors, and product managers understand the scope of a market and set realistic expectations for growth. The TAM-SAM-SOM framework provides a structured way to think about market opportunity from the broadest perspective down to achievable targets.
TAM represents the total market demand for a product or service if you had 100% market share and no constraints. It's the theoretical maximum revenue opportunity and includes all potential customers worldwide who could possibly use your product. TAM is useful for understanding the big picture but is rarely achievable by any single company.
Example: For a project management SaaS, TAM might be all businesses worldwide that could use project management software.
SAM is the portion of TAM that your product or service can actually serve based on your specific offering, geographical reach, industry focus, or other constraints. It represents the segment of the market that fits your product's capabilities and your go-to-market strategy.
Example: For that same project management SaaS, SAM might be tech startups in North America with 10-200 employees who prefer cloud-based solutions.
SOM is the portion of SAM that you can realistically capture given your current resources, competitive landscape, and go-to-market execution. This is your realistic short-to-medium term revenue target. It accounts for competition, marketing reach, sales capacity, and product maturity.
Example: For the project management SaaS, SOM might be 2-5% of SAM based on current marketing budget, sales team size, and competitive positioning.
Use Multiple Sources
Cross-reference industry reports, government data, and competitor analysis.
Bottom-Up Validation
Validate top-down estimates with bottom-up calculations from customer data.
Conservative SOM
Start with conservative SOM estimates; it's better to exceed targets than miss them.
Update Regularly
Revisit market size estimates as you learn more about your customers.
Calculate the number of units you need to sell to cover all fixed and variable costs.
Estimate customer lifetime value and compare it to customer acquisition cost.
Calculate monthly and annual recurring revenue, churn rate, and net MRR growth.
Project your cash runway based on current cash and monthly burn rate.
Evaluate investments using discounted cash flow analysis and net present value.
Simulate three-tier SaaS pricing to calculate MRR, ARR, and ARPU.
Understanding TAM, SAM, and SOM helps you set realistic revenue targets and communicate your market opportunity to investors and stakeholders.
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