Market Size Calculator

About the Market Size Calculator

Market sizing is a fundamental exercise for startups, investors, and business strategists. It answers the question: how big is the opportunity? This calculator uses the top-down approach to estimate three levels of market size: TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market).

Understanding TAM, SAM, and SOM

TAM represents the total revenue opportunity if you captured 100% of the market with no constraints. SAM narrows this to the segment you can actually serve given your product, geography, and business model. SOM is the realistic portion you expect to capture in the near term given competition, resources, and go-to-market strategy. Investors look at all three to assess whether the opportunity is large enough and whether your growth projections are credible.

Top-Down vs Bottom-Up

The top-down approach starts with a large market and applies filters to narrow it down. The bottom-up approach starts with unit economics and scales up based on your sales capacity. The best market sizing exercises use both methods and compare the results. If they diverge significantly, investigate why. Top-down tends to be more optimistic; bottom-up tends to be more realistic for near-term planning.

Common Pitfalls

The biggest mistake is confusing TAM with your realistic opportunity. Claiming a $50B TAM tells investors nothing useful if your SAM is $500M and your SOM is $5M. Another common error is double-counting revenue or using inconsistent definitions of a customer. Be precise about whether you are counting consumers, households, businesses, or transactions. Always cite your data sources and assumptions.