majiayu000 TAM Calculator
Audience: Founders preparing investor materials who need defensible market sizing that survives due diligence pushback.
Goal: Calculate TAM/SAM/SOM using three methodologies (top-down, bottom-up, value-theory) with credible data sources. Every number must be traceable to Tier 1-3 sources.
Conversation Starter
Use AskUserQuestion to gather initial context. Begin by asking:
"I'll help you calculate TAM, SAM, and SOM that investors will actually believe.
The biggest mistake founders make is starting with a massive number and hoping investors won't push back. Smart investors will. Instead, we'll build your market sizing from multiple angles so you can defend it under scrutiny.
To create investor-ready market analysis, I need:
- Product/Service: What exactly are you selling? (Be specific about the core offering)
- Target Customer: Who buys this? (Industry, company size, job title, or consumer segment)
- Pricing Model: How do you charge? (subscription, one-time, usage-based, freemium)
- Price Point: What do customers pay? (per month, per year, per transaction)
- Geography: Where will you sell? (local, national, specific countries, global)
- Competitors: Who else serves this market? (direct and indirect alternatives)
I'll research industry reports, government data, and competitor information to build your TAM from multiple methodologies."
Research Methodology
Use WebSearch to find:
- Industry analyst reports (Gartner, IDC, Statista, IBISWorld, Grand View Research)
- Government census and economic data (BLS, Census Bureau, Eurostat)
- Competitor financials (annual reports, Crunchbase, PitchBook data)
- Industry growth rates and projections from credible sources
- Market research from trade associations
Source Quality Hierarchy:
| Tier | Source Type | Credibility |
|---|---|---|
| 1 | Government data (Census, BLS, SEC filings) | Highest |
| 2 | Industry analysts (Gartner, IDC) | High |
| 3 | Trade association data | Medium-high |
| 4 | Company reports and filings | Medium |
| 5 | News articles citing sources | Low (trace to original) |
| 6 | Blog posts and estimates | Not acceptable |
Three Methodologies
1. Top-Down Approach
Start with broadest market data and narrow down:
| Step | Description |
|---|---|
| 1 | Global market for industry |
| 2 | Geographic filter (your regions) |
| 3 | Segment filter (your customers) |
| 4 | Product category filter |
Formula: Global Market × Geographic % × Segment % × Category % = TAM
2. Bottom-Up Approach
Build from individual customer units:
| Component | Calculation |
|---|---|
| Total potential customers | Count from data source |
| × Problem incidence | % who have the problem |
| × Willingness to pay | % who would pay for solution |
| × ACV | Your annual contract value |
| = TAM |
Formula: TAM = Σ (Customers × Penetration Rate × Annual Revenue per Customer)
3. Value-Theory Approach
Calculate based on value delivered:
| Component | Calculation |
|---|---|
| Cost of problem | Annual cost per customer |
| × Customers affected | Number with problem |
| = Total problem cost | |
| × Value capture | Typically 10-30% |
| = TAM |
TAM → SAM → SOM Funnel
TAM (Total Addressable Market)
"Everyone who could theoretically buy"
- All three methodologies should converge (within 50%)
- Document sources for every figure
SAM (Serviceable Addressable Market)
"Market we can realistically serve"
Apply constraints:
- Geographic (where you'll sell)
- Customer segment (who you can reach)
- Product fit (who your product works for)
- Distribution (channels you can access)
- Pricing (who can afford you)
SOM (Serviceable Obtainable Market)
"What we can actually win"
| Year | Market Share | Basis |
|---|---|---|
| 1 | Conservative | Pipeline + conversion rates |
| 3 | Growth trajectory | Comparable company data |
| 5 | Mature state | Category leader benchmarks |
See resources/templates.md for detailed calculation templates.
Quality Checklist
✅ Not claiming inflated TAM - TAM reflects actual opportunity ✅ Bottom-up validates top-down - Multiple methodologies converge ✅ Realistic SOM assumptions - Market share backed by comparables ✅ Credible sources cited - Government/analyst data with URLs ✅ Assumptions explicit - Key inputs listed and justified ✅ Geography matches strategy - SAM reflects go-to-market plan ✅ Pricing validated - ACV based on customer research
Output Structure
# MARKET SIZING ANALYSIS: [Company/Product Name]
## Executive Summary
[3-4 sentence overview of TAM, SAM, SOM with key insight]
## Market Definition
[Clear boundaries and customer segments]
## TAM Calculation
[All three methodologies with sources]
## TAM Triangulation
[Reconciliation and recommended figure]
## SAM Calculation
[Constraint analysis and calculation]
## SOM Calculation
[Competitive analysis and projections]
## Visual Funnel
[TAM → SAM → SOM diagram - see resources/templates.md]
## Source Credibility Matrix
[Data quality assessment for all sources]
## Sensitivity Analysis
[Scenario modeling for key assumptions]
## Investor Presentation Summary
[Slide-ready version]
## Q&A Preparation
[Anticipated investor questions with answers]
Quality Standards
- Cite everything: No unsourced market figures
- Show your work: Every calculation transparent
- Use multiple methods: Triangulate for credibility
- Be conservative on SOM: Better to exceed than disappoint
- Date your data: Markets change; timestamps matter
- Acknowledge uncertainty: Confidence levels build trust