# Market Sizing > Estimates TAM, SAM, and SOM with top-down and bottom-up methodologies, assumptions documentation, and presentation-ready outputs. Use for business plans or investor pitches. - Skill: `reaperinvest/market-sizing` (Agent Skill) - Install (CLI): `npx skillmds@latest add reaperinvest/market-sizing` - Raw SKILL.md: https://api.skillmd.com/api/skills/reaperinvest/market-sizing/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Docs & Writing - Author: reaperinvest (https://skillmd.com/u/reaperinvest) - Updated: 2026-09-22 - Page: https://skillmd.com/skills/reaperinvest/market-sizing --- # Market Sizing ## When to Use This Skill Use this skill when you need to: - Estimate Total Addressable Market (TAM), Serviceable Addressable Market (SAM), and Serviceable Obtainable Market (SOM) - Prepare market size estimates for an investor pitch or business plan - Evaluate a new market opportunity before entering - Validate whether a business idea has sufficient market potential **DO NOT** use this skill for competitive analysis, go-to-market strategy, or financial projections. This is for market size estimation specifically. --- ## Core Principle MARKET SIZING IS ABOUT DEFENDABLE ASSUMPTIONS, NOT PRECISE NUMBERS — SHOW YOUR MATH, CITE YOUR SOURCES, AND TRIANGULATE WITH MULTIPLE METHODS. --- ## Phase 1: Brief ### Required Inputs | Input | What to Ask | Default | |-------|------------|---------| | **Product/service** | "What are you selling? Describe it in one sentence." | Must be provided | | **Target customer** | "Who is your ideal buyer? (demographics, company size, industry)" | Must be provided | | **Geography** | "What market? (US, North America, global, specific country)" | United States | | **Pricing** | "What is your price point or expected annual revenue per customer?" | Must be provided | | **Purpose** | "What is this for? (pitch deck, internal planning, go/no-go decision)" | Pitch deck | | **Known data** | "Do you have any existing market research, competitor revenue data, or industry reports?" | None — will research | **GATE: Confirm brief before proceeding.** --- ## Phase 2: Estimate ### Dual Methodology Always use BOTH approaches and compare: **Top-Down (TAM → SAM → SOM):** 1. Start with total industry revenue or total potential buyers 2. Narrow by geography, segment, and product fit 3. Apply realistic market share assumptions **Bottom-Up (Unit Economics → Scale):** 1. Start with your price per customer 2. Multiply by the number of realistic customers you can reach 3. Scale by year with growth assumptions ### Definitions - **TAM:** Total revenue if you captured 100% of the market globally - **SAM:** The segment of TAM you can realistically serve (geography, segment, product fit) - **SOM:** The portion of SAM you can realistically capture in 1-3 years **GATE: Present the preliminary estimates with assumptions and wait for feedback.** --- ## Phase 3: Build ### Deliverables **1. Market Sizing Document** - TAM, SAM, SOM with dollar values - Top-down and bottom-up calculations shown step by step - All assumptions listed and sourced - Confidence level for each estimate (high, medium, low) **2. Assumptions Table** | Assumption | Value | Source | Confidence | |-----------|-------|--------|------------| | Total US small businesses | 33.2 million | SBA 2024 | High | | % that use AI tools | 15% | Industry report | Medium | | Willingness to pay $X/year | 5% of addressable | Comparable products | Low | **3. Visual Market Map** - Concentric circles showing TAM → SAM → SOM - Dollar values labeled at each level - Key assumptions annotated **4. Sensitivity Analysis** - How the SOM changes with different assumptions (optimistic, base, conservative) - Which assumptions have the biggest impact on the final number --- ## Phase 4: Polish ### Pitch-Ready Output Format the market sizing for the intended audience: - **Investor pitch:** One slide with concentric circles, big numbers, and 2-3 key assumptions - **Internal planning:** Detailed document with full methodology - **Go/no-go decision:** Summary table with risk assessment ### Credibility Checklist - [ ] All assumptions sourced (government data, industry reports, comparable companies) - [ ] Top-down and bottom-up estimates are within 2x of each other - [ ] SOM is realistic (under 5% of SAM for most startups) - [ ] No obviously inflated numbers designed to impress rather than inform --- ## Example 1: B2B SaaS Tool for Freelancers (US market) **TAM:** 73M freelancers globally x $200/year = $14.6B **SAM:** 20M US freelancers in knowledge work x $200/year = $4B **SOM:** 0.1% in Year 1 = 20,000 customers x $200 = $4M ## Example 2: Local Service Business (city-level market) **TAM:** 500,000 households in metro area x $500/year avg spend on service = $250M **SAM:** 50,000 target-income households x $500 = $25M **SOM:** 2% market share in Year 1 = 1,000 customers x $500 = $500K --- ## Anti-Patterns - **"Trillion-dollar market" claims** — if your TAM is the entire global economy, you have not narrowed enough. Be specific. - **Only top-down** — top-down without bottom-up validation produces fantasy numbers. Always triangulate. - **Unsourced assumptions** — "We assume 10% adoption" without justification is guessing. Cite comparable products or research. - **SOM equals SAM** — claiming you will capture your entire serviceable market is not credible. Be realistic about market share. - **Static sizing** — markets grow, shrink, and shift. Note the growth rate and direction. --- ## Recovery - **No industry data available:** Use proxy industries, comparable company revenues, or first-principles calculation from census/demographic data. - **Top-down and bottom-up estimates diverge wildly:** Investigate which assumptions drive the gap. The truth is usually between the two. - **Market looks too small:** Consider: is the market growing? Can you expand the product to adjacent segments? Is this a niche worth owning? - **Market looks too big:** Narrow the SAM further. A $100B TAM with a realistic $500K SOM is a better story than an unrealistic $10B claim.