Tam Sam Som Calculator

TAM SAM SOM Calculator — Market Sizing Methodology

A skill that enhances market sizing for the industry-analyst and research-reviewer.

Target Agents

• industry-analyst — Calculates market size systematically
• research-reviewer — Validates market size calculations

Definitions

TAM (Total Addressable Market):
  Total revenue opportunity if 100% market share
  "If everyone who could use our product, did"

SAM (Serviceable Addressable Market):
  Portion of TAM targeted by your product/service
  "Our market segment based on geography, customer type, etc."

SOM (Serviceable Obtainable Market):
  Realistic market share you can capture
  "What we can actually achieve in 1-3 years"

Top-Down Approach

Start with total industry data, narrow down:

TAM = Industry report market size
SAM = TAM x (Target segment %)
SOM = SAM x (Realistic market share %)

Example:
TAM: Global CRM market = $80B
SAM: SMB CRM in North America = $80B x 15% x 40% = $4.8B
SOM: Year 3 target = $4.8B x 0.5% = $24M

Bottom-Up Approach

Start with unit economics, scale up:

SOM = Target customers x Revenue per customer
SAM = Total addressable customers x Revenue per customer
TAM = Total potential customers globally x Revenue per customer

Example:
SOM: 500 customers x $2,000/yr = $1M
SAM: 50,000 potential SMBs x $2,000/yr = $100M
TAM: 2M potential businesses globally x $2,000/yr = $4B

Cross-Validation

Compare Top-Down and Bottom-Up results:
- If within 2x of each other: Good convergence
- If >3x difference: Review assumptions
- Present both with reasoning

Data Sources

Common Mistakes

1. TAM too large ("the whole internet")
2. Confusing TAM with SAM (not everyone is your customer)
3. SOM too aggressive (>5% in year 1 for new market)
4. No sources cited
5. Static analysis (no growth rate consideration)
6. Not accounting for pricing differences across segments