Market Size Calculator: Bottom-Up TAM, SAM and SOM
A market size is only useful if you can explain where it came from. This builds it from two numbers you can defend, how many customers have the problem and what one of them spends with you in a year, then narrows it to the part you can reach and the part you can realistically win.
Count buyers, not people: businesses, households or individuals who would pay.
Your price times how often they buy in a year.
Limited by geography, language, channel and what the product does today.
Check it against how many customers your channels can bring in a month.
Total market (TAM)
$48,000,000
40,000 customers
Serviceable market (SAM)
$12,000,000
10,000 customers
Obtainable market (SOM)
$600,000
500 customers
Winning your obtainable share over three years means signing about 14 new customers a month. If your channels cannot produce that, lower the obtainable share until they can.
Why bottom-up. “If we get 1% of a $40 billion market” tells a reader nothing about whether you can win a single customer. Counting the buyers you can name and multiplying by what each one pays shows your working, so anyone can check the assumptions and you can see which one to test first.
How to read this
TAM, the total addressable market, is every customer with the problem times annual revenue per customer. SAM, the serviceable market, is the share of those you can actually reach and serve with the product, channels and geography you have. SOM, the obtainable market, is the share of SAM you can realistically win in about three years.
Bottom-up sizing beats the top-down version ("the industry is worth $40 billion and we only need 1%") for a simple reason: the top-down number says nothing about whether you can win a single customer. A bottom-up count shows its working, so a reader can check each assumption, and so can you.
SOM is the number to test against reality. Divide it by 36 and you get roughly how many customers a month you would need to sign to reach it in three years. If your channels cannot produce that, the obtainable share is too high, and it is better to find that out here than in month eight.
Common questions
- What is the difference between TAM, SAM and SOM?
- TAM is everyone who has the problem. SAM is the part of that you can serve today, given where you operate and how you sell. SOM is the part of SAM you can realistically win in the next few years. Each one is a subset of the one before.
- Where do I find the number of potential customers?
- Public counts are usually close enough to start: census business counts by industry code, licensing boards, trade association membership, or a filtered search on a directory. Write down the source next to the number so anyone can check it.
- What is a realistic obtainable share?
- Lower than most founders guess. Work it out from your channels instead: how many customers a month your CAC calculation says you can win, times 36, divided by SAM customers. That gives you a share you can defend.
- Why not just use an industry report figure?
- An industry report tells you how big the category is, not how many customers will buy from you. It is fine as a cross-check on your TAM, but it should never be the starting point.
Do this for your own business
The Founder Workbook inside PushStartGo builds this from your own customer interviews and your own numbers, keeps it with the rest of your plan, and checks it for the vague phrases and made-up figures that sink most plans. Customer discovery, value proposition, and prototype testing are free with no card. Go-to-market, profit model, and pitch prep are part of Pro.
Start your workbook free