About the Market Size Calculator (TAM SAM SOM)
This market size calculator estimates TAM, SAM and SOM using a bottom-up method: the number of potential customers multiplied by what each one would pay you per year. It is the approach investors prefer in pitch decks because every number can be traced back to something you can check, such as a census count of businesses or households and your actual price.
TAM (total addressable market) is the revenue if every potential customer bought. SAM (serviceable addressable market) narrows that to the share you can actually reach with your product, geography and channels. SOM (serviceable obtainable market) is the slice you can realistically win in the next few years given competition and your sales capacity.
Founders use it for pitch decks and business plans, product teams to prioritise segments, and marketers to set realistic targets. Keep the SOM share modest — a few percent of SAM is typical for a new entrant — and document the source of your customer count.
With the default inputs, the som — obtainable market is $18,000,000.00. Change any value above to recalculate instantly.
How to use the market size calculator (tam sam som)
- 1Find a sourced count of every potential customer in the category (for example from census or industry data).
- 2Enter what one customer would pay you per year.
- 3Set the percentage your product and channels can serve today (SAM).
- 4Set a realistic 3–5 year market share of that serviceable market (SOM).
- 5Use SOM and the customer count as your revenue and sales targets.
Formula and method
Bottom-up sizing starts with a count of potential customers (N) and multiplies it by annual revenue per customer (ARPA) to get TAM. SAM applies the percentage of those customers your offer can realistically serve — for example only English-speaking countries, only companies above a size threshold, or only segments your channels reach.
SOM applies the market share you can plausibly win within three to five years. Customer counts for SAM and SOM follow the same percentages, which turns the headline figure into a concrete sales target.
- N
- Number of potential customers
- ARPA
- Annual revenue per customer (account)
- s%
- Serviceable share of the total market
- o%
- Obtainable share of the serviceable market
Worked examples
SaaS for small businesses
2 million small businesses paying $1,200 a year is a $2.4 billion TAM. If 25% fit your product and region, SAM is $600 million, and a 3% share of that gives a $18 million SOM — about 15,000 paying customers.
B2B tool for mid-size companies
500,000 companies at $3,000 a year is $1.5 billion. Serving 40% of them makes SAM $600 million, and 5% of that is a $30 million SOM from 10,000 customers.
Consumer subscription app
30 million possible users at $10 a month ($120 a year) is a $3.6 billion TAM. A 10% serviceable slice is $360 million, and 1% of that is $3.6 million from 30,000 subscribers.
Frequently asked questions
What is the difference between TAM, SAM and SOM?+
TAM is total demand for the product category, SAM is the part of it your product and go-to-market can serve, and SOM is the share of SAM you can realistically capture in the next few years.
Is top-down or bottom-up market sizing better?+
Investors generally trust bottom-up sizing more because it is built from customer counts and your real price. Top-down figures from analyst reports are useful as a cross-check but are often too broad to guide decisions.
What is a realistic SOM percentage?+
For a new company, SOM is commonly 1–5% of SAM over three to five years. Higher shares are possible in small niches but need evidence such as a strong distribution advantage or signed pipeline.
Where can I find the number of potential customers?+
Government statistics are a good start: in the US the Census Bureau publishes counts of businesses by industry and size, and household data. Industry associations, app store data and LinkedIn company filters are also useful.