Market Sizing Analysis

Calculate Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM).

Three Methodologies

1. Top-Down Analysis

Start with total industry size and narrow down:

• Total industry revenue (from reports, databases)
• Apply geographic filters
• Apply segment filters
• Apply technology/product filters

2. Bottom-Up Analysis

Build up from unit economics:

• Number of potential customers
• Average revenue per customer
• Realistic penetration rate
• Growth trajectory

3. Value Theory

Estimate based on value delivered:

• Problem cost to customers
• Willingness to pay
• Value capture ratio (typically 10-20% of value created)

Industry Templates

SaaS

• TAM = Total businesses in category x Average annual contract
• SAM = Businesses matching ICP x Average deal size
• SOM = Realistic year 1-3 acquisition x ACV

Marketplace

• TAM = Total transaction volume in category
• SAM = Addressable transactions x Take rate
• SOM = Realistic GMV x Take rate

Presentation Tips

• Always show methodology and assumptions
• Use ranges, not single numbers
• Cite data sources
• Compare with analogous markets
• Show bottom-up and top-down convergence